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The Senate Committee on Finance met on January 30, 2023 to discuss SB 1, the Senate budget proposal, and to hear presentations from the Legislative Budget Board and Article I agencies. Due to inclement weather, the hearing recessed ahead of schedule and took certain agencies and public testimony out of order; the report below reflects the order in which witnesses were called to testify. An archive video of the hearing can be found here.

 

This report is intended to give you an overview and highlight the various topics taken up. It is not a verbatim transcript of the discussions 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.

 

Opening Comments

  • Chair Huffman – Discussing committee organization, introducing staff, Comptroller Heater will provide overview, & then will go into Article I
  • Chair Huffman – Meeting Mon-Thurs with Fridays reserved for any unfinished business
  • Chair Huffman – Will monitor weather for tomorrow and Wednesday’s hearing, will likely need to meet on Friday due to travel issues
  • Chair Huffman – Will break up into work groups after going over each article
  • Senators make introductions & introduce staff present at the hearing
  • Whitmire – Have a lot of unmet need
  • West – Agrees there is unmet need, think there will be bipartisan support for tax measures
  • Bettencourt – Will have the record property tax relief budget
  • Committee rules adopted

 

SB 1 (Huffman) General Appropriations Bill.

  • Chair Huffman – State fiscal status is unprecedented, managed through pandemic downturn and looking at significant revenue to the state; challenge is to craft responsible budget that is sustainable in the future years, priorities were
  • $288.7b in All Funds, reserves $15b for property tax relief, $3b to increase homestead exemption to $70k, contingent on legislation
  • Pay raise for state employees to address workforce crisis
  • Funds FSP and enrollment growth
  • $2.5b for higher ed endowment
  • $650m for community college formula
  • Funds Medicaid caseload & mental health care system transformation
  • $4.6b for border protection
  • $350m to bolster law enforcement in rural Texas
  • $900m to eliminate liability for LEO and judge pensions
  • $35.6b to address transportation needs, $150m for port capital improvement projects, $00m for ship channel improvement fund
  • $400m for restoration & maintenance of Alamo complex

 

Comptroller Glenn Hegar

  • Giving an update on BRE, provides 3 page handout to committee (link)
  • $188b for general purpose spending in 24-25, 23.6% more than current biennium
  • Ending GR-R balance of $32.7b
  • Must reserve $10.2b for Economic Stabilization Fund (ESF) and State Highway Fund (SHF) transfers, reserves would be $4.5b higher but for constitutional limits
  • Projecting 108.4b in federal and 68b in other reserve revenues, but dedicated to specific purposes and unavailable for general purpose spending
  • In total, expecting $342b in 24-25
  • $25.6b in tax collection growth, but taxpayers paying $4.5b more per month in tax due to inflation
  • Estimate does not include further swaps of state/federal dollars, supplemental approps, and any other funds like FEMA
  • Ending balance also due to other factors like rising property tax offsetting state amounts
  • Ending balance could be even higher if legislature chooses to substitute federal funds for state funds
  • BRE is more positive than anyone expected, especially considering world events, but BRE is also subject to substantial uncertainty like inflation, possible interest rate increases
  • Expecting consumer spending to slow as employment stops and people deplete savings, construction expected to slow, global recession could decrease demand for oil; though oil prices could surge as economic activity resumes in China
  • Cannot reasonably expect a repeat of this surplus next session, and certainly not the session after that; unique budget position this session
  • On ESF, constitutional cap will be $26.4b in 2024-25, at end of FY23 will be at $13.7b, at end of 2024 will need to make $3.3b severance tax transfer
  • Provides overview of severance tax transfers to ESF and SHF; transfers typically are between $1.2b to $1.5b, transfers this year are unprecedented this session
  • $5.7b in unencumbered GR balances to the ESF, by the largest so far
  • State Constitution requires transfers of ½ of any unencumbered GR balance; this does not include GR-D or appropriated funds; projecting $11.4b unencumbered GR balance total, meaning $5.7b transfer
  • These transfers happened in 1992 and 2008 before, but this one is substantially larger
  • Unencumbered balance transfer is merely an estimate and will depend on actual appropriations and other budget factors
  • Expecting ESF to be >$23b at end of 2024, at end of 2025 more than $3.5b would be transferred, but transferring everything would take us above constitutional cap so $690m would remain in GR
  • Expecting balance in ESF at end of 2025 to exceed cap for 2026-27, will not need to set aside severance tax and GR transfer for transfers for 2026-27
  • ESF is expected to lower in 2026-27, cap is tacked to funding that was elevated due to federal transfers and if these go away the cap will lower
  • If not for the cap, in FY25 would be setting aside >$6b for transfers to ESF in 2026, however this is set aside for SHF transfer due to there being no cap
  • Transfers are largest ever, reflected in the volatile O&G transfers; great deal of uncertainty in O&G prices and shown in 95% certainty projection is between $27-$183
  • Substantial one-time events in the ESF that are happening now that haven’t before, confusing and unprecedented
  • Hancock – Had a lot of ARPA money last session, do you have a breakdown? Spent on priorities
    • Hegar – Us and LBB can help you walk through this, still a asubstnatial amount that hasn’t been spent
  • Hancock – Much of it was priority spending that was denied by the federal gov
    • Comptroller’s Office has $500m for broadband, asking federal gov to be allowed to use $70m for pole replacement
  • Chair Huffman – One of the biggest ones was tuition revenue bonds
    • Still waiting to hear on some dollars Comptroller’s Office was holding for historical libraries as well
  • West – Unencumbered GR balance of $11.4b, you have a listing of all of those funds?
    • Yes, revenue projections into various accounts; all mixed in
  • West – You can break that down by article?
    • Can tell you the revenue streams, but all mixed in
  • Bettencourt – With O&G severance tax, compared to 2019-20 we have a huge increase in volume, can swing greatly
    • Have seen increases in Texas, one of the major drivers is NG prices; low of $27 is lower than where we are now in the high $70s
  • Bettencourt – With production increases we’ve seen, have a greater capability now than in the past
  • Hinojosa – On the ARPA funds, $5.4b left? But have a deadline to expend those funds, must be obligated by end of 2024 and expended by end of 2026; what does obligated mean?
    • Will need to check on ARPA rules, typically it is appropriated money and is encumbered
  • Schwertner – On the ESF cap, in 2026-27, based on BRE projections we won’t be able to transfer up to $4.5b due to constitutional cap; can you speak to wisdom of having back up balance and possibility of removing cap; have a unique choice and obligation this session to spend on priorities, return to taxpayers, or putting more away for difficult times
    • When I first started, had $6.4b in ESF and wasn’t invested; asked legislature to change this to allow investment and keep purchasing power
    • Still have 25% kept aside, need to release this to cover inflation
    • No one thought Permian Basin was going to revive again, but it has so have a unique opportunity; probably will not be a third revival & imperative we try to retain dollars for future generations; growing now, but will not always be that way
    • Useful for one-time expenses; when we have times of plenty, should leave money for future generations
  • Schwertner – Other countries have a fund to deal with volatility of O&G and address generational needs
  • Chair Huffman – There are other ways to ensure we invest in Texas like paying off the pension, Rep. Bonnen & I are working on historical fund to upkeep state buildings; ways to invest surplus for future generations
    • Variety of tools in the toolbox, many wondering what will happen with constitutional spending limit, e.g. will they bust it?
  • Chair Huffman – That’s going to be a “no”
    • Was waiting for one of you to say this
    • Staff recommended setting up a different savings account or endowment accounts for facilities, parks, etc.; similar to property tax relief fund
    • Continuing to make sure we have a healthy savings account balance is important
  • Kolkhorst – 25.6% growth in total tax collections is unprecedented, double any increase over last 30 years, but Texans paid more for taxable items @$4.5b/month on taxable items; a lot of that 25.6% growth is based on this inflation, how do we balance this?
    • Summation of the points is we’re in a once-in-a-lifetime budget position; will likely not see this high of an increase again
    • Driven in part by inflation increases; people will continue to spend more
    • Highlights volatility of O&G prices, could have a very high cash carryover balance again, but probably not
  • Nichols – Many areas in rural Texas where you can’t get broadband, but maps show these areas served by satellite when they aren’t; how are we addressing this?
    • Continuing to work with you and Rep. Ashby to try and improve upon legislation last session
    • In our map, need to go by federal guidelines and state policy, goes by advertised speeds & some entities are over-advertising speeds
    • Trying to work to ensure access apart
  • Campbell – How much debt do we have?
    • Overall, $3.2k/person, TX has a lower debt threshold than other states
    • Most of the revenue into the treasury is self-supporting, most debt acquired with very lo interest rates
    • Have looked at this over last biennia, can pay this off, but question is if we want to if the debt is self-supporting
    • Likely many other priorities to spend on from a cost-benefit analysis
  • Campbell – From a state portion, even though debt is self-supporting, if we face crunch in the future wouldn’t it be prudent to pay off the debt?
    • Have always held opinion that I try to pay off debt ASAP, but also know there are times that when other priorities win out
    • For choices this session, not sure debt payoff rises to priority 1, 2 or 3 due to how cheap the debt is
    • Spending now would put us in a position to not have to borrow in the next few years
  • Hall – Appreciate what was said about one-time event, in the past have had good surpluses and chose not to spend everything which turned out to be a good decision; inflation is a two-edged sword, money flow is very fluid that we have no control over
  • Whitmire – Price of oil projections based on?
    • This fiscal year have $92 due to high prices previously, but moving down to $70 and then back up to $80
  • Whitmire – In previous session based on $60 but then it moved up to $80
    • Yes, O&G is the most volatile stream of revenue
  • Whitmire – Do you also keep a pain index for those most affected? Property tax reductions won’t hit renters
    • No, do not have a complete matrix of needs and impact
    • Do have a 50 state indicator to compare where TX is with other states, but only by individual indicators
  • Whitmire – Could eliminate a lot of the pain with federal funding, also possibly help rural hospitals
  • Zaffirini – Of the federal funds, how much is actually available to substitute for GR?
    • A little over $5b left in federal money currently, also have some FEMA dollars that are reimbursable, somewhere around a couple billion
    • Between the two a little over $7b potentially available
  • Zaffirini – How much should we appropriate for property tax relief?
    • Will leave that up to legislature; need to have something of significance that is meaningful & need to be able to sustain it
    • No exact number, will let leadership fight that out
  • Chair Huffman – Oh we’re not going to fight
  • Creighton – You consider over 1k different metrics; in terms of pain index can look at how TX is comparing to others, e.g. CA has a >$20b deficit
    • CA had a $100b surplus just a year ago, things changed for them quickly
    • TX should not repeat mistakes CA made policy-wise, many of those that made CA well-off have moved to TX, important to keep business environment conducive for future generations

 

Comptroller of Public Accounts Agency Budget Overview

Comptroller Glenn Hegar

  • Provides overview of Comptroller’s Office functions, appreciates funding SB 1 that will cover duties and allow for IT upgrades like e-filing
  • Have provided LBB with two additional exceptional items, 1) additional funds to restructure salary rate for audit & enforcement @$6.4m and 2) legacy fiscal modernization project @$18.1m
  • As people move to CAPPS, other legacy systems need to be updated and modernized
  • Also need to maintain buildings outside of Austin, a lot of deferred maintenance need
  • Bettencourt – Asking for 23 FTEs, there are islands of non-automation left in the Office
    • Hoping for help with that this session
  • Bettencourt – Also a queue in arbitration, any other areas?
    • That one is a top priority, legacy system & could increase efficiency with upgrade
    • Trying to work with team to figure out solutions to solve backlog, one of those is automation
  • Bettencourt – Could use focus on this area, homeowners are queued up over 90-100 days
  • Paxton – About Opioid Abatement Fund, some constituents in district have nonprofits addressing addiction; SB 1827 went into effect on Sept. 1, 2021, money meant to address opioid crisis in TX, Opioid Abatement Council was to oversee use of money; has your Office received all of the appointments for the Council?
    • Received all the appointments midsummer around June, have had two meetings, one was organizational, bought agencies into present for Council
    • With fentanyl, discussion is much broader than it used to be
    • Didn’t want Comptroller’s Office to get ahead of Council, want their direction before proceeding
    • Have somewhat sacrificed expediency to create system that treats everyone fairly and everyone understands the process; taking slow approach to get it right
  • Paxton – Concern is that a slower approach is costing lives, fentanyl being just one way; received first funds and spending authority in Sept. 2021; three tranches with 70% to be decided on by the Council, have they created a process yet?
    • No is the short answer, one meeting was to make sure they knew process, second was to catch them up, third is Comptroller putting out RFP to help us understand funding going out, incl. district differences, formulas for funding, health regions, etc.
    • Legislature has budget decisions on 15%, 15% was to go to local govs and Comptroller’s Office is the trust company
    • Have only had a 60% response from local govs
  • Paxton – Have spoken with Collin County Judge and they have decided what to use money for, but they haven’t received anything
    • System is not set up to distribute
  • Paxton – It’s millions of dollars, no decision making needed to disburse money to local govs
    • If legislature or someone could’ve given us a list of who to wire money to, we could’ve started; some litigating, some not, those who were not receive no dollars
    • Trying to make sure we know exactly who to wire to
  • Paxton – Who is the point person in your office?
    • At the end of the day me as head of Office, Amanda Lopez point for Council, Dickey Cobb for entities receiving federal money, Mike Reiseg for the trust company
  • Paxton – Have you had requests from cities & counties to receive money that has been allocated for them?
    • Have had a few different requests for things like boys & girls clubs, info packets, etc.
    • Have had some wanting us to go faster, but also remember crisis of CPRIT and how reputations were tarnished because expediency was prioritized
    • Trying to handle 70% responsibly
  • Paxton – 15% that locals are expecting is held by you
    • Didn’t all arrive until last year
  • Paxton – Authority and funding was given in Sept. 2021
    • Until we have process set up will send it out, 60% have responded
  • Paxton – Have you sent it to those who have requested?
    • No, trying to get a total picture before sending money out; if members want to help, welcome it
    • Collin County receipt?
  • Paxton – Somewhere in the range of $12m, a lot of money that could be used for education
  • Chair Huffman – Will move on, was my bill, was by design very protected
  • West – On the performance measure targets, there is a reduction in number of audits?
    • Stopped hires during COVID, large amount of retirement during COVID & have had hard time bringing in new auditors; getting this sorted will bring more revenues
  • Campbell – On Opioid Abatement Fund, expediency is vulnerable to waste

 

Legislative Budget Board

Jerry McGinty, LBB

  • Link to presentation
  • Reduction in federal funds is largely the reduction in COVID expenditures in 2022-23, ARPA funds not reflected in introduced bill
  • $9.7b in the $15b property tax relief fund is a transfer from GR into property tax fund, essentially spent $21.6b in GR in this budget; contingency in rider that avoid spending limit
  • Reduction in General Government of about $700m, reflects reductions in Office of Gov Trusteed Programs transfer to TMD
  • Also around $1b where COVID spending is replaced by GR

 

Julie Lindsey, LBB

  • FSP fully funds requirements set forth in law, including all enrollment growth
  • $15b in property tax relief, $3b intended to increase homestead exemption
  • $5.5b reduction in Art II related to reduction in COVID funds
  • Decrease in $6.9b in Medicaid & CHIP due to end of continuous coverage requirement, but offset by increased GR need of $1.8b in less favorable FMAP
  • $1b in behavioral health funding, on top of $2.3b in state hospital construction
  • Higher ed has $3.2b in contingency funding split between higher ed endowment funds and funding for public universities
  • $30.5b for highways, $550m for ship channel and ports
  • $4.6b for border security, incl. salary adjustments for LEOs
  • $400m for the Alamo, $500m for Gulf Coast Protection, $300m for rural LEO fund
  • Recommendations incl. statewide salary adjustment of 5% in both FY24 and FY25, schedule A will see even bigger raises
  • $148.9m in supplemental to provide 3 months of these increases in the current biennium
  • $855m for pension liabilities in LEO and judicial pensions & to increase state contribution for TRS

 

Jerry McGinty, LBB

  • $43.6b in pay-as-you-go limit, $4b in tax spending limit, $17.1b in consolidated GR limit
  • Tax spending limit will probably be the controlling limit this session, limits growth in state tax revenues not designated by the Constitution like Sporting Goods Sales Tax or Motor Fuels Tax
  • Based on 12.33% approved by LBB in late November 2022
  • Limits take into account supplemental appropriations
  • 202-23 limit was $3.8b
  • Out of $15.8b ARPA, approx. $12b was appropriated via legislation last session leaving $3b, there were some adjustments that were ineligible that were swapped with GR; incl. adjustments about $5.4b left, not included in SB 1
  • ARPA projects need to be completed and funds spent by 2026
  • Hinojosa – This was my concern, projects will need to have short timeline
    • McGinty – Yes, need to be mindful of 2026 deadline
  • Hinojosa – So money obligated but not used would need to be returned or swapped?
    • Correct
  • Kolkhorst – $1.8b to fund 5% salary increases in FY24 & FY25, 5% in each biennium?
    • Yes, one with caveat, but supplemental bill intends to start that 3 months early
    • This is a minimum of 5% with $3k floor, employees making less than $60k will see a higher percentage increase
  • Kolkhorst – minimum raise is $3k per year, would apply to part-time proportionally?
    • Yes, .5 FTE would be half those numbers
  • Kolkhorst – Many exceptional items are employee raises, does this address those?
    • LBB compiled all the agencies’ initial requests, overall funding needs are met
  • Kolkhorst – Nothing in budget gives specific teacher pay raise?
    • Correct, present in intent language at end of TEA’s budget, but no amount appropriated
  • Kolkhorst – For TRS, increasing state contribution from 8% to 8.25%, what is the number attached?
    • Can get this for you
  • Kolkhorst – Substantial number, will exceed employee match
  • Chair Huffman – Yes, bill phased this in over 3 sessions
    • Rider 21 also states intent to provide benefit enhancement if fund is actuarially sound
  • Kolkhorst – 13th check or COLA?
  • Chair Huffman – 13th check; each percentage COLA increase is $1.1b
  • Kolkhorst – 13th check is much higher percentage of what we give
  • Kolkhorst – $600m for school admins to implement school safety initiatives, minimum per campus?
    • Lindsey – $600m is more of a placeholder, some discussion with TEA to get a plan & how it will be implemented; wanted to indicate that funding was there
  • Chair Huffman – Weather is moving in a little faster than anticipated, Senate & house closing at 2pm, Finance will not be meeting Tuesday, & will try to meet @1pm Wednesday
  • Hall – Money for vehicle replacements, number of EVs?
    • Not sure, can get this to you

 

Chair Huffman called up Historical Commission out of schedule

 

Historical Commission Agency Budget Overview
John Nau, Historical Commission

  • Requesting $45m to continue important courthouse preservation program
  • Support establishment of safekeeping trust fund that will support work into the future
  • Major work is needed at battleship San Jacinto
  • 27 FETs for state sites program, 16 FTEs for other agency programs; additional positions will help support IT operations statewide and manage the 250 historic building covenants]
  • Exceptional items for IT equipment to communicate between sites spread across state, need a capital authority rider to spend $2.5m on deferred maintenance for historical sites
  • Texas Holocaust, Genocide, and Antisemitism Advisory Commission is requesting $200k and one additional FTE to support antisemitism duties added last session
  • Hall – Any of the new vehicle purchases EV?
    • Will leave that up to staff, have some vehicles that are probably not good to be out on the street
    • Some sites are so far into he country, might be impractical for EVs
  • Hall – Could you have staff let us know if you’re planning to do EVs

 

Public Testimony

Rahul Srinivasan, Texas 2036

  • Important to speed up implementation of TX’s broadband plan; TX is slated to receive billions upon approval of FCC broadband maps
  • Legislature should get with stakeholders to ensure max amount of dollars
  • Thanks legislature for approach to ERS & long term liabilities

 

Luther Elmore, AFSCME Texas Retirees

  • Public workers earned less than in private sector with understanding that pensions would provide later
  • ERS annuities have not kept pace, last COLA was 2001, ERS members have not had 13th check in over 20 years; time to support COLA with surplus

 

Cyrus Reed, Sierra Club Lone Star Chapter

  • Federal funding opportunities are coming, some with no guidelines yet; budget allows for state agencies to accept federal money so long as they inform
  • Want to make sure budget has flexibility to allow this
  • Would like to also see state get credit for air pollution with EPA when federal funds are drawn down

 

Carla James, RSEA of TX

  • Appreciates budget on behalf of retirees and taxpayers
  • Any way to pay off debt for the state is important, one way you’re doing this is putting $1b into ERS, will save interest payments
  • Should discuss 13th check for state employees

 

Ann Graham, Texans for the Arts

  • TX Commission on Arts request for $3m increase for grants, grants from TCA have benefited constituents, but have not increased since 2014; supports increase in grant funding

 

Gretchen Pruitt, Texas Library Association

  • TSLAC plays an essential role of enhancing service of all libraries, budget funds essential services
  • Supports $4.4m exceptional item for broadband readiness

 

Ann Bishop, Texas Public Employees Association

  • Asks that bill registration be changed

 

Heidi Smith, Texas Cultural Trust

  • Highlights Texas Cultural Trust report showcasing economic and other benefits
  • Supporting exceptional item 2 to increase cultural district grant funding by $5m

 

LBB Presentation on Comptroller of Public Accounts

Charlie Smith, LBB

  • $694m in All Funds, $29.6m increase primarily in GR for salary adjustments
  • Reallocation of $5.6m to budget for staffing
  • CAPPS funding at $96.8m for ongoing support
  • Increase of $3m for capital budget allowance
  • Recommending deletion of Rider 20, funding now built into agency’s base
  • Recommendations update list of agencies for CAPPS deployment

 

LBB Presentation on Comptroller of Public Accounts – Fiscal Programs

Charlie Smith, LBB

  • $1.77b in All Funds, decrease of $34m, 43 FTEs per year, increase of 23 FTEs
  • $151.8m for mixed beverage tax reimbursements, $47m to continue state highway funding
  • $350m addition for new grant program for rural LEOs
  • Recommendations incl. complete payoff of Texas Guaranteed Tuition plan
  • Recommending updating funding for some riders, Opioid Abatement Council rider wording needs to be updated to reflect legislation passing

 

LBB Presentation on Historical Commission

KJ Curtiss, LBB

  • $75m All Funds, $59.5m decrease, 41 FTE increase, offset by decrease of 5 FTEs due to ending of grant related to Hurricane Harvey
  • Sporting Goods Sales Tax aligns with July 2022 CRE; also seeing decrease associated with ARPA & other federal funds
  • Reduction of $1.8m is needed for Sporting Goods Sales Tax proceeds to align with BRE
  • Agency has provided updated on exceptional items, total $219m and 1 FTE, new item supports Texas Holocaust, Genocide, and Antisemitism Advisory Commission
  • Nichols – Battleship Texas was taken out of Historical Commission, $15m?
  • Chair Huffman – I think there is more than that, but addressing in supplemental; tried to acknowledge in the budget that we would be addressing
  • Nichols – So somewhere in that number is money for the4 Foundation for the ship itself?
  • Chair Huffman – In TPWD

 

LBB Presentation on Employees Retirement System

John Posey, ERS

  • All Funds @$7.9b
  • Recommendations increase health insurance by $255m or 7%
  • Payroll growth will grow by 0.77%, some of this also due to statewide salary adjustments
  • $808.2m for LECOS retirement fund, estimates put this on path to depletion in 2050, $653m in unfunded liability; since the LAR ERS had an updated actuarial assessment, new depletion in 2045, unfunded liability @$750m; state contributions are currently not sufficient to pay normal cost
  • Judicial Retirement also on path to depletion by 2076, $95m unfunded liability, updated LAR depletion date is 2069, unfunded liability @$89m; $105m to address unfunded liability, $6.5m to increase state contribution
  • Cost of COVID in 2021 was $165.1m, but decrease of $57.8m due to decreased services
  • Group benefits will be depleted in 2027, due to increase in health care expenditures
  • ERS has four different trust funds, expected $37.3b at beginning of FY24
  • First exceptional item accounts for updated data on LECOS and judicial plans, ERS has another actuarial evaluation in February & numbers are likely to change again

 

Employees Retirement System Agency Budget Overview

Porter Wilson, ERS

  • Appreciates funding in SB 1
  • ERS fully funded in 2054, assuming future legislatures continue to fund legacy payment it would cut off 5 years and be funded by 2045
  • Overall $26b in savings by paying off unfunded liabilities
  • Actuarial updates drawn from new evaluations based on conditions at the end of FY22
  • Expecting death benefits to go up another 5% this year when Board adopts new CPI

 

Public Testimony

Tyler Sheldon, Texas State Employees Union

  • Appreciates putting employees first in the state budget, any additional funding into ERS saves state considerably on interest on the accrued deficit
  • Benefit enhancements haven’t been discussed for ERS before because it was on the road to depletion, but ERS will be within 31 years of actuarial soundness so can look towards COLA, 13th check, or enhancement

 

LBB Presentation on Social Security & Benefit Replacement Pay

John Posey, ERS

  • $2.2b in All Funds, $234m increase
  • Recommendations increase Social Security by 12% over biennium, assuming federal law on benefits does not change
  • Benefit Replacement Pay All Funds decreased by $3.2m because of increased turnover of employees covered by the benefit

 

LBB Presentation Texas Emergency Services Retirement System

John Posey, ERS

  • $4.1m All Funds, increase of 4.6%
  • Agency is appropriated a lot of GR-D from Volunteer Firefighter Assistance Fund, $60k increase to this account
  • Sunset recs incl. strengthen documentation process and follow up on late payments
  • Agency exceptional item would increase staff salary to offset high turnover
  • Kolkhorst – Is the exceptional item after the base bill raised salaries?
    • Yes

 

Texas Emergency Services Retirement System Agency Budget Overview

Tiffany White, TESRS

  • Provides overview of Texas Emergency services System and TESRS
  • Actuarial evaluation in 2022 showed 30 year amortization, actuarially sound with 1/3rd contribution from legislature
  • Exceptional item is an equity adjustment, different than the salary adjustment in SB 1

 

LBB Presentation on Cancer Prevention and Research Institute of Texas

KJ Curtiss, LBB

  • Rider 4 transfer to DSHS for Cancer Registry, CPRIT overall request lowered by $6.2m to reflect this transfer
  • Projected issuance expected in 4th quarter 2024
  • West – Since 2013, CPRIT has received $7.5m in revenue sharing? How does this compare to other institutions in other states? If you can find this we would appreciate it
    • Yes sir

 

Cancer Prevention and Research Institute of Texas Agency Budget Overview

Wayne Roberts, CPRIT

  • Despite obstacles over last 3 years, CPRIT has maintained momentum, no additional request beyond SB 1, though asking to include same COLA for exempt salaries as well; especially important for Chief Science Officer
  • West – What are comparable programs in other states?
    • California Institute of Regenerative Medicine, just over $6b in authorization, will need to check on revenue
    • CPRIT has around $8.9m
  • West – CA is the only state with a comparable program
    • Only other state is Massachusetts, around $45m to $50m/year, TX is unique, second largest funder of cancer research in the world
    • Difficult to compare to other states as TX program is unique, also does product development
  • West – Just trying to figure out if our program’s revenue sharing is comparable to other programs
    • Will do some research and get back to you
  • Hinojosa – Voters approved $6b in bond authority; there were concerns initially that a lot of funding was going only to a few institutions, you’ve since made adjustments to try and account for some emerging medical research institutions?
    • Correct, developed Texas Regional Excellence in Cancer award that only applies to institutions 100 miles away from major institutions
    • Second round of applications were quite successful
  • Hinojosa – Want to make sure we’re taking care of other regions of the state
    • Released an additional 3 request for applications targeting regional institutions
  • Campbell – Seems like revenue sharing is very low, $8.9m since onset?
    • At this point in time, yes; if drugs released at onset, just now would be making through Stage 4 trials

 

LBB Presentation on Commission on State Emergency Communications

George Purcell, LBB

  • $161.9m All Fund reduction, 56% reduction from 2021-22; largely caused by removal of one-time federal grant
  • Majority of funds are generated from statutory emergency services fee, returns are down, wired is also down; Rider 9 required CSEC to develop plan for continued funding on 911 services
  • Deleting two riders, unexpended balances for ESI and 911 services report
  • Exceptional items include increase in Exec. Dir. salary due to compression
  • Hancock – Essentially next gen would be moving owning our own server to signing up for ongoing cloud service; changes from one-time payment to ongoing fee & will change how we need to address it
  • Nichols – Are we certain that’s not a proprietary system, won’t need to rebuild in the future?
    • Agency might be able to answer

 

Commission on State Emergency Communications Agency Budget Overview

Kelli Merriweather, CSEC

  • Will not need to replace everything, next gen is based on i3 standard and any company providing the service must meet this standard & be interoperable
  • Nichols – So no restriction on the data?
    • Data belongs to the state or public entity that created it
  • Bettencourt – So you have standardized data files and structure and you can move from one platform to the next so you don’t have stranded data?
    • Yes, this is the vision of next gen 911
  • Bettencourt – Any platform limitation on hardware running this or not?
    • Will need new devices to update due to age, wear & tear
    • 911 equipment being sold now is interoperable
  • Appreciates funding in SB 1, supports programs and helps preserve GR-D balances
  • Wrapping up transition to next gen 911, proud of removal of funding strategy
  • Campbell – Will the change up make us more vulnerable to cyber threats?
    • Should make us more resilient because it is interoperable
  • Campbell – Someone else is storing our data?
    • Cyber profile does increase because it’s in an IP environment, doing a cybersecurity assessment with federal funding

 

Public Testimony

Robert Sartin, American Cancer Society Cancer Action Network

  • Supports CPRIT funding in SB 1, need ongoing to fight cancer and keep everything in working order

 

Julie Guillot, Leukemia & Lymphoma Society

  • Urges legislature to not cut cancer research, TX needs its own funding program

 

LBB Presentation on the Pension Review Board

John Posey, LBB

  • $2.4m over the biennium, a little lower than base, FTE cap continued at 13 FTEs
  • $600k dollar reduction due to IT funding in supplemental bill from last session
  • Agency has requested 2 year extension of one-time IT funding, agency states projects were delayed due to difficulty of contracting; database transfer is expected to be complete in 2023, portal to begin in summer of 2023
  • Exceptional items incl. salary increases

 

Pension Review Board Agency Budget Overview

Stephanie Leibe, PRB

  • Provides overview of PRB operations
  • Staff has made significant progress on rebuilding internal database, in process of launching new main website
  • Exceptional items incl. Exec. Dir. salary increase, lost last two Exec. Dir. to local retirement systems who can offer much higher salaries

 

Amy Cardona, PRB

  • PRB has experienced significant turnover and has had difficulty attracting new applicants, due to inability to stay competitive in salaries
  • $133k exceptional item to enhance salaries to support recruitment and retention; PRB requires specialized workers

 

Texas Veterans Commission Agency Budget Overview

Laura Koerner, TVC

  • Appreciates funding in SB 1
  • LAR supports mission of TVC and continues services to 1.5m veterans in Texas
  • First 4 exceptional items addressed in SB 1

 

Tom Palladino, TVC

  • Appreciates funding in SB 1
  • Items not included in SB 1 recommendations: 1) asking for 10 FTEs for veterans mental health program, 2) increase in claim support for veterans, 3) Woman Veterans Program support, 4) 1 FTE for veteran entrepreneur program
  • Hinojosa – Commends TVC and leadership of Palladino
  • West – Asks about funding from Texas Loot Commission to Veteran Treatment Court
    • Palladino – Projected reduction in revenue from Lotto Commission
    • Koener – First funding priority
  • Chair Huffman – Usually projections are lower for the Lotto Commission than they end up being

 

Closing Comments

  • Chair Huffman – Will start with Commission on the Arts first thing Friday morning