House Appropriations – March 7, 2019

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The House Committee on Appropriations met to consider subcommittee recommendations on Articles II, III, and X, as well as HB 4.

This report is intended to give you an overview and highlight of the discussions on the various topics the committee took up. It is not a verbatim transcript of the hearing but is based upon what was audible or understandable to the observer and the desire to get details out as quickly as possible with few errors or omissions.

Article II (Decision Document)

Davis opening comments

Experiencing an emergency within APS; several case workers have moved to CPS
Department of Family Protective Services request for additional case workers was fully funded
Provided over $72 million to fund case load growth and stem ECI providers leaving the program
Did not fund exceptional item for ABA and services for children with autism because HHC is in process of adding the service in supplemental bill
Added a rider for women’s health programs that funds measuring outcomes, ensures funding goes towards the need, and requires reporting on contractor activity
Subcommittee adopted $50 million for substance abuse treatment; adopted over $14 million to address waitlist for pregnant women and women with dependent children

LBB

Department of Family and Protective Services
- Technical adjustments address items that FTEs that were left out of base intentionally
- Rider 28 and a new rider were adopted as amended
- Riders 5 and 7 were adopted as amended
- All other items were adopted
- Howard – For Chair Davis, regarding the nurse family partnership program, I was wondering why part of that was not included and put into Article 11?
  - Davis – Limitation of funds, as well as capacity issues not being able to utilize all the funds
  - Howard – The request for funds was more than could be utilized?
  - Davis – To my understanding, yes
- Recommendations adopted
Department of State Health Services
- Requests for revising Riders, 8, 9, and 10, were adopted
- All other items were adopted
- Recommendations adopted
Health and Human Services Commission
- Technical adjustments items 1-3 adopted
- Exceptional items such as provide for Medicaid entitlement growth and provide for Medicaid non-entitlement cost growth were not adopted
- Women’s health program case load and cost growth was adopted with a new rider and a rider amendment
- Item 18C was withdrawn by agency
- Item 19D, expansion for specialty care for first incident of psychosis, was adopted to Article 11
- Item 21D was adopted with a new rider
- Item 25B was adopted for an increase rate of 11%
- Items 29A and C were adopted as ESFs
- Item 36 was adopted with a new rider
- OIG exceptional item requests, Item 53 was withdrawn by the agency and Item 55 was adopted
- Agency additional requests, Item 1 and 3 are pended
- Item 6 and 7 were adopted with amendments to current rider
- All other items were adopted
- Recommendations adopted
Special Provisions related to Health and Human Services
- Agency has no items to consider for special revisions
- Recommendations adopted

Article III – Public Education (Decision Document)

Bonnen opening comments

Subcommittee anticipates working with Public Education Board
Subcommittee delivered additional funds for top priorities, including financial aid, formula funding, and research support
Approximated a total of over $200 to increase formula funding across the board
Restored research funding for all academic institutions
Increased funding in Texas grants suggests growth in student population, and maintains percentage of eligible students that may access said grants
Highlighted $109 million in introduced bill that is dedicated to school safety

LBB

Texas Education Agency
- Technical adjustment 1 adopted
- Agency requests 3, 4, 5 adopted
- Agency request 1 in Article XI
- Subcommittee revisions and Additions items 1-3 adopted
- Recommendations adopted
Texas School for the Blind and Visually Impaired
- Agency requests 1 and 4 in Article XI
- Recommendations adopted
Texas School for the deaf
- Technical adjustments 1 and 2 adopted
- Agency requests 1, 2, 3 in Article XI
- Recommendations adopted
Special Provisions for the School for the Blind and Visually Impaired
- Subcommittee revisions and additions item 1 adopted
- Recommendations adopted
Teacher Retirement System
- Agency requests 2, 3 adopted
- Agency requests 1, 4 in Article XI
- Recommendations adopted
Optional Retirement Program
- No items
- Recommendations adopted

Article III – Higher Education (Decision Documents)

Bonnen opening comments

Covered higher ed in pervious comments on Article III for public ed.

LBB

Higher Education Employees Group Insurance
- Technical adjustments 1 and 2 adopted
- Agency request 1 in Article XI
- Recommendations adopted
Higher Education Coordinating Board
- Cost-out adjustments item 1 adopted
- Technical adjustments 1-6 adopted
- Agency requests adopted
- Agency requests 1-14 in Article XI
- Rider revisions requested by agency items 1-3 in Article XI
- Rider revisions requested by agency items 4 and 5 adopted
- Subcommittee revisions and additions items 1 and 2 in Article XI\
- Recommendations adopted
Available University Fund
- Technical adjustments item 1
- Agency requests 1 and 2 in Article XI
- Recommendations adopted
Higher Education Fund
- No items
- Recommendations adopted
Available National Research University Fund
- No items
- Recommendations adopted
Support for Military and Veterans Exemptions
- No items
- Recommendations adopted
General Academic Institutions, Systems Offices, Lamar State Colleges and Texas State Technical Colleges
- Cost-out adjustments items 1 and 2 adopted
- Technical adjustments items 1-5 adopted
- Formula funding item 1-4 adopted
- Non-formula funding items 1-3 adopted
- FTE methodology adopted
- Agency requests 1-50 in Article XI
- Rider revisions requested by agency items 1-5 adopted
- Subcommittee revisions and additions items 1 and 2 adopted
- Recommendations adopted
Health Related Institutions
- Technical adjustments items 1 and 2 adopted
- Formula funding items 1-8 adopted
- FTE adjustment methodology adopted
- Multi-Institution requests item 1 in Article XI
- All exceptional item requests by institutions in Article XI
- Rider requests items 1-3, 5-7 in Article XI
- Rider requests items 4, 8, 9 adopted
- Recommendations adopted
Public Community and Junior Colleges
- Technical Adjustment item 1 adopted
- Formula Funding items 1-3 Adopted
- Agency requests 1-6 in Article XI
- Schaefer – Community Colleges a few years ago bought into success points, from conversations I have had it has made a difference in the way CCs operate and has initiated a cultural change in the way the CCs function. This is a good program.
- Howard – Agree with Schaefer, has had a positive impact. Need to make sure it is funded at the agreed upon rate. We need to be cautious about how we move forward, must provide the necessary base funding.
- Recommendations adopted
Texas A&M AgriLife Research
- Agency requests 1 and 2 in Article XI
- Recommendations adopted
Texas A&M AgriLife Extension Service
- Agency request 3 adopted
- Agency requests 1 and 2 in Article XI
- Recommendations adopted
Texas A&M Engineering Experiment Station
- Agency requests 1 and 2 in Article XI
- Recommendations adopted
Texas A&M Transportation Institute
- Agency requests 1 and 2 in Article XI
- Recommendations adopted
Texas A&M Engineering Extension Service
- Agency request 4 adopted
- Agency requests 1-3 in Article XI
- Recommendations adopted
Texas A&M Forest Service
- Agency request 2 adopted
- Agency request 1 in Article XI
- Recommendations adopted
Texas A&M Veterinary Medical Diagnostic Laboratory
- Agency requests 1 and 2 in Article XI
- Recommendations adopted
Special Provisions Relating to Components of Texas State Technical College
- No items
- Recommendations adopted
Special Provisions Relating Only to State Agencies of Higher Education
- Technical adjustments 1 and 2 adopted
- Agency request 2 in Article XI
- Recommendations adopted

Article X (Decision Document)

LBB

Sarah Keyton, LBB – No outstanding issues for any of the Article X agencies.
Gonzalez – During House rules discussion it was decided House could not increase office budgets, then the Senate decided to increase office budgets. Is there any way for the House to increase office budgets though the General Appropriations Act even if it isn’t done through House rules or admin?
- Keyton – The budgets are set by House administration for the offices. The General Appropriations Act includes an appropriation for the House but does not specify how that is allocated.
- Gonzalez – Difference between Senate and House staff operating budget?
- Keyton – Do not have that info right now, can follow up.
- Schaefer – The housekeeping resolution is what guides House administration to set limits for the office. Appropriations gives funding. If the appropriation were to increase, we would need to bring the housekeeping resolution back up in order to accomplish that.
- Gonzalez – Can we bring up any type of resolution?
- Schaefer – We can bring up a resolution any time the body wishes. It does not have to go to the Senate, there is no particular process except the Speaker and body have to be willing. The Senate raised their office budgets and we kept our flat, which will be 6 years of flat office budgets.
- Zerwas – If that were the will of the House to do that there will be opportunities to “massage this thing”.
Article X adopted.

HB 4 (Zerwas) – Relating to making supplemental appropriations and reductions in appropriations and giving direction, including direction regarding reimbursement, and adjustment authority regarding appropriations.

Zerwas opening comments

Includes traditional items the legislature funds that must be paid, including shortfalls in Medicaid, foster care, and state hospitals.
Includes targeted one-time expenses related to Harvey.
Have been working on a committee sub that will include additional one-time funding for Harvey and other funding crucial to the state.
Motion to reduce some TEA funding in HB 1 because those costs are covered by the ESF in HB 4.
- Motion adopted.

LBB

Reviewed HB 4.
Appropriates $5.9b in all funds, $1.75b in GR, $2.31b in federal funds, and $1.85b from ESF.
$2.1b in GR and $2.3b in federal funds to fund Medicaid through the remainder of FY 19.
DPFS, $85.3m in GR for foster care shortfall
$245.6m in all funds for funding replacement as a result Harvey.
$1.5b to TEA.
Howard – How does this square with spending limit?
- LBB – $2.4b under the GR pay as you go limit for 18-19. $2.0b under for 20-21.
- Howard – What does this mean for any surplus GR going into 20-21?
- LBB – There will be surplus funds under HB 4.
- Howard – That is the $2.0b?
- LBB – Yes.
Schaefer – In the 85^th session supplemental was about $1b, and Medicaid shortfall was around $800m, correct?
- LBB – Yes.
- Schaefer – This time it is almost $6b, what accounts for this other than Harvey?
- LBB – Harvey is a little over $2b of this amount. All the $1.8b in ESF is Harvey related, that is the most significant increase. $1.5b is at TEA for foundation school program.
- Schaefer – Is our margin of error on Medicaid shortfall greater this time?
- LBB – This also includes transfers made out of Medicaid made during the special session last time for TRS and TEA.
- Schaefer – How did we do that?
- LBB – Those were bills passed during the special session.
- Schaefer – How much of a Medicaid shortfall do we anticipate for the next biennium?
- LBB – HB 1 as introduced fully funds projections for caseload growth, does not fully fund projections for cost growth.
- Schaefer – What is the historic percentage of cost growth, is it hard to predict?
- LBB – Do not have that information, will follow up.
Zerwas – It is common for us to “shortchange” Medicaid, knowing we have to come back. That has been what we have done for the past 6 sessions since I’ve been here. We fully anticipate enrollment but not cost growth.
- Schaefer – As my memory was refreshed on what we did with TRS care, we need to inform our colleagues who may not be hearing this meeting that the $4.4b for Medicaid in the supplemental reflects the decision made for TRS at the end of last session.
- Zerwas – I like to think of Medicaid as $1b a month of GR. We then look at what point the agency will run out of funding for Medicaid using that, it gives an idea of how expensive that program is.
Minjarez – Clarify the relative caregiver payments for DFPS? Specifically, the reduction of $8.5m in TANIF funds.
- LBB – Those TANIF funds are not eligible to be used for relative caregiver payment, we are saving those funds to be used for another purpose.
Howard – How much of the $2.0b “surplus” in GR or GRD?
- LBB – That is all GRD, so the GR balance would be projected to be negative.
- Howard – And there is additional GRD that has been used to certify the budget?
- LBB – Yes, a little under $5b total.

Todd Staples, Texas Oil and Gas Association – For

When oil and gas does well, all Texans benefit.
Funding is at historic levels due in part to the robust activities in Permian, Eagle Ford, etc.
Oil and gas in many instances makes up 60% or 80% of county budget.
Legislature should provide counties with additional funding to keep up with needs created by the boom in oil and gas.
- Appropriate amount would be $500m from ESF to address these needs. Could be administer through TxDOT.
Howard – This is a unique situation, could you comment on how the 2.5% revenue cap would impact counties would like this?
- Staples – You have to balance the needs of local growth and the ability to respond. WE have supported HB 2, the legislature needs to figure out what that percentage is.
- Howard – So you see value in a cap but with flexibility for high growth areas?
- Staples – Yes.

Talmadge Heflin, Texas Public Policy Foundation – On

Compliment the legislature for staying within population inflation, consider that to be a conservative Texas budget.
There was room left within population inflation last session for the supplemental bill.
Believe there are $3.6b in state funds and $4.4b in all funds to use in the supplemental.
Will not count funds used to make communities and agencies whole from Harvey against he population inflation cap.

Michael Lozano, Permian Basin Petroleum Association – For

There are resource issues for work on county roads even in well-funded counties.
100 billion barrels of recoverable oil assets in Permian alone. This would be around 100 years’ worth of drilling.
Opportunity to narrowly tailor funds to where they are most needed.
Howard – Reiterate that the ESF is from oil and gas severance tax, you are saying that an appropriate use of that would be to use some of what the oil and gas industry has contributed.
- Lozano – Yes, we believe this would recur the continued vitality of the economy in these areas.
- Howard – And as Mr. Staples pointed out there are high numbers of fatalities on these roads?
- Lozano – Yes as high as 11% in some places.
Munoz – Could work with you and Mr. Staples to determine the dollar amount of state incentives the industry receives. We can do everything we can to make sure the roads for all counties are in safe condition, but also work with industry to see what kinds of incentives the industry is receiving.
- Lozano – We are talking about offering county road solutions, not just adding assets to the industry. For people who live in these areas need better transportation infrastructure, roads are not just for industry.
- Munoz – My question was not about whether the roads are just for industry, more focused on the state incentives provided to the industry.
- Lozano – Will work with you on that.
Wilson – I think Munoz’s question should be expanded to all industries that are receiving incentives or are exempt from sales tax, which amounts to a subsidy. It is more than the oil and gas trucks going up those roads. We don’t want to raise the gas tax on the citizens, we should look at pay-as-you-go for roads. It is difficult or impossible to maintain road safety on small county budgets.

Roger Harmon, Johnson County Judge – For

Additional funding for roadways is needed.
5% tax cap would hurt Johnson County.

Tom Schmid, Texas State Aquarium – On

Growth of the aquarium was made possible by continued funding from the legislature.
Wildlife rescue program at aquarium provided first response to Harvey, also provides conservation and protection of coastal wildlife.
- Given certain conditions, now is the time to invest in a permanent, hurricane-proof center for the program.
- Request state funding, would get private funding to match any private funding.

Zerwas closing remarks

Will continue to work on the bill
Gonzalez – What is the timeline on HB 4?
- Zerwas – Will be voted out of committee on the 20^th.

HB 4 left pending.

Committee adjourned.