Wayne Pulver, Assistant Director of the Legislative Budget Board (LBB), agreed with Appropriations Chairman Jim Pitts, R-Waxahachie, on Tuesday that an expected budget shortfall next session of $15-18 billion is a reasonable assumption. The last estimation circulated from the LBB was back in March, and published in HillCo Client Advisory v 126. At that time John O’Brien, Director of the Legislative Budget Board (LBB), who spoke to the House Committee on Appropriations, estimated a budget deficit of $11billion for FY 2010-2013.
However, as more details emerge about assumptions underlying budget shortfall estimations, it becomes clear why estimations vary. For example, when O’Brien offered his estimation of an $11 billion shortfall, he also noted the estimation assumed the state would see $75 billion in revenue and did not include the following scenarios:
- $12 billion that was in the stimulus section (some of those items were one time funding);
- A lower projection on property tax rate growth;
- Enrollment growth;
- Criminal Justice prison population “creep up”; and
- HHSC case load increase (it was predicted the caseloads would grow at 2% but they have grown 8%).
Pulver was also questioned about other variables that could dramatically affect the predicted shortfall estimation. His shortfall estimate assumes no enhanced FMAP continuation. The Federal Medical Assistance Program (FMAP) is the federal government’s match of Texas’ expenditures for most Medicaid services. Over a biennium, that could be an additional source of funding of up to $4 billion; but it is not clear yet if the extension will end in December or possibly be extended by the U.S. Congress.
The economy is showing small signs of recovery according to testimony from the Comptroller’s office but many factors are still uncertain leaving the total estimated shortfall uncertain as well.
