House Speaker Joe Straus handed out interim charges to 31 committees on November 19th giving a preview of some of the issues that will be addressed during the 82nd session. Straus signaled in those charges the Texas budget will be a priority.
The Committee on Appropriations was asked to monitor matters affecting the fiscal condition of the agencies and state. He directed the committee to “examine the growth of constitutionally and statutorily dedicated accounts and their utilization in the budget.”
Straus also ordered a review of “caseload trends in the Texas Medicaid program, including a review of cost drivers, factors affecting caseload increases, and regional variations,” as well as an examination of “the Texas Education Agency’s programs and services, including the Student Success Initiative, and evaluate their impact on achieving the stated agency and statewide goals.”
Education was particularly affected during the last appropriations bill. Instead of utilizing the planned $3.25 billion in state funds to cover education costs, the legislative appropriations opted to direct $4.2 billion of federal stimulus dollars into public education (the Texas Comptroller site shows $4.9 billion). The dilemma ahead is that there are no stimulus dollars expected for the next session.
Other factors contributing to the budget discussion next session include increasing costs for Medicaid, state funding going to cut local school property taxes, and the recession.
Straus also asked the Ways and Means Committee to “examine the state’s major tax exemptions to determine how the current costs and benefits compare with the original legislative objectives.” Economic turmoil has lead to a reduction in consumer spending and, as a result, sales tax collections are down more than 12 percent in the current fiscal year. This poses a problem as the appropriations bill from this session assumed modest sales tax revenue growth of 0.5 percent this year and 4.2 percent next year.
Texas has more recurring spending than recurring revenue and during the 81st Session it was pointed out there was already an $8 billion structural deficit in place, according to John O’Brien, Legislative Budget Board (LBB) Director.
Even the use of the rainy day fund may not even cover the budget gap. A recent estimate shows the gap in the next session will be $12.7 billion, according to the Texas Taxpayers and Research Association.
Additionally, the comptroller now estimates the rainy day fund will reach $8.2 billion which is lower than the January estimates of $9.1 billion.