Among the work to be completed during each of the Texas Legislature’s biennial sessions is adoption of a two-year state budget. This process differs from many other states, who have dedicated legislative sessions for writing their budgets. While on paper this process appears to be a rushed timeframe, the budget work actually begins in advance of the official start of the legislative session.
Already, state agencies are preparing their legislative appropriations requests, or LARs, which itemize funding requests and include performance measures for those appropriations. Although the legislature cannot take any votes or advance bills out of committee, the legislature will hold “interim” committees later this year to receive and begin to consider these appropriations requests.
State Comptroller Glen Hegar is regularly estimating the state’s projected revenue for the upcoming biennium. This summer the comptroller released the most current revenue estimate, including a $2.8 billion increase over previous estimates.
Citing rising oil prices and production, the comptroller estimates the state will have $110 billion in general revenue to spend on the 2020-2021 budget, up from $107 billion that was estimated in October.
Lawmakers will receive a revised budget estimate in January which will be the official numbers that budget writers will work from.
The current total budget is $216.8 billion, about half of that coming from general revenue and the balance provided by federal grants, allocations and reimbursements. This money is largely dedicated to healthcare and other social services. Texas General Revenue funds can be spent in any manner the legislature sees fit.
As a whole, the business community is generally most interested in the education and transportation budgets; an educated workforce and reliable infrastructure help to recruit and keep Texas businesses. The current biennium appropriates $59.9 billion for its education budget and $26.6 billion for transportation.
Texas has been criticized by education advocates for consistently being at the bottom of the list nationally for per pupil state spending. Currently, Texas spends about $9,400 per student, ranking them 36th in the nation. As much as the business community would like that number to change, it’s unlikely that we’ll see an education spending windfall this session. That’s because big ticket items such as Medicaid funding and Hurricane Harvey relief will likely take priority. The additional revenue could also be used to meet the state’s $2.5 billion commitment to the state highway fund, which is good news for business.
With almost universal opposition to any new or increased taxes, not all priorities can be met. In fact, lawmakers are receiving political pressure to move away from the state’s reliance on property taxes, which prevents homeowners from actually ever owning their home.
Last session, property tax reform was a named priority for the lieutenant governor and governor, but failed to pass when the House and Senate disagreed on details to such reform. Should property tax reform pass, nobody has identified how to replace that revenue. Adoption of a state income tax would be political suicide and many believe an increased sales tax to be regressive. These are thoughtful considerations if the state is serious about financing a reliable infrastructure, effective public education system and meeting the needs of our public safety net.
Click here to read part 1: how Hurricane Harvey will impact the legislature.
Click here to read part 2: healthcare and funding.