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Awash in money, Texas House, Senate align their budgets, try to avoid ‘spendthrift’ label

AUSTIN — Legislative leaders began their waltz toward writing a budget this week almost in harmony, avoiding public displays of disunity and hewing to the Republicans’ unwritten rule that they shouldn’t launch much new spending, even when the state’s awash in money.

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Only a few differences between the House and Senate’s initial or “base” budgets surfaced.

The House wanted to accept last month’s offer by the six chancellors of university systems for a tuition freeze, if lawmakers cough up nearly $1 billion to help at-risk students and veterans afford college and bridge funding shortfalls for employee health coverage. The Senate did not.

The Senate staked out part of the tax cut package and new spending on K-12 schools it favors – a $70,000 homestead exemption and a vague pledge to increase teacher salaries. The House was even vaguer, signaling it wants a commensurate amount of property tax relief and plans to boost education spending. It just isn’t ready to specify how it’d cut taxes or how much or in what ways it’d boost school finances.

And the House added language saying it’s lawmakers’ “intention” to spend $1.1 billion to put more air conditioning in prisons, while the Senate only said that the prison system should keep logging indoor temperatures during the hottest months. One in five of the state’s 100 lockups have no air conditioning, and dozens of inmates and guards fall ill each year. Lawsuits abound.

“Once the [budget-writing] committees meet, the bills are going to start diverging much further than they are now,” said Dale Craymer, president of Texas Taxpayers and Research Association, a tax-research organization mostly supported by business. “But it was a positive sign for the process that they’re at least starting from the same numbers.”

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Both the Senate and the House’s budgets would spend $288.7 billion over two years, including federal funds and other revenue. Of that, $130.1 billion would come from state general revenue.

Paying for foster care

Two other House-Senate differences affect the state’s troubled foster care system. The chambers took different approaches to applying $50 million per year to foster care provider payments, with the House saying rates for caring for “basic” and “moderate” kids – the majority of children in foster homes – should go up. The Senate simply said “increase foster care rates,” with no restrictions.

Also, the House signaled it would embrace a long-awaited plan for overhauling how rates are calculated. Advocates hope it will pinpoint how much money is needed to train caregivers for specific child needs. The Senate, whose chief child-welfare policy writer, Brenham GOP Sen. Lois Kolkhorst, has criticized how long it’s taken state bureaucrats to fashion the plan, was silent about the new rate-setting method.

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Katie Olse, executive director of the main provider group, the Texas Alliance of Child and Family Services, said more needs to be done. But the base budgets are a good start, she said.

“Right out of the gate, the Legislature is prioritizing investment in foster care services and Community Based Care,” she said, referring to a regional procurement of services that GOP leaders believe will produce better results than the “legacy” foster care system.

For the most part, though, the House and Senate plans align. Each would spend $288.7 billion over two years; $130.1 billion of it, state general revenue.

In identical language, each chamber wants to apply $2.5 billion toward a new research endowment for the four university systems not benefiting from the Permanent University Fund, including the University of North Texas System. No bill has been filed. The spending would be contingent on passage of a bill, which would roll into the new Texas University Fund a $900 million balance left in an endowment for the “non-PUF” schools launched in 2009.

Both chambers’ spending plans, which include a second bill to plug holes in the budget passed last time, would grant 5% pay raises to most state employees, put $1 billion towards shoring up their pension fund, ramp up border security spending to $4.6 billion and immediately spend $2.3 billion on state mental hospitals. Lt. Gov. Dan Patrick has said that a proposed constitutional amendment, to build even more mental hospitals, should be forthcoming.

Tax relief, border security, state worker pay raises among Texas lawmakers’ top wishes

On Wednesday, Patrick hailed the Senate’s budget, noting it’s $4 billion below a tax spending limit. Senate Finance Chairwoman Joan Huffman, R-Houston, called it “a conservative budget that addresses challenges facing our state and does not exceed population growth times inflation.”

Speaker Dade Phelan, R-Beaumont, and House Appropriations Chairman Greg Bonnen, R-Friendswood, issued no statements – just a bill that, with 1,033 pages, logs in at the exact same length, with the same top-line numbers on total proposed spending, as the Senate’s.

‘Still $42 billion left’

In the fine print were clear signals the GOP leadership would love to do a lot but it’s hindered by spending caps in the Texas Constitution and antipathy toward spending among some of the state Republican Party’s most fervent activists.

Wary about appearances they’re racing to spend a record-breaking revenue surplus, legislative leaders peppered their budgets with placeholder provisions that amounted to winks and nods.

For instance, both chambers’ bills raise the tantalizing prospect of “benefit enhancements” for retired teachers but say that’s contingent on a determination that the Teacher Retirement System “is considered actuarially sound.” A “13th check” was just paid to retired educators. The base budgets, though, don’t even specify that another such one-time payment is the goal.

Texas is looking at a $32.7 billion ending balance of state discretionary money in the current cycle, three times bigger than the previous record for a carryover balance – $11.2 billion, for the 2022-2023 cycle.

In the biennial revenue estimate he issued last week, Comptroller Glenn Hegar forecast strong revenue growth. He expects general revenues to pump out another $155.5 billion in the next two years, up from this cycle’s $137.8 billion.

Together with more than $5 billion of unspent federal COVID-19 aid, the carryover and the new money mean that lawmakers actually have as much as $50 billion or more to play with.

That’s not even considering the $27.1 billion of energy-tax money Hegar expects to build up in the state’s rainy day fund.

Leaving aside the state’s savings account, “there’s still $42 billion left over that they haven’t said much about,” Craymer, the business tax organization chief, said of legislative leaders.

“We know there’s going to be a big infrastructure package … and they both talked about putting more money into public education,” he said. “There’s also some assessment of where they stand on the spending limit. They’re trying to do a dance around that.”

Under the state Constitution, the only bill lawmakers are required to pass in the just-started, 140-day session is the two-year budget.

But spending caps and the GOP majority’s penchant for tightfisted budgeting make it unlikely that Republican leaders will spend nearly as much as they could.

While Abbott and Patrick have spoken of the historic chance lawmakers have to make prudent “investments,” their main focus has been reducing property taxes – with Abbott more exuberant in his promises, while Patrick – whose bona fides as a property tax critic are unassailable – has been more restrained.

Patrick and Huffman touted how the Senate’s base budget would reserve $15 billion for property tax relief. But $3.1 billion of that would simply help maintain school tax rate reductions passed in 2019. Cutting rates helps businesses as well as all categories of residential property owners. Increasing homestead exemptions helps only homeowners.

The one-third reductions in school maintenance and operations tax rates passed in 2006, which at the time cost $14 billion in state dollars for two years, now cost $20 billion every cycle if adjusted for inflation, said Eva DeLuna Castro, a state budget expert formerly with the progressive think tank Every Texan.

Texas’ budget surplus soars to $33B, fueling demand for tax cuts, one-time ‘investments’



story by The Texas Tribune Source link

AUSTIN — Legislative leaders began their waltz toward writing a budget this week almost in harmony, avoiding public displays of disunity and hewing to the Republicans’ unwritten rule that they shouldn’t launch much new spending, even when the state’s awash in money.

Only a few differences between the House and Senate’s initial or “base” budgets surfaced.

The House wanted to accept last month’s offer by the six chancellors of university systems for a tuition freeze, if lawmakers cough up nearly $1 billion to help at-risk students and veterans afford college and bridge funding shortfalls for employee health coverage. The Senate did not.

The Senate staked out part of the tax cut package and new spending on K-12 schools it favors – a $70,000 homestead exemption and a vague pledge to increase teacher salaries. The House was even vaguer, signaling it wants a commensurate amount of property tax relief and plans to boost education spending. It just isn’t ready to specify how it’d cut taxes or how much or in what ways it’d boost school finances.

And the House added language saying it’s lawmakers’ “intention” to spend $1.1 billion to put more air conditioning in prisons, while the Senate only said that the prison system should keep logging indoor temperatures during the hottest months. One in five of the state’s 100 lockups have no air conditioning, and dozens of inmates and guards fall ill each year. Lawsuits abound.

“Once the [budget-writing] committees meet, the bills are going to start diverging much further than they are now,” said Dale Craymer, president of Texas Taxpayers and Research Association, a tax-research organization mostly supported by business. “But it was a positive sign for the process that they’re at least starting from the same numbers.”

Both the Senate and the House’s budgets would spend $288.7 billion over two years, including federal funds and other revenue. Of that, $130.1 billion would come from state general revenue.

Paying for foster care

Two other House-Senate differences affect the state’s troubled foster care system. The chambers took different approaches to applying $50 million per year to foster care provider payments, with the House saying rates for caring for “basic” and “moderate” kids – the majority of children in foster homes – should go up. The Senate simply said “increase foster care rates,” with no restrictions.

Also, the House signaled it would embrace a long-awaited plan for overhauling how rates are calculated. Advocates hope it will pinpoint how much money is needed to train caregivers for specific child needs. The Senate, whose chief child-welfare policy writer, Brenham GOP Sen. Lois Kolkhorst, has criticized how long it’s taken state bureaucrats to fashion the plan, was silent about the new rate-setting method.

Katie Olse, executive director of the main provider group, the Texas Alliance of Child and Family Services, said more needs to be done. But the base budgets are a good start, she said.

“Right out of the gate, the Legislature is prioritizing investment in foster care services and Community Based Care,” she said, referring to a regional procurement of services that GOP leaders believe will produce better results than the “legacy” foster care system.

For the most part, though, the House and Senate plans align. Each would spend $288.7 billion over two years; $130.1 billion of it, state general revenue.

In identical language, each chamber wants to apply $2.5 billion toward a new research endowment for the four university systems not benefiting from the Permanent University Fund, including the University of North Texas System. No bill has been filed. The spending would be contingent on passage of a bill, which would roll into the new Texas University Fund a $900 million balance left in an endowment for the “non-PUF” schools launched in 2009.

Both chambers’ spending plans, which include a second bill to plug holes in the budget passed last time, would grant 5% pay raises to most state employees, put $1 billion towards shoring up their pension fund, ramp up border security spending to $4.6 billion and immediately spend $2.3 billion on state mental hospitals. Lt. Gov. Dan Patrick has said that a proposed constitutional amendment, to build even more mental hospitals, should be forthcoming.

Tax relief, border security, state worker pay raises among Texas lawmakers’ top wishes

On Wednesday, Patrick hailed the Senate’s budget, noting it’s $4 billion below a tax spending limit. Senate Finance Chairwoman Joan Huffman, R-Houston, called it “a conservative budget that addresses challenges facing our state and does not exceed population growth times inflation.”

Speaker Dade Phelan, R-Beaumont, and House Appropriations Chairman Greg Bonnen, R-Friendswood, issued no statements – just a bill that, with 1,033 pages, logs in at the exact same length, with the same top-line numbers on total proposed spending, as the Senate’s.

‘Still $42 billion left’

In the fine print were clear signals the GOP leadership would love to do a lot but it’s hindered by spending caps in the Texas Constitution and antipathy toward spending among some of the state Republican Party’s most fervent activists.

Wary about appearances they’re racing to spend a record-breaking revenue surplus, legislative leaders peppered their budgets with placeholder provisions that amounted to winks and nods.

For instance, both chambers’ bills raise the tantalizing prospect of “benefit enhancements” for retired teachers but say that’s contingent on a determination that the Teacher Retirement System “is considered actuarially sound.” A “13th check” was just paid to retired educators. The base budgets, though, don’t even specify that another such one-time payment is the goal.

Texas is looking at a $32.7 billion ending balance of state discretionary money in the current cycle, three times bigger than the previous record for a carryover balance – $11.2 billion, for the 2022-2023 cycle.

In the biennial revenue estimate he issued last week, Comptroller Glenn Hegar forecast strong revenue growth. He expects general revenues to pump out another $155.5 billion in the next two years, up from this cycle’s $137.8 billion.

Together with more than $5 billion of unspent federal COVID-19 aid, the carryover and the new money mean that lawmakers actually have as much as $50 billion or more to play with.

That’s not even considering the $27.1 billion of energy-tax money Hegar expects to build up in the state’s rainy day fund.

Leaving aside the state’s savings account, “there’s still $42 billion left over that they haven’t said much about,” Craymer, the business tax organization chief, said of legislative leaders.

“We know there’s going to be a big infrastructure package … and they both talked about putting more money into public education,” he said. “There’s also some assessment of where they stand on the spending limit. They’re trying to do a dance around that.”

Under the state Constitution, the only bill lawmakers are required to pass in the just-started, 140-day session is the two-year budget.

But spending caps and the GOP majority’s penchant for tightfisted budgeting make it unlikely that Republican leaders will spend nearly as much as they could.

While Abbott and Patrick have spoken of the historic chance lawmakers have to make prudent “investments,” their main focus has been reducing property taxes – with Abbott more exuberant in his promises, while Patrick – whose bona fides as a property tax critic are unassailable – has been more restrained.

Patrick and Huffman touted how the Senate’s base budget would reserve $15 billion for property tax relief. But $3.1 billion of that would simply help maintain school tax rate reductions passed in 2019. Cutting rates helps businesses as well as all categories of residential property owners. Increasing homestead exemptions helps only homeowners.

The one-third reductions in school maintenance and operations tax rates passed in 2006, which at the time cost $14 billion in state dollars for two years, now cost $20 billion every cycle if adjusted for inflation, said Eva DeLuna Castro, a state budget expert formerly with the progressive think tank Every Texan.

Texas’ budget surplus soars to $33B, fueling demand for tax cuts, one-time ‘investments’



story by The Texas Tribune Source link

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