The committee met to take up and consider the following bills:
CSHB 903 – Capriglione, Relating to the investment of a portion of the economic stabilization fund balance.
- Would invest a portion of the ESF in a mix of funds with the intent to match the return rate with inflation
- Would only invest amounts over the defined sufficient balance
- Should return $15 million for every billion invested
- All returns would be invested right back into the ESF
- Rep. Linda Koop noted the bill is a good idea and it was thoroughly vetted in the subcommittee
- Rep. Trent Ashby asked if the Comptroller has control of the investments
- The legislature would set the amount of money to be invested and the legislation already has a limit on what types of investments can be made
Bill reported favorably
HB 5 – Otto, Relating to strategic fiscal reviews of state agencies.
- This is the codification of a new process the speaker initiated last year to evaluate state agencies and their programs to see they are using their resources efficiently
- This is the strategic fiscal review (SFR)
- Process will require the LBB to do a deep dive into agencies
- Will include a description of their activity and justification for each, an evaluation on effectiveness and efficiency of the agency related to each activity
- Not Sunset; a fiscal review
- Allows the legislature to look at “mission creep” regarding expanding programs
- Rep. Donna Howard asked if SFR could look at what could be improved with increased investments
- Chairman John Otto noted that may put LBB in an untenable position trying to determine that
Bill reported favorably
HB 8 – Otto, Relating to the deposit of money received from the federal government.
- Federal funds are currently deposited into the GR fund and account for about 1/3 of the state budget
- Before funds consolidation they were deposited into a separate account
- Funds should be segregated so there is an audit trail for state and federal audits
- Would not place any limitations or prohibitions on use of federal funds
- Currently the ESF cap is calculated at 10% of the amount deposited into the GR fund the previous year; this current policy allows federal funds to affect the cap calculation and increases the cap by $4 billion
- Removing the federal funds would achieve a lower cap
Dale Craymer, TTRA
- ESF was intended to be a management tool during the boom and bust cycle of the oil and gas industry
- When federal funds were blended into the GR fund the ESF cap was inadvertently raised by about 30%
- Rep. Brian Hughes asked what would happen with the ESF being above the cap
- Have never been in this situation before; the way the law works the Comptroller never makes the transfer if a transfer would exceed the cap
- Otto said the HJR will address that
- Rep. Sylvester Turner asked if federal funds were removed what the balance cap of the ESF would be
- Would impact the cap in the upcoming biennium
- Otto noted based on the BRE the cap may be hit in the second year of the upcoming biennium
- Ursula Parks, LBB, noted it would be around $11 billion for 2018-19; the cap at the end of 2017 will be around $11.4 and the account would likely not reach that cap
- Otto noted this will help get closer to the goal of only $3 billion in GRD being used to certify the budget
Bill reported favorably
HJR 8 – Otto, Proposing a constitutional amendment to dedicate certain money to the purpose of retiring state debt early.
- Requires that funds above the ESF cap be dedicated in a separate account for the purpose of early retirement of state debt
- Would get recommendations on the debt that is eligible to be called and paid off early
- Would free up money having to be spent on principle and interest
- There is no requirement that any of the money be used for any particular debt
- There is a scenario that could happen where no state debt could be called and money in the account could grow over time
- Turner noted the legislature cannot use it but for this purpose and it cannot be used to certify the budget
- Rep. Borris Miles asked who makes the decision on what debt to call
- The legislature, most likely with advice from Bond Review Board and LBB
Bill reported favorably
CSHB 2 – Otto, Relating to making supplemental appropriations and giving direction and adjustment authority regarding appropriations.
- Supplemental bill is $432.6 million in all funds
Marva Scallion, LBB
- Medicaid is appropriated a total of $143.3 million in all funds and $60.1 million in GR
- Supports a total shortfall of around $338.4 million and is supplemented by transfers of $195.1 million from HHS agencies
- These are from unused balances, unnecessary surpluses
- Turner asked about the surplus balances; how is there a surplus in mental health; have we met all necessary needs
- Believe that is due to providers being unable to spend all increased funding appropriated in the previous biennium
- Turner asked Price about some items not being fully funded in this budget; how can a transfer be made from HHS to HHS
- Price noted not all areas have satisfied all the demand that exists; we are putting more money into mental health services and women’s health program; hearing LBB say that the timing of the roll out of some of the programs would not allow for all previously appropriated money to be spent; not a conclusion that all the demands in those areas are satisfied
- Parks noted the way the programs are designed and the way money has been appropriated is that the funds cannot be used after a certain time and they would lapse back into GR fund
- Turner noted if all needs haven’t been met by the agency and they haven’t expended all appropriated funds something is terribly wrong
- Giddings noted it is troubling knowing that needs are not being met and there is funding left over; whatever bureaucracy that is preventing appropriated money from being used the legislature needs to look into that
- Rep. Greg Bonnen noted the committee needs to be careful not to send the wrong message and incentivize wasteful spending just to get rid of unused balances
- Rep. Sergio Munoz asked if there will be some explanation or report on why money was unexpended
- LBB can provide that information
- The bill reduces appropriations from FSP by $710 million due to higher than anticipated property value growth and lower student enrollment
- Increase of $768.1 million to TRS care to avoid insolvency of the plan
- Appropriates $20.6 million from GR to TFC for projects to fix critical issues in state buildings
- School for the Deaf
- DARS
- Various other state owned buildings
- $213 million in all funds to reimburse MCOs for Medicaid and CHIP health insurance provider fee and federal income tax
- $50.5 million GR to pay for correctional managed care
- $1.6 million in all funds for DFPS Title IV-E waiver
- Reduces TANF funds by $35 million to make it available for the future biennium
- TxDOT would be allowed to carry forward balances made in HB 1025 (83R) for state highway system energy sector repairs and county grant program
- Munoz asked about MCO provider fee; would like to know more detailed info on the fee and how it is being paid
- Committee amendment 1 – Turner: has to do with settlement funds from a San Jacinto River
Bill left pending.