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Budget ballyhoo

House passes sales tax cut

Over to you, Danno.


The Texas House tentatively approved a $4.9 billion tax relief plan Tuesday that includes a cut to the state’s sales tax, marking a clear line in the sand against the Senate, which favors property tax cuts.

The House voted 141-0 for House Bill 31 by Ways and Means Chairman Dennis Bonnen, R-Angleton, which would cut the state sales tax rate from 6.25 percent to 5.95 percent. If the bill reaches the governor’s desk, it would be the first cut in the state’s sales tax in Texas history.

Bonnen presented his sales tax cut as more impactful than the Senate’s proposal, which would increase homestead exemptions to lower local school property taxes. The Legislature passed an even larger property tax cut in 2006 that was widely viewed as underwhelming by homeowners due to increases in property values and local tax rates.

“A sales tax cannot be eroded by a local tax hike or rising appraisals,” Bonnen told the House. “We would be using our tax dollars for a tax that we control.”

My personal choice would be to invest this money in education, infrastructure, shoring up the pension system, that sort of thing, but you know what they say about elections and consequences. If we have to cut taxes, I’ll take the sales tax cut, as it’s more progressive and doesn’t require advanced shenanigans with the spending cap. But let’s keep things in perspective here. What this cut means is that if you spend $100, you will save a grand total of thirty cents on your sales tax – instead of paying $108.25, you’ll owe $107.95. The claim is that this cut will save the average family something like $170 per year, well to get that amount of savings that family would have had to spend some $57,000 on taxable goods and services during the year. That’s more than most families of four in Texas make in a year. I guarantee you, nobody is going to notice this. That’s the real problem here – any tax cut will cost the state billions, but will accrue only modest benefits to the people. I can only wonder what if any effect this will have on the next campaign, assuming this goes through the Senate as well. BOR has more.

Budget passes House as most amendments get pulled

It was a long day in the House on Tuesday and Wednesday but not a terribly bloody one as many of the budget amendments and riders that had been queued up got withdrawn. A brief recap of the action:

Border “security”:


House Democrats tried — and mostly failed — to divert funds allotted for border security and the Texas Department of Public Safety to other departments during Tuesday’s marathon budget debate.

But the rancor over immigration enforcement that many expected didn’t materialize after lawmakers agreed to pull down amendments that, if debated, would have aired ideological differences over the contentious issue.

After predicting a “bloody day” on the House floor, state Rep. Jonathan Stickland, R-Bedford, pulled an amendment that would have reduced the appropriations for a public college or university by the same amount that it awarded in grants or financial aid to undocumented students.

Last month, Stickland expressed frustration over the lack of traction for a bill he filed to eliminate a 2001 provision that allows undocumented immigrants in-state tuition.

But on Tuesday, Stickland, with little attention or fanfare, withdrew the amendment after discussions with lawmakers.

“We did some negotiations,” he said.

An amendment by state Rep. Tony Tinderholt, R-Arlington, that would have defunded the state’s Border Faculty Loan Repayment Program, which was created to help keep doctoral students on the border to teach, was also withdrawn with little attention.

On the funding, Democrats made good on their promises to try and take money from border security operations, which was at about $565 million when the day began, to local entities or other state departments.


One border lawmaker had tentative success in transferring money from DPS to his district for local law enforcement grants. An amendment by state Rep. Alfonso “Poncho” Nevarez, D-Eagle Pass, would take $10 million from the agency for that effort. But it’s contingent upon another measure — Republican state Rep. Dennis Bonnen’s House Bill 11, an omnibus border security bill — making it to Gov. Greg Abbott’s desk and getting signed.

Republicans had a bit more success in shifting money.

State Rep. Dan Huberty, R-Houston, was able to direct money into the state’s military forces for paid training for Texas’ 2,300 members of the reserve unit.

“Most of them reside in most of our districts, and we have zeroed out money for training,” he said.

But the success came after a lengthy back and forth between Huberty and members upset at where the funds would be taken from. Huberty offered one amendment that would have taken $2.2 million from the Texas Agriculture Department. That didn’t sit well with Democrat Tracy King, D-Batesville, the chairman of the House Agriculture and Livestock Committee. Huberty eventually pulled that amendment and instead took $2.2 million from the Texas Facilities Commission.

Huberty specified on Monday that the money is not intended to extend the Texas National Guard’s deployment on the Texas-Mexico border.

The Senate wants to spend even more money on the ridiculous border surge, so this fight is far from over. The fact that this is a complete boondoggle that makes the rest of the state less safe, it’s one of the few things that certain legislators actually want to spend money on.

The voucher fight was similarly deferred.

A potentially contentious vote on a measure that would have banned spending public money on school vouchers was avoided after its author withdrew the amendment.

Rep. Abel Herrero (D-Corpus Christi) said he pulled the amendment because it wasn’t necessary.

“Given the commitment of the House to supporting public education, I felt this amendment was duplicative,” Herrero said. It also would have forced some lawmakers to take a difficult vote, caught between turning their backs on their district’s public schools and potentially earning the ire of conservative interest groups.

A coalition of Democrats and rural Republican lawmakers has coalesced during the past two decades to defeat voucher legislation. Herrero said the anti-voucher coalition is still strong.

“The coalition is solid,” Herrero said, “Vouchers for all intents and purposes are dead in the House.”

The coalition may be strong, but Texas Republican Party Chairman Tom Mechler is working to weaken it. Mechler sent a letter to GOP legislators Tuesday pushing them to vote against Herrero’s amendment.

If you followed the budget action on Twitter, this was the first major amendment to get pulled, and it was a sign of things to come. Attention will shift to Public Education Chair Jimmie Don Aycock when that loser of a bill passes the Senate.

Finally, you knew there had to be a moment that would be worthy of the Daily Show and the kind of viral mockery that makes us all heave deep sighs. Sure enough:

Seven hours into Tuesday’s debate on the House’s $210 billion two-year budget, things got first heated and then uncomfortable as state Rep. Stuart Spitzer, R-Kaufman, successfully pushed an amendment to move $3 million from HIV and STD prevention programs to pay for abstinence education.

A line of opponents gathered behind the podium as Spitzer laid out his amendment and proceeded to grill, quiz and challenge the lawmaker on his motives.

“Is it not significant that Texas has the third-highest number of HIV cases in the country?” state Rep. Sylvester Turner, D-Houston, asked. “Does it bother you to know there are people walking around with HIV, undiagnosed?”

Turner and Spitzer also had an exchange over how Spitzer had arrived at his price tag. “If we gave you a billion dollars for abstinence, would that be enough?” Turner asked. “Or would you need two?”


Texas allows school districts to decide whether and how to approach sex education, as long as they teach more about abstinence than any other preventive method, like condoms and birth control. But a number of representatives questioned the effectiveness of this program.

State Rep. Chris Turner, D-Grand Prairie, pointed out that the state currently has one of the highest rates of teen pregnancy in the country, and the single-highest rate of repeat teen pregnancy.

“It may not be working well,” said Spitzer, in reference to the current abstinence education program. “But abstinence education is HIV prevention. They are essentially the same thing.”

State Rep. Harold Dutton Jr., D-Houston, took to the podium and asked Spitzer, “Were you taught abstinence education? Did it work?”

Spitzer replied that he was a virgin when he married at age 29. “I’ve only had sex with one woman in my life, and that’s my wife,” Spitzer said.

Dutton continued. “And since you brought it up, is that the first woman you asked?”

“I’m not sure that’s an appropriate question,” Spitzer responded.

The House was called to order, and Rep. Nicole Collier, D-Fort Worth, took the microphone. “Earlier you stated that you could not get STDs without having sex,” she said.

“It depends on what your definition of sex is,” said Spitzer. “I can go through of all of this if you want to.”

“If you still think you can’t get an STD without having sex, then maybe we need to educate you,” Collier added.

Spitzer’s amendment ultimately passed 97 to 47.

Spitzer is a medical doctor, because having one Donna Campbell in the Lege just wasn’t enough. He must have been absent the day they went over how intravenous drug use is a frequent means of transmission for HIV. This is another lesson the state of Indiana could teach us if we cared to pay attention. The Observer, Nonsequiteuse, RG Ratcliffe, Trail Blazers, and Newsdesk have more.

Let the budgetary games begin

The House takes up the budget today, with over 300 amendments and riders queued up for votes. A couple of things to watch for as the debate goes on:

Killing vouchers.


Lawmakers in the Texas House will have a chance to draw a line in the sand over private school vouchers during the upcoming battle over the budget Tuesday.

An amendment filed by state Rep. Abel Herrero, D-Corpus Christi, would ban the use of state dollars to fund private education for students in elementary through high schools, including through so-called tax credit scholarships.

If passed, the measure — one of more than 350 budget amendments covering topics from border security to abortion up for House consideration — would deliver a blow to Lt. Gov. Dan Patrick.


If Herrero’s amendment fails, it would represent a dramatic change in sentiment for the chamber, which overwhelmingly passed a similar budget amendment during the 2013 legislative session. Patrick, a Houston Republican who served as state senator before taking office as lieutenant governor in January, led that chamber’s education panel at the time.

Rep. Herrero’s amendment from 2013 passed by a 103-43 vote. Neither Speaker Straus nor Public Ed Chair Rep. Jimmie Don Aycock is any more pro-voucher than they were last year, and neither is Dan Patrick any more beloved, so you have to feel pretty good about the chances this time, though it’s best not to count your amendments till they pass. If it does, that won’t fully drive a stake through vouchers’ cold, greedy heart for the session, but it’ll be a solid blow against them.

“Alternatives To Abortion”

As the Texas House prepares for a floor fight Tuesday over its budget, a flurry of amendments filed by Democrats seeks to defund the state’s Alternatives to Abortion program.

A group of Democratic lawmakers filed more than a dozen amendments to either reduce or eliminate funding for the program, which provides “pregnancy and parenting information” to low-income women. Under the program, the state contracts with the Texas Pregnancy Care Network, a nonprofit charity organization with a network of crisis pregnancy resource centers that provide counseling and adoption assistance.

Since September 2006, the program has served roughly 110,000 clients. The network features 60 provider locations, including crisis pregnancy centers, maternity homes and adoption agencies.

State Rep. Jessica Farrar, D-Houston, said she filed an amendment to defund the entire program because the state is giving more money to “coerce women” into a “political ideology instead of providing information and services” at a time when Texas women’s access to health services is being reduced.

The proposed House budget allocates $9.15 million a year to the program in 2016 and 2017 — up from $5.15 million in the last budget.

“I think it’s troublesome that here we are going to almost double funding for a program that has not proven to be successful in any way,” said Farrar, chairwoman of the Women’s Health Caucus in the House. An additional amendment by Farrar would require an audit of the program.

Several House Democrats filed similar amendments, including Borris Miles of Houston, Celia Israel of Austin and Chris Turner of Grand Prairie, whose amendments would transfer more than $8 million from the Alternatives to Abortion program to family planning services and programs for people with disabilities.

“These facilities have very little regulation, no accountability and no requirement to offer actual medical services,” Turner said, adding that funding could be used for other medical programs. “My amendments are an attempt to address our state’s real priorities and needs.”

Two Republicans, meanwhile, filed measures to boost the program’s funding.

I don’t expect Dems to win this fight, but it’s a fight worth having.

Other women’s health funding issues

The state currently administers three similar women’s health programs that cover things like annual well woman exams, birth control and cancer screenings for low-income women.

The newest program, the Expanded Primary Health Care Program, created in 2013, is slated to get the funding bump, bringing the total for women’s health services in the House version of the budget to about $130 million per year.

Here is the breakdown of funding for each program:

  • Texas Women’s Health Program: $34.9 million in 2016, $35.1 million in 2017
  • Expanded Primary Health Care Program: $73.4 million in 2016, $73.4 million in 2017
  • Family planning program administered by Department of State Health Services: $21.4 million in 2016, $21.4 million in 2017

In 2011, motivated by a never-ending quest to defund Planned Parenthood, the Texas Legislature slashed family planning funding by nearly $70 million, leaving about $40 million for preventive and contraceptive services for low-income women. A recent study by the University of Texas at Austin’s Texas Policy Evaluation Project, a research group that studies the effects of family planning budget cuts, found that more than 100,000 women lost services after the 2011 cuts and 82 family planning clinics closed. In 2013, the Legislature restored the $70 million and put it into the newly created Expanded Primary Health Care Program, which became a separate item in the state budget. Still, advocates and providers have consistently fought for more money, arguing that the state is only serving one-third of women eligible to receive services.


Here is a list of other women’s health amendments and riders to watch for:

  • State Rep. Mary Gonzalez (D-Clint) filed an amendment that would allow teenagers who are 15 to 17 years old and already mothers to get contraception without their parents’ consent. Right now, state law requires that all teenagers under the age of 18 get their parent’s permission for birth control. The amendment mirrors Gonzalez’s House Bill 468, which she presented to the House State Affairs Committee in mid-March.
  • State Rep. Chris Turner (D-Arlington) has proposed a rider that would ensure sex education programs teach “medically accurate” information to public school students.
  • State Rep. Bryan Hughes (R-Mineola) proposes adding even more money to the Alternatives to Abortion program by taking almost $7 million from the Commission on Environmental Quality.
  • A House budget rider by state Rep. Sarah Davis (R-Houston) protects the state’s Breast and Cervical Cancer Services program that provides breast and cervical cancer screenings for uninsured women, under attack this session by conservative lawmakers hell bent on, you guessed it, defunding Planned Parenthood.

Some possible winners in there – in a decent world, Rep. Gonzalez’s bill would be a no-brainer – but again, fights worth having. Rep. Sarah Davis has received some liberal adulation this session for trying to do good on women’s health issues. That budget rider will be a test of whether she can actually move some of her colleagues or not.

Public education

An amendment by the House’s lead budget writer, Appropriations Committee Chairman John Otto would allocate $800 million more to certain public schools as part of a plan announced last week to diminish the inequities that exist among districts under the current funding scheme.


At the news conference Monday, Austin state Rep. Donna Howard said at least 20 percent of public schools still will receive less per-student funding than they did in 2011 under the proposal. That year, state lawmakers cut $5.4 billion from public education, restoring about $3.4 billion two years later.

“We aren’t keeping up as it is,” Howard said.

She also noted the plan also does not include the $130 million that had been earmarked for a bill containing Gov. Greg Abbott’s plan to bolster pre-K programs — an amount she described as insufficient considering it does fully restore funding to a pre-K grant program gutted in 2011.

Howard has filed a budget amendment that would allocate $300 million for pre-K.

Pre-K is one of Greg Abbott’s priorities this session, but his proposal is small ball. Rep. Howard’s amendment has a chance, but we’ll see if Abbott’s office gets involved.

And finally, same sex benefits, because of course there is.

Rep. Drew Springer (R-Muenster) is again trying to bar Texas school districts from offering benefits to the same-sex partners of employees.

Springer has introduced a budget amendment that would eliminate state funding for districts that violate the Texas Constitution, which prohibits recognition of same-sex partnerships.

The amendment is similar to a bill Springer authored two years ago, which cleared committee but was never considered on the floor. Under Springer’s budget amendment, the education commissioner, in consultation with the attorney general, would decide whether districts have violated the Constitution. Districts would have 60 days to correct the problem.

According to Equality Texas, Springer’s amendment is aimed at the Austin, Pflugerville and San Antonio school districts, which offer “plus-one” benefits that are inclusive of same-sex partners. But the group says those benefits are in line with a 2013 opinion from former Attorney General Greg Abbott, which found that such programs are only illegal if they create or recognize a status similar to marriage.

Yes, as noted, Rep. Springer has tried to meddle in this area before. I admit, I’m more worried about a budget amendment this year than a bill in 2013. Keep a close eye on that one.

House will address school finance


Jimmie Don Aycock

With a plan that would add $3 billion to the state’s public education budget, the Texas House has decided to take on school finance reform this legislative session.

As he announced a deal Wednesday that would put $800 million on top of the $2.2 billion the chamber had already allocated to public schools, Public Education Committee Chairman Jimmie Don Aycock, R-Killeen, called the decision a “significant change in direction.”

The topic of school finance was largely expected to go unaddressed this legislative session while a massive lawsuit involving more than two-thirds of the state’s school districts awaits a ruling from the Texas Supreme Court.

After months of private discussions and meetings, Aycock said House leaders no longer wanted to wait for a long-needed overhaul of the system. The proposal will be filed as House Bill 1759.

“We had to ask the fundamental question: Do we want to do what’s right for the state of Texas and the children of Texas, or do we want to sit around and try to play lawyer and outguess the courts?” Aycock told reporters at a Capitol news conference.

The Observer fills in some details.

Aycock said his priority is to correct illogical and outdated features in Texas’ school finance formulas, like adjustments for higher salaries in expensive urban districts or the extra cost of educating students with limited English proficiency, which haven’t been updated in more than 25 years. Tinkering with any of those would upset the delicate equilibrium of a system that, despite its flaws, has been in place since 2006.

“The fact is that when you change these complicated formulas, some people win, some people win more than others, some people lose,” Aycock said. “In order to mitigate that pain politically, you can only do this sort of modification when there’s more money going into the system.”

Some, but not all, members of the crowd around Aycock this morning have been meeting since last fall in an informal working group on school finance reform. The group includes Republicans and Democrats from both urban and rural districts.

In an interview, Rep. Donna Howard (D-Austin) said Aycock’s plan wouldn’t fix what’s wrong with Texas’ school finance system, but to Democrats who’ve been railing against the state’s chronic underfunding of schools, the extra money was welcome. “It was an offer we couldn’t refuse,” she said.

Still, adding more money this session to Aycock’s plan wouldn’t address the system’s basic flaws, or allow for reforms like pre-kindergarten expansion.

“I think it’s a huge step toward addressing what the court said we need to address,” Howard said, but “I take Chairman Aycock at his word that this is not about trying to make the lawsuit go away.”


David Thompson, an attorney representing one group of school districts suing the state, told the Observer that without a bill to look at yet, it’s impossible to guess how the case might be affected. “I do very much appreciate the House’s willingness to spend some time to address the issue,” Thompson said, adding that the plans Aycock described include “some very positive features.” Thompson said he’s most interested in seeing a proposal that steers more money to districts that educate the state’s neediest children.

Had lawmakers completely punted on school finance reform—or if the House’s plan eventually falls through—a Supreme Court ruling against the state would likely prompt a special session in 2016 dedicated to fixing the system. If nothing else, the new reform effort could serve as a practice run for new members getting to know the arcane system for the first time.

Rep. Aycock had previously filed a different school finance bill, HB654, to simplify the school funding mechanism by grouping the state’s 1,026 regular school districts into at least 30 “school finance districts”. This is something else entirely, and it’s not clear to me what the status of that bill is. Regardless, considering that Rep. Aycock talked about “nibbling around the edges” back in December, it’s quite a step forward. Whether it can survive the tax-cuts-uber-alles mania that is gripping the Senate remains to be seen, but for now this is a hopeful sign.

Trouble in tax cut paradise

What if you propose a tax cut but the beneficiaries of it say they’d rather the money went to something else?


Major business groups pushed back Friday against a multi­billion-dollar package of tax cuts advancing in the Texas Senate, calling it inequitable and saying state needs should be funded before lawmakers consider tax relief.

The criticism highlights how, despite support for tax cuts among Republican legislative leaders, details are far from settled and are prompting dissension among lawmakers and businesses.

It also echoes concerns from some leading lawmakers that the emphasis on tax cuts could imperil efforts to address such issues, as education, transportation, state debt and pension programs.

“If, after paying our state bills, there is money left over for tax relief, that relief should be fair to those who pay the most taxes in the first place – both individuals and businesses,” said the letter signed by seven big-business groups.

“That portion of tax relief to business should encourage growth and investment, enhancing our ability to expand our production and payrolls. Unfortunately, we believe the package of bills up for consideration in the Texas Senate falls short of these principles and creates new inequities in the tax system,” they wrote.

The letter to Lt. Gov. Dan Patrick and senators is signed by representatives of the Texas Association of Business, Texas Association of Manufacturers, Texas Taxpayers and Research Association, Association of Electric Companies of Texas, Texas Chemical Council, Texas Oil and Gas Association, and Texas Association of Realtors. It mirrors concerns expressed previously.


Senate leaders, including Patrick, pushed right back at the criticism.

“While traveling the state for the last 18 months, taxpayers made it clear they expect tax relief this session,” Patrick said. “Gov. Abbott and I have said that lasting franchise and property tax relief are a critical component of a successful session.”

Senate Finance Committee Chair Jane Nelson, a Flower Mound Republican who is a lead sponsor of the package, defended its aims but did not dismiss the concerns.

“We are striking a good balance between tax reductions for businesses and homeowners, and we will continue to work deliberatively through the process on that issue. As a businessperson myself, I am grateful for the input from these important stakeholders and look forward to working with them moving forward,” Nelson said.

In other words, Patrick told them they’ll take what they’re given and they’ll like it and the hell with whatever the state needs. No wonder all these interests united to oppose his election last…oh, wait. Never mind. Maybe after Patrick and his crew finish wrecking the state’s finances these guys will get a clue. Hope it’s not too late by then.

The state spending cap is a stupid idea

And the Republicans want to make it worse.


Texas Senate leaders on Tuesday announced another round of efforts to change the way the state determines its two-year spending limit, and keep tax cuts from counting toward the constitutional cap on spending.

Lt. Gov. Dan Patrick joined state Sen. Kelly Hancock, R-North Richland Hills, at a Capitol press conference to announce legislation that would not allow the state’s budget to grow faster than population growth plus the rate of inflation.

State budget leaders in December pegged the state’s economic growth over the next two years at 11.68 percent, based on the projected rate of growth in Texans’ personal income. That means state spending cannot exceed $107 billion for the next biennium, leaving several billions of dollars in state coffers.

Hancock said basing economic growth projections on personal income is “a false measurement.”

“Individual income typically grows at a faster rate than the state’s economy,” he said.

Hancock’s Senate Bill 9 and Senate Joint Resolution 2, assigned low numbers as a sign of importance, would also exempt tax cuts from counting towards the spending limit. That would allow Republicans to provide billions of dollars in tax relief without having to vote to exceed the spending limit.

The proposed constitutional amendment changes the number of votes needed in both houses to exceed the spending limit from a simple majority to a three-fifths majority.

This is a companion to the earlier proposal to exempt spending on tax cuts and reducing debt from the spending cap. It’s not about spending or limiting spending so much as it is about limiting options, and it has nothing at all to do with fiscal responsibility, despite what some people want to believe. If the only things you can easily spend money on are tax cuts and reducing debt, what are you going to prioritize? The Observer points out some of the problems inherent in these ideas.

Hancock’s Senate Joint Resolution 2 and Senate Bill 9 would ask voters later this year to redefine the spending cap and tie it to state population growth, plus inflation, instead of growth in Texans’ personal income, which rises faster. It would broaden the spending cap to apply to all of the state’s spending, instead of just certain kinds.

That would bind the hands of future legislatures even tighter, while ensuring that more and more revenue would be untouchable beyond the cap. Legislators could still vote to bust the cap—though few seem to have the political courage to do that now—but Hancock would make that harder, too. Right now, the cap can be lifted by a simple majority of both houses. Hancock would make it a three-fifths vote.

If passed, Patrick’s two budget proposals don’t technically contradict—actually, they’d be weirdly toxic (or synergistic, depending on your perspective) in combination, since more and more money would end up on the wrong side of the spending cap, and that money could only be used for tax cuts and debt—but it’s still a weirdly incomprehensible mess from a policy perspective, and put together seemingly on the fly. It’s the art of government as outlined on the back of a Gadsden Flag cocktail napkin.

What’s worse—it’s straight out of Sacramento. You know how the recent recession calcified a Texas meme about the Golden State being the worst place on earth? California is doing pretty well lately, though you won’t hear about it in Austin. But one of the ways California got itself into a mess over the last few decades was by tying the hands of future legislatures and restricting the state’s ability to raise revenue, all the while kicking tough (and easy) decisions to voters. All three are becoming more and prominent parts of the Texas model—paradoxically, done in the name of targeting “California-style” spending.

You think the Lege engages in shenanigans and sleight of hand now to meet the constitutional mandate for a balanced budget? (And by the way, doesn’t that already serve as a spending cap?) Just wait till they’re foolish enough to put more obstacles in their own path. Whether they like it or not, ultimately stuff needs to be done. Why make it harder than it needs to be? It’s even more ludicrous hearing anyone talk about this as if it represented “discipline”. Last I checked, being disciplined meant having the restraint to not do unwise but tempting things. If you have to be handcuffed to a pole to ensure you don’t do them, you’re not disciplined.

But there’s another factor to consider as well. The budget is in surplus now, but the state has many documented needs. Roads, water, education, pension funds, and a laundry list of deferred maintenance that’s causing some of the people responsible for deferring it some poetically just problems, and so on. As someone who is old enough to remember the budget crunch of 2011 – which largely turned out to be the fault of a Comptroller who couldn’t do arithmetic – I heard the hoary old “household budget” metaphor dragged out to justify savage cuts so many times that if I’d received a nickel each time, I’d have a bigger surplus than the state does right now. Well, there’s a household budget metaphor for good times, too. When households are sitting on a pile of extra cash, they tend to the needs that they have build up over time. They fix things. They upgrade. They maintain. They invest in the care and wellbeing of their household, both the physical structure and the residents of it. Everyone recognizes such behavior as being responsible and necessary. Putting another artificial constraint on spending, especially now, is the opposite of that. It ensures that the problems we have now, both the ones we try to deal with and the ones we continue to ignore, will get worse and be more expensive to deal with later. How is this a good idea? Republicans are going to do what Republicans are going to do, but any Democrat who signs onto this needs to rethink their priorities. Eye on Williamson has more.

Voodoo economics

Also known as Dan Patrick’s budgetary contortions.


Lt. Gov. Dan Patrick, joined by the Texas Senate’s lead budget writers, announced “a new bold proposal” Wednesday morning to allow lawmakers to cut property taxes and pay down the state’s debt without busting the state’s politically charged spending cap.

“Gosh darn, we know our businesses and taxpayers need tax relief,” Patrick said at a press conference. “But because of the cap, we are limited in what we can do.”

Lawmakers entered the session with an estimated $113 billion to haggle over, but are expected to hit the state’s spending cap at $107 billion. Spending beyond the cap would require a simple majority vote in the House and Senate, a move that Republican leaders have repeatedly insisted will not happen this session.

The measures filed Wednesday are an attempt to provide political cover for Texas lawmakers to tap more of the billions of dollars sitting in state coffers without being viewed by voters as freewheeling spenders. Republicans in particular are wary of a vote for breaking the state’s spending cap being used against them in future primaries to paint them as fiscally irresponsible.

“We have more money on hand than we believe any Legislature has ever had at one moment in time dealing with budget issues,” Patrick said. “There is no support for exceeding the spending cap, but that also means that when we leave, we will have approximately $4.5 to $5 billion in the state’s checking account.”

While a simple idea in theory, the spending cap in practice is a complicated measure that even some members of the Legislature have trouble grasping. The Texas Constitution says the government can’t grow faster than the state’s economy. State leaders set a growth rate of 11.68 percent for this session in December, based on the estimated rate of growth in Texans’ personal income over the next two years.

“For 36 years our state spending cap has helped enforce fiscal discipline, and we should be very cautious about any attempt to weaken it,” House Speaker Joe Straus said in a statement responding to Patrick’s proposals.

Well, gosh darn, Dan Patrick categorically refused to consider exceeding the spending cap in 2013 when some people wanted to more fully restore the cuts to public education spending, so right there is your first clue that this is little more than a gimmick and an attempt to hardcode Republican priorities into the state constitution. I’m a bit pressed for time, so I’ll point you to a couple of good analyses of this. First, from Ross Ramsey:

Lots of things would be possible right now without that spending cap in place; this year, it leaves as much as $6 billion in the state treasury that is out of budget writers’ reach. That has lawmakers dreaming of how to get around the cap, and there are ways to do that.

The first one is simple: Vote to spend more. If a majority of senators and representatives agree, they can spend more than the cap allows. This requires some intestinal fortitude from legislators, especially in primaries where voters will want to know how the state budget ballooned so quickly. Price-sensitive voters won’t like the answer unless they can be convinced that the extra money was well-spent.

A second, proposed Wednesday by Lt. Gov. Dan Patrick and Sens. Jane Nelson, Juan “Chuy” Hinojosa and Kevin Eltife, is complicated. They want to change the constitution to exempt spending on tax cuts and debt payments from the calculation of a spending cap. They would be able to take care of other items on their wish lists and keep spending past the cap on taxes and debt. Voters would have to approve, and it would take approval from two-thirds of the House and two-thirds of the Senate to get the measure to voters.

That’s more complicated, but it fits the recent pattern established by the state’s officeholders. They are scared to death of voters — so much so that they rely on a “Mother, may I?” approach to tough votes.

For two Novembers in a row, the state of Texas has gone to voters asking for more money, first for water and more recently for transportation.

Those didn’t involve taxes — lawmakers are allergic to that. But they were nervous about spending money, even on popular things — water projects during a drought and highway money for the state’s perpetual traffic jam — and asked voters for permission instead of just writing the checks themselves.

The state had the money it needed, sitting in the so-called Rainy Day Fund, but lawmakers didn’t want to just write a check themselves, for fear they would be labeled spendthrifts in the next round of primary elections.

Those would be Republican primary voters, of course, since those have always been the only voters Dan Patrick cares about or listens to. I’m old enough to remember back in 2011, during the (now known to have been mostly phony) budget crunch, when everyone compared that situation to households that cut back and tighten their belts and all those other virtuous things during hard times. Well, I don’t know how it is at your house, but at mine if the roof starts to leak or if the water heater breaks, I spend what I must to get it fixed. Somehow, that part of the household-as-budget-analogy never gets brought up.

And from Christopher Hooks:

The proposal makes a certain sense from the Democrats’ point of view—busting the spending cap probably means more money will go to state needs like education, even if Patrick wins his tax cuts. And it makes a certain sense for somebody like Eltife, who won’t have to stand in the way of tax cuts while other fiscal needs get attention, too.

But from Patrick’s POV, it’s a weirdly craven move. For one, he’s proposing to bust the spending cap—a sacred cow among conservatives—while saying loudly that he’s proposing to preserve it. And it contains a certain measure of political cowardice; if legislators wanted to, they could vote to bust the spending cap this session with a simple majority vote. Instead, they’re asking voters to make the hard choice for them, a move that seems eerily reminiscent of the dreaded Sacramento style of governance.

Furthermore, the amendment, if it passed, would privilege tax cuts over other kinds of spending. If the Lege ends up with $6 billion in additional revenue over the spending cap next session, it would virtually assure that that money would produce more tax cuts rather than, say, go back to schools or health care or roads.

Finally, it’s a move that’s emblematic of Patrick’s emerging leadership style—impulsive, seemingly thought-up on the fly and done with little consultation with his legislative partners. House Speaker Joe Straus gave an exceptionally cool statement in response: “For 36 years our state spending cap has helped enforce fiscal discipline, and we should be very cautious about any attempt to weaken it.”

But Patrick’s proposal points to a reality about the new era in the Lege: Patrick and the generally suburban-oriented senators who represent the new vanguard are not amenable to government spending and value tax cuts above almost all else.

Yes, that’s what this is about. It’s what basically all of the budgetary tricks and sleights-of-hand are about, including the spending cap itself. It’s a convenient excuse for not doing what you didn’t want to do anyway, like restoring cuts to public education, and it’s an opportunity to restrict the terms of debate further by forcing certain priorities ahead of others. I feel the same way about things like proposals to dedicate certain taxes that have otherwise been for general use to specific purposes. I get why Sen. Hinojosa is playing along, but I fear he’s being suckered. This is a bad deal, and we should hope the House rejects it.

We can always pay for tax cuts later

Item One:


Texas House leaders said Monday they can cut taxes by more than the $4 billion initially proposed by their Senate counterparts, upping the ante for the high-profile issue despite other looming big-ticket state needs.

“We really believe that we ought to be able to do more than $4 billion in tax cuts here in the House,” Ways and Means Committee Chairman Dennis Bonnen, R-Angleton, said. “We don’t have a number at this point. We just know that we can do better than that.”

Asked about exceeding $4 billion in tax cuts for homeowners and businesses combined, House Speaker Joe Straus, R-San Antonio, said, “We’re on the same page.”

It is the closest House leaders have come to identifying a specific tax cut figure they are contemplating.

Straus, Gov. Greg Abbott and Lt. Gov. Dan Patrick previously had declared tax relief a priority for this legislative session, with Abbott saying he will not sign a budget that does not include tax cuts for business.


Some were surprised by the House leaders’ pronouncement.

“Any kind of tax relief needs to be sustainable,” said Rep. Lyle Larson, R-San Antonio. “I don’t think anybody wants to pass a tax cut and then retreat in the subsequent (legislative) session.”

Rep. Jessica Farrar, D-Houston, said a higher priority should be placed on public education, still struggling after massive cuts in 2011 that have been only partly restored.

“I think we have got to look at our priorities and make sure that we can take care of tomorrow’s workforce,” she said.

Item two.

Flanked by a dozen Republican senators, Lt. Gov. Dan Patrick on Tuesday announced a slate of legislation he said would provide lasting tax relief to businesses and homeowners in Texas.

“At the end of the day, the Texas economy stays strong if people have more money in their pocket, if businesses have more money to create jobs,” said Patrick, a Republican.

Patrick said three recently filed bills — Senate Bills 1, 7 and 8 — would deliver a combined $4.6 billion break from the state’s property and business taxes.

About $2.5 billion of that total would go toward increasing homestead exemptions from school property taxes. Currently set at $15,000, they would instead be 25 percent of the median home market value in the state. In 2016, when the median home market value is projected to be $134,500, that could mean as much as a $33,625 exemption.

Another $1.5 billion would stem from reducing the state’s franchise tax on businesses by 15 percent.


But there are signs that it may encounter opposition from within Patrick’s own party.

“We have got to deal with the major problems of this state before we commit to tax cuts,” state Sen. Kevin Eltife, R-Tyler, said in an interview after the announcement. “We have some big ticket items that we can actually resolve this session. I think those needs come first.”

Eltife said he wanted to see a long-range plan to fix the significant shortfalls in state-funded pensions and deferred maintenance on state facilities.

“I think it’s the cart before the horse. We need to go through the budget process and make sure we have those needs addressed in our budget before we commit to cutting $4 billion a year in revenue out of the state budget,” he said. “It might work down the road, but I want to see a plan of action for the needs of this state before I commit to cutting taxes.”

Silly Sen. Eltife, and Reps. Larson and Farrar. Tax cuts are the only real need we have. Weren’t you paying attention to the 2014 campaign?

Besides, we all know nothing like this could ever happen here.

Republican governors meeting in Washington last weekend said financial conditions in their states have deteriorated so much that they must raise taxes, even if it means crossing their own party.

In the face of a historical antipathy deepened by the tea party movement, chief executives in Alabama, Nevada and Michigan among other states are proposing increases this year to address shortfalls or to spend more on faltering schools and infrastructure. They advocate higher levies on businesses, tobacco, alcohol and gasoline, in some cases casting the increases as user fees.

The governors are at a crossroads. They are choosing between the path of Gov. Sam Brownback in Kansas, who has refused to change course even after tax cuts provoked furious opposition, and that of Alabama’s Robert Bentley, who has said the state’s perennially precarious budget has reached the breaking point.

“I don’t want to raise taxes, but I also know that we need to pay our debts,” Bentley said. “We don’t have any choice.”

Like I said, that could never happen here. Unless you’re talking about raising sales taxes to pay for property tax cuts, because that’s totally different. PDiddie and RG Ratcliffe have more.

Tax cuts >>> public education

Well, what did you expect?


Senate budget writers have enjoyed praise from conservatives for their focus on tax cuts, but they’re about to get an earful from educators who think their promises could cost Texas public school students.

The starting budgets of the state House and Senate, released last month, are similar on many fronts, but not with respect to education. Faced with $4.5 billion in additional revenue from increasing property values, the House has chosen to reinvest a portion of that in public education while the upper chamber is focusing on tax relief, a decision not sitting well with educators.

“I don’t know how you could say that budget prioritized public education,” Lonnie Hollings-worth, governmental relations director at the Texas Classroom Teachers Association, said of the Senate budget. “We think the priority should be to fund our public schools and not to do tax cuts.”

A cursory glance at the Senate’s document indicates the upper chamber wants to provide billions more this biennium for public education funding. But the promises of many senators, including new Finance Committee Chair Jane Nelson, to provide $4 billion in tax relief leave only around $200 million available for schools.

On the House side, budget writers have pledged to funnel $2.2 billion of the property value growth revenue into public education. The money comes with strings attached, but education advocates say the decision to re-invest this money into education shows the lower chamber’s commitment to meet the needs of schools.

“We appreciate that the House leadership recognizes there is a need and is moving in that direction,” said Josh Sanderson, a lobbyist for the Association of Texas Professional Educators, the state’s largest educator group. “We’re trying to get that same acknowledgement in the Senate.”

Good luck with that. Look, the Republicans were clear on what their priorities were. Public education was not high on the list. If there’s a few bucks left over after tax cuts and border security and roads and maybe some other tax cuts, then sure, whatever. If and when the Supreme Court forces them to spend more on education, then they’ll deal with it, as minimally as they think they can get away with. But until then, this is what we elected. EoW and Better Texas Blog have more.

The Senate’s opening budget

Could be worse, I guess.


Senate Finance Chairwoman Jane Nelson presented a $205.1 billion two-year base budget Tuesday morning, vowing to provide property tax cuts that Texans “actually feel” while keeping the state’s economy humming along.

The Senate budget is $3 billion larger than the $202.4 billion House budget that Speaker Joe Straus released nearly two weeks ago. However, the Senate budget includes $4 billion allocated for tax cuts. Straus opted to leave tax cuts out of the House’s opening proposal to allow members to formulate their own ideas on how to cut taxes.

At a Tuesday news conference, Nelson said that the Senate budget plan includes $3 billion set aside for “meaningful” property tax relief that homeowners would notice, as well as $1 billion for business franchise tax cuts. She and Lt. Gov. Dan Patrick said the mechanisms by which they intend to cut property and margins taxes were still being worked out and could end up higher than the $4 billion currently proposed.

“We are taking in substantial revenue, and we have an obligation to return a large share of those dollars to the people who have worked hard and earned that in the first place,” Nelson said.

One could argue, as Rick Casey deftly does (via), that there’s a greater obligation to provide for the state’s many unmet needs. One could also argue that we just had an election to settle that argument, and we know which side won. Be that as it may, I guaran-damn-tee you that the people – and corporations – that will benefit the most from whatever tax cuts Patrick and Nelson have in mind will be those that need them the least. And yes, tax cuts we will get – for some value of “we”, anyway – oil prices be damned. I’m sure there will be plenty of “waste” to cut in the 2017 budget when we need to pay the piper. If we need a suggestion for where to look first on that score:

The Senate budget would add $815 million for border security, more than the previous seven years combined, according to Nelson’s office. The House budget allocates $396.8 million for border security, which House officials described as enough to maintain the increased presence of DPS officers that were sent to the border in June as part of a high-profile border surge.

I can’t even imagine what that will mean in practical terms. But I’m sure that whatever it is, it will be declared a success in two years’ time. PDiddie and Trail Blazers have more.

Hegar’s first revenue estimate is in

We’ll see how it holds up.


Amid concerns that tumbling oil prices could push the Texas economy into a recession, Comptroller Glenn Hegar offered a cautiously optimistic tone on the future of the Texas economy Monday, announcing that lawmakers will have $113 billion to haggle over in crafting its next two-year budget.

“Our projections are based on expectations of a moderate expansion in the Texas economy and reflect uncertainties in oil prices and the possibilities of a slowing global economy,” Hegar said.

The biennial revenue estimate sets a limit on the state’s general fund, the portion of the budget that lawmakers have the most control over. The general fund typically makes up nearly half of the state’s total budget.

Hegar predicted that Texas will take in $110.4 billion in revenue from taxes, fees and other income during the 2015-16 biennium. Hegar’s $113 billion projection also includes money expected to come from leftover funds in the current biennium. With the addition of federal funds and other revenue sources, lawmakers should have a total of $220.9 billion for the 2016-17 budget.

The state’s Rainy Day Fund is also projected to grow to $11.1 billion by the end of the next biennium if lawmakers choose not to use any money in the fund.

The state will end the current biennium, which ends Aug. 31, with $7.5 billion in leftover funds, Hegar said. That surplus will be split three ways between general revenue, the Rainy Day Fund and the state highway fund.

Two years ago, Comptroller Susan Combs estimated that the Legislature would have $208 billion for its budget, including $101.4 billion in general revenue and $11.8 billion in the Rainy Day Fund. Lawmakers ultimately passed a $200 billion budget.


The liberal Center for Public Policy Priorities has estimated that lawmakers will need to increase general spending from the current $95 billion to $101 billion to maintain the state’s current level of services. More than half of that $6 billion spike comes from Health and Human Services, where an increase in medical costs and Medicaid cases in particular has grown.

Don’t expect that to happen. Indeed, if Dan Patrick has his way, it will never happen. The good news is that this is a reasonably sunny estimate, meaning The Lege will be able to do at least some of the things it wants to do without too much voodoo, assuming it doesn’t impose some ridiculously lowball artificial limits on itself, which it must be noted is always a possibility. But just because there’s revenue available doesn’t mean it isn’t spoken for, or at least in demand. The Observer explains.

On one hand, it’s not a crisis budget, and it’s not one that will require legislators to make cuts (though they might anyway.) The office of Lt. Gov.-elect Dan Patrick released a brief statement that characterized the comptroller’s estimate as a green light for his agenda, which has included the promise of significant tax cuts: It provided “adequate revenue to secure our border, provide property and business tax relief while focusing on education and infrastructure. I intend to accomplish these goals.”

On the other, the “surplus” is a lot less than it looks at first glance, in part because the amount of budget trickery the Legislature has employed over the years. Gov.-elect Greg Abbott and Patrick have called for ending road funding diversions and making the Texas Department of Transportation whole again. But about $3 billion in additional revenue is needed to end diversions, and TxDOT says it needs an additional $5 billion just to keep the system at the current level of congestion—that is, without making any forward progress.

In education, the state has not yet gotten back to the level of funding that preceded 2011’s gargantuan cuts to public ed—a portion was restored in 2013, but a significant amount of money is needed even beyond what was the case in 2011, thanks to population growth. And it’s unclear how proposed voucher programs would affect the system’s overall cost.

And then there’s tax cuts. The truly sweeping tax overhauls that were talked about during the election, like substituting property taxes for increased sales taxes, seem to have fallen off the radar for now. In the past, GOP lawmakers of all stripes have passed minor tax bills and sold them to the voters as massive ones. That may be Patrick’s play, but even modest tax reductions will shave the “surplus” down in a hurry.

The question as always is what gets prioritized, and what gets left out. I believe this is an accurate summary:

Budget expert Dale Craymer, president of the business-based Texas Taxpayers and Research Association, pointed out that lawmakers in writing the next budget will have the cushion of unspent cash and “a pretty solid non-oil-and-gas base to our economy.”

Still, he said, the “three great wants” of tax relief, transportation and public education are big-ticket items.

“The state is still in a good position to deal with maybe one of these,” Craymer said, “but certainly not all three.”

I’d say that’s the priority order for the Republicans. What happens if the Supreme Court forces them to deal with public education, especially if they don’t leave themselves any room to do so? Your guess is as good as mine.

What’s the Lege going to do with the revenue?

Not as much as it should, of course, because the Lege never comes close to doing as much as it should. It’s a question of whether they’ll try to address some real problems, or just engage in an orgy of tax cutting.


Texans can expect tax relief, a laser focus on border security and more efforts to fight traffic congestion when a cash-flush Legislature convenes in January.

The budget priorities line up with campaign promises from Republican state leaders and lawmakers, who handily won their spots with a message of keeping state government lean while carefully weighing any additional spending for its benefits.

At least some outnumbered Democrats also appear to be on the tax-relief bandwagon, as the state welcomes the prospect of having $5 billion or more in greater-than-expected revenue when the current two-year budget period ends. Anticipated economic growth is expected to yield billions more, with the caveat that uncertain oil prices must temper expectations.

The tax-relief issue “crosses party lines,” said Senate Finance Committee Chair Jane Nelson, R-Flower Mound. “Property taxes are really something that people would like to address.”

Besides property-tax relief – pushed by Sen. Dan Patrick, the incoming lieutenant governor – the potential for cutting the state’s business tax has been highlighted by Attorney General Greg Abbott, the governor-elect.

The devil, as always, is in the details of a state budget that totals $200 billion in the current two-year fiscal period, including state and federal funds that are largely spoken for before lawmakers convene. Education and health and human services alone take up nearly three-quarters of the total.

“I fully expect there to be some tax relief. The question is, what’s the nature of it?” said Rep. John Otto, a Dayton Republican who serves on the House Appropriations Committee.


What’s clear is that despite the billions of greater-than-predicted dollars awaiting lawmakers’ allocation, the list of programs that can use more money is far longer than the dollars can cover, especially in light of a spending cap on certain general revenue.

“It’s sort of easy when there’s not a lot of money. You just say we haven’t got the money,” said Rep. John Zerwas, a Richmond Republican who serves on the House Appropriations Committee. “Whereas now, I call it kind of a food fight. You’ve got a lot of food on the table, and people are going to start grabbing for it and trying to make sure they get their programs funded at a level that they want.”

Simply keeping current levels of services to a growing population would cost an additional $6 billion to $7 billion in state general revenue, said Eva De Luna Castro of the Center for Public Policy Priorities, which focuses on services important to middle- and lower-income Texans. That’s without addressing the lingering cuts from 2011.

“All we’re hearing about is tax cuts. Nobody is talking about, ‘What did we cut out of the budget in 2011?’ ” she said. “I don’t think it’s exaggerating to say that our future economy and prosperity are at stake. We need good roads but we also need good schools and universities.”

If you think that last bit is just the usual liberal happy talk, you should see what the Texas Association of Business’ wish list for the legislative session looks like. They expect to spend the next six to eight months fighting against the people they just supported for election on these issues, because that’s how they roll. “Border security” is a huge boondoggle for which all indicators are always that we should keep doing what we’ve been doing, which is to say to spend more and more and more on it. And no, the feds aren’t going to cover that check no matter how nicely Greg Abbott asks the President for it. As for property tax “relief”, the proposals put forth by Sen. Kirk Watson and others to increase the homestead exemption would be the most equitable way of doing this, which means it is also the least likely way of it happening. But I suppose anything is still possible before the session begins, just like the possibility than your favorite NFL team can go 16-0 while training camp is still going on. We’ll see what happens when the games start getting played for real.

Even Rick Perry thinks the slash and burn crowd is nuts

Insert pithy quote about reaping and sowing here.

Corndogs make bad news go down easier

Our corndog spending is under control

Gov. Rick Perry shot back Monday at conservative critics who say the state budget is growing too fast, offering the clearest signal yet that he plans to sign the two-year, $197 billion appropriations bill into law.

The governor noted that he is still analyzing the legislation and wouldn’t commit to officially approving it, but he said the Legislature is meeting the challenges of a growing state in a fiscally responsible way.

“I did read some of the criticism, and I’m not sure that those who were making that criticism have a really good handle on the Texas budgeting process,” Perry told reporters. “Frankly I don’t understand their math.”


The budget plan, which passed a Legislature firmly in the hands of the GOP, has drawn fire from conservative voices in recent days. The director of the conservative Texas Public Policy Foundation, former state Rep. Arlene Wohlgemuth, called the budget “an unwelcome departure from the guiding principles of fiscal responsibility.”

And The Wall Street Journal, in a weekend editorial titled “Texas Goes Sacramento,” called the budget reckless and urged Perry to veto most or all of it — or risk being compared to profligate California and Washington, D.C. Perry has line-item veto authority, so he still has time to pare down the spending before his weekend deadline to sign or reject legislation.

“Now Austin is borrowing from Washington’s playbook as the Lone Star State embarks on its biggest spending spree in memory,” the newspaper said.

Perry said detractors should not be counting the supplemental spending bill as part of the budgetary growth, because that legislation paid for billions of dollars in health care costs that had not been taken care of in the 2011 session.

Several Texas Republicans also defend one-time expenditures from the Rainy Day Fund. Legislators voted to take $4 billion from the account, largely to pay for water infrastructure upgrades and to phase out accounting tricks used in previous budgets.

“This state is growing and we’re growing fast, and we’re putting great pressure on infrastructure, both transportation, water, schools, and we have been meeting that challenge rather well,” Perry said.

The anti-spending zealots don’t care what the spending is on. There is only one budget category as far as they’re concerned, and that category is Spending. They want less of it, full stop. Rick Perry is well aware of this, and has freely used that language when the purpose has suited him. The fact that he is now at cross purposes with these marauders just shows how far out they are.

Also outraged, and with much greater justification since they did much of the heavy lifting, were Rep. Jim Pitts and Sen. Tommy Williams, the chairs of the House Appropriations and Senate Finance committees. I love this bit:

Williams said he and House Appropriations Chairman Jim Pitts, R-Waxahachie, sent a letter to the Journal disputing the facts behind the paper’s editorial. The Journal is expected to publish the letter in the coming days, according to Williams’ spokesman, Gary Scharrer.

The editorial claimed lawmakers increased spending 26 percent from the previous session, citing figures from the Texas Public Policy Foundation, an influential conservative group. Lawmakers have described TPPF’s figures as misleading and manipulative.

“I’ve got a bellyful of people that are using their organization to criticize the work that we do here so they can raise money to pay their own salaries,” Williams said, referring to TPPF.

According to the nonpartisan Legislative Budget Board, lawmakers approved a two-year budget that increases total spending by $7 billion, or 3.7 percent. State spending would increase $7.2 billion, or 8.3 percent.

Yes, the TPPF are a bunch of lying hacks – film at 11. Williams’ zinger is dead on. There’s no other organization in the state that funnels so much money to so many people with so little talent and so few useful skills. (Marc Levin, who does criminal justice policy for the TPPF, is an honorable exception.) You have to wonder how many of them could survive in the real world.

And then there’s this:

“We stand by our numbers, and are happy to explain them in-depth to anyone who wishes,” TPPF spokesman Joshua Treviño said Wednesday.

Josh, old buddy. How are things in Malaysia these days. If he tells you that two plus two is four, I’d advise asking him who’s paying him to say that.

Anyway. It’s hilarious seeing Perry getting slapped by these clowns, who are usually his bros – it’s basically the wingnut version of “Heathers”. It’s just a shame anyone takes them seriously in the first place. Texas Politics and EoW have more.

Budget time in Houston

Houston City Council has begun the process of debating Mayor Parker’s budget for the next fiscal year by proposing 60 amendments to it.


Parker’s budget would spend $4.5 billion, including fee-supported enterprise funds such as the aviation department and utility systems, and is a 6.4 percent increase over the current fiscal year. The proposed general fund budget, supported chiefly by property and sales taxes, is $2.2 billion, an increase of 4.9 percent over the current budget, but just 2.4 percent over projected spending for the current year.

The council is expected to begin hashing out the budget next week.

The big-ticket proposals related to property tax relief for seniors, with council members Andrew Burks, C.O. Bradford and Helena Brown each offering at least one idea on the topic. Most of their amendments sought to raise Houston’s $70,862 residential property tax exemption to match Harris County’s $160,000. Affected homeowners would save $569 annually under Bradford’s most aggressive proposal, and up to $58 under his most modest.

Brown’s proposal, which would hike the city exemption in steps to match the county’s by 2019, would cost $5.7 million next year and $102 million cumulatively by 2019, City Finance Department director Kelly Dowe estimated. Those numbers likely are understated, he said, because they are based on 2012 tax data and assume no growth in appraised values.

CM Brown’s proposal would therefore cost the city an average of $16 million per year through 2019 under current appraisals. The single year total would be higher than that in 2019, probably $22 or $23 million, and would be at least that much going forward. That’s a lot of money, and though it isn’t “spending” in the way that a new program or an expansion of services is, it’s still millions of dollars being diverted from the budget. Maybe it’s a good idea, and maybe it’s something the city should do, but if you’re one of those people that likes to focus on the city’s financial situation, implementing this kind of tax cut would have a significant effect on the bottom line. I just want to make sure we’re all clear on that. By way of contrast, the most expensive new spending proposal was $3 million per year, for a summer jobs program for youth.

For a lot more detail on the budget, in particular the details of various city departments’ budgets, see the recent coverage in Houston Politics here, here, here, and here. Can anyone explain to me why none of this stuff made it into the print version of the paper, or even the website, as far as I can tell? This is what you really need to know if you want to understand the budget.

We appear to have a budget

Took them long enough.


After days of jockeying and one-upsmanship, the Texas House and Senate each approved measures Wednesday evening critical to passing their next two-year budget.

“The results of these two bills together is a good conservative budget, and it’s something we can all be proud of,” said Senate Finance Chairman Tommy Williams, R-The Woodlands.

With just five days left in the legislative session, both chambers needed to at least tentatively pass separate measures by midnight as part of a larger budget deal agreed to by leaders from both chambers last week.

The Senate voted 29-3 for House Bill 1025. Sens. Dan Patrick, R-Houston; Ken Paxton, R-McKinney; and Donna Campbell, R-New Braunfels, voted against the measure.

Senate Joint Resolution 1 passed the House 130-16, meaning it crossed the 100-vote threshold to avoid coming up for a second vote on Thursday.

The measure approved by the House would ask Texas voters to amend the state Constitution to create a new fund for water infrastructure projects. The Senate passed a $5.4 billion supplemental budget bill that would, among other things, put $2 billion in that new fund.

The negotiations over how exactly to approve the two measures exposed deep tensions between the House and Senate as lawmakers on both sides pushed for the other chamber to move first out of concerns that the other side might not keep its word.

I didn’t follow the ins and outs of this little soap opera because it was low comedy even by legislative standards, and in the end either it was going to get done or it wasn’t. Rick Perry could still blow it all up if he wants to, but that has always been the case. The bill to provide “relief” from the margins tax was substantially altered in the Senate and is in conference committee, and it’s not clear that either that or whatever crumbs have been thrown to TxDOT will meet Perry’s goals for avoiding a special session, at least for something other than redistricting. But at least the Lege hasn’t deliberately sabotaged things. Take your victories where you can. The Observer, Burka, and EoW have more.

Budget deal reached

And the crowd goes wild.


Top House and Senate negotiators agreed to a two-year budget for the state of Texas Friday that restores about $4 billion of $5.4 billion in cuts to public education made in 2011. It also creates a path for lawmakers to put $2 billion toward water infrastructure projects.

The five House members and five Senators of the Budget Conference Committee voted unanimously to adopt a final draft of the portions of the budget that remained unresolved, including Article 3, the portion focused on education and the area on which most of Friday’s negotiations focused on.

The main numbers of the budget are still being calculated by the Legislative Budget Board. But John Opperman, Lt. Gov. David Dewhurst’s budget director, said the total budget would be less than the $195.5 billion budget the Senate approved earlier in the session. The budget is about $700 million below the state’s constitutional spending limit, he said. The budget still needs to be approved by the full House and Senate and signed by the governor.

The budget adopted Friday does not include a controversial rider setting guidelines around how Texas might negotiate with the federal government over expanding Medicaid. Senators had adopted the rider in their budget plan but the House had voted it down.

“The House wouldn’t agree to it,” said Senate Finance Chair Tommy Williams, R-The Woodlands.

Under Friday’s deal, the $2 billion in water funding will come from the state’s Rainy Day fund, a reserve made up mostly of oil and gas taxes. That funding will be found in House Bill 1025, a supplemental budget bill that addresses funding on various issues.

The roughly $4 billion for public education hews closely to what Democrats had pushed for all week after acknowledging they were not going to be able to completely restore last session’s cuts. Budget conferees agreed to $3.2 billion for the Foundation School Program, the main account the state uses to fund public education. Another $200 million is expected to be added to the Foundation School Program in HB 1025.

As part of the $4 billion education package, negotiators also agreed on a $330 million infusion into the Teacher Retirement System’s pension fund.

All in all, not too shabby. The lack of a Medicaid rider is disappointing, but not terribly surprising. Too many Republicans, starting with Perry, Dewhurst, and Abbott, who just don’t care if people can’t get health care. The $4 billion in public education money is impressive, the highest number I’ve seen all session for public ed. It’s not $5.4 billion, but it’s a pretty significant fraction of it. There were a lot of twists and turns and allegations and accusations along the way, with various deals along the way being reported as agreed to and blown up, with threats of a special session featuring all kinds of awful agenda items for Democrats if they didn’t give in. Burka accused the Democrats of “forgetting how to win” after they spiked a deal that would have infused $3.5 billion into public ed but represented a walk-back of prior commitments by the Rs. I wonder what he thinks of them now. There are of course still reasons why a special session may happen, but assuming Rick Perry doesn’t spike the budget the scope for such sessions is now a lot smaller, and thus a lot less dangerous. Nice work, y’all. BOR has more.

From the “Tax breaks for me but not for thee” department

There are two types of people in Texas: Those for whom the tax code is written to favor, and everybody else.


The Dallas Country Club, not a place usually thought of as needing a huge tax break, used a quirk in state law to reduce its taxable value by nearly half.

Valero, one of the largest oil companies around, also used this provision to twice to force the Texas City school district to repay millions in collected taxes.

At a time when budgets are tight and school districts are hurting, counties statewide are watching their tax bases shrink by hundreds of millions of dollars in some cases as big business takes advantage of a 1997 amendment to the tax code that was intended to make sure homeowners were treated fairly.

The tax clause allows companies to file lawsuits year after year to reduce taxable value on their properties without any regard for the true market value, slowly shifting the tax burden to homeowners, officials in several Texas counties say.

In Bexar County, the clause allowed a new $600 million J.W. Marriott resort, in 2010 the largest Marriott in the world, to reduce its taxable value by more than half.

To Michael Amezquita, Bexar County’s chief appraiser, “It’s the equivalent of backing up the Brink’s truck to the public trough and driving away.” In his opinion, “It’s a legal way to steal dollars.”

As of Jan. 1 this year, there were 4,222 lawsuits challenging property values in Harris County, about 98 percent of them using the tax clause. The lawsuits represent about $35 billion in taxable value.


Lawsuits using the tax clause flooded the courts after the Texas 14th Court of Appeals ruled in 2005 that tax consultants testifying for the property owner did not need to use approved methods for determining value. The judge only has to believe that the testimony is reasonable.

“It’s like the Legislature just gave them a big red ‘easy’ button to reduce property taxes on the basis of equity,” said Sands Stiefer, attorney and deputy chief appraiser for the Harris County Appraisal District.

The lawsuits are nearly always successful, and most are settled out of court.

“It’s going to shift the tax base back to residential property,” said Ken Nolan, chief appraiser for the Dallas County Appraisal District.

Amezquita, the Bexar County appraiser, said that after Marriott lowered its tax value, he was sued by nearly every hotel in the county for tax rate reductions.

In El Paso County, a refinery used the law to slash its $781 million taxable value by 60 percent.

In Harris County, Houston 8th Wonder Properties purchased 104 acres of unimproved land for $77 million and a judge reduced the taxable value to $38 million. The appraisal district is appealing to the Texas Supreme Court. Houston 8th Wonder Properties officials did not respond to a request for comment.

The key element of the 1997 law allows companies to reduce their taxable value to the median value of similar properties. But because there is no definition for a comparable property, businesses are able to pick properties that in reality are dissimilar, appraisal district officials say.

In Harris County, HCA Gulf Coast compared 62.5 acres of prime, undeveloped property with a strip of property 90 feet wide, so narrow that it cannot be easily developed, according to an example of unfair property comparison given to legislators by the Harris County Appraisal District. The court reduced the value of the prime property by half.

Isn’t that nice? The effect of this ridiculous largesse is in the tens of billions statewide; it cost HISD $11 million just last year. There was a bill by Sen. Wendy Davis to try to limit the damage of this by restricting these lawsuits to properties valued at under $1 million, but it never had a chance in the Senate. Way too much money at stake to for that.

Hand in hand with this kind of generosity towards the wealthiest taxpayers is the notion of tax “reform” that lowers their taxes even more but does nothing for anyone else.

When the Texas House began debating HB 500 last Tuesday, the proposal would have reduced the collective tax bills of Texas businesses by $400 million. After several hours of debate, that figure had ballooned to $627 million as lawmakers eagerly tacked on amendments for various industries who said they had been treated unfairly under the state’s “margins” tax.

After all, Gov. Rick Perry has promised the Legislature will approve $1.8 billion in tax relief. Why say no to any exemption?

“HB 500 takes a stupid tax policy and makes it stupider,” a frustrated Rep. Mark Strama, D-Austin, told the House at the end of the lengthy debate. The bill, especially with all the amendments just approved, he said, would make the margins tax “more inequitable and more arbitrary.”

What the Legislature should be doing, he said, is a complete overhaul of the tax.

As Tuesday’s debate showed, that is easier said than done.

Texas’ tax system is “unbalanced, inefficient and inequitable,” said Bernard Weinstein, an adjunct professor of Business Economics at SMU’s Cox School of Business. And yet, elected officials view tax studies as opening a Pandora’s box, said Weinstein, a member of the 1987 Select Committee on Tax Equity,

“It’s great to sit down and talk about the big picture, but I don’t know too many politicians who are willing,” he said.

“Tax reform to many people equals tax increase.”

For those who are already winning, maybe. For the rest of us, it might mean we’d be screwed a little bit less. Again, we can’t let that happen.

“When the state cuts, local governments have to pick up the pieces,” said Scott McCown, executive director of the Center for Public Policy Priorities. “You can’t just cut taxes. We need tax reform.”

[Former Deputy Comptroller Billy] Hamilton agreed that it made sense to view “state and local tax structure as a unit.”

“High property taxes are the price we pay for the tax system we’ve got,” he said.

When the governor promises tax relief, added SMU’s Weinstein, an important question is: “For whom?”

Unless you have a lobbyist there in Austin schmoozing for you, the answer is not you. You don’t get the breaks, you get the tab. It’s not by accident, it’s the system we’ve put in place.

Finally, on a related note, Mayor Parker’s office put out this statement on property tax fairness yesterday.

Property tax fairness is an issue important to the city’s bottom line and that of every residential property owner because they are bearing an unequal tax burden. Clearly, all properties need to be valued appropriately. The current system is obviously inequitable and rewards a lack of transparency by the owners of many commercial properties. All too often, sound valuations made by Harris County Appraisal District (HCAD) are unfairly attacked by these owners, and HCAD, bound by a system that favors the owners, is forced to defend its actions with one hand tied behind its back. It is time for a change, and the state legislature is the primary place to make that change. The City of Houston will work with HCAD, the Houston Organization of Public Employees and other groups to achieve that change.

See here for more. It’s a little late to address this in the current legislative session, but the sentiment is correct, and I hope the fight for more tax fairness is a highlight of the next session.

Maybe I buried Medicaid expansion too soon

I still think it’s dead, but I could be wrong about that.

It's constitutional - deal with it

It’s constitutional – deal with it

The fate of Medicaid reform in Texas could rest solely on an up-or-down vote on the 2014-15 budget.

State Rep. John Zerwas, R-Simonton, a member of the conference committee that is hashing out the differences between the House and Senate budget plans, said Monday he’s relatively confident that a rider stipulating the Legislature’s preferred Medicaid reform terms — like cost containment measures and private market reforms — for any deal with the federal government is “sticking” to the 2014-15 budget. The rider does not expand Medicaid, he clarified, and said he would be “happy to defend it” to his colleagues.

The 2014-15 budget is not yet finalized. Budget conferees are meeting Monday evening to discuss the health and human services section and could discuss the rider. It could also come up in future discussions on the proposed budget this week.

Republican lawmakers have made it clear that they won’t approve an expansion of Medicaid eligibility this session. And although some conservative GOP House members have vowed to reject the budget proposal if such a rider is included, Zerwas said the rider has the support of the majority of budget conferees. The budget does not include financing to expand Medicaid eligibility in the upcoming biennium.

“No amount may be expended to modify Medicaid eligibility unless the [Health and Human Services Commission] develops a plan to create more efficient health care coverage options for all existing and newly eligible populations,” states the budget rider, which was authored by Senate Finance Chairman Tommy Williams, R-The Woodlands.

The rider also says the Legislative Budget Board, which includes the lieutenant governor and House speaker, must ensure that any deal reached with the federal government to expand Medicaid eligibility cuts uncompensated care costs; promotes the use of private coverage and health savings accounts; establishes wellness incentives, cost-sharing initiatives and pay-for-performance initiatives; and reduces the state’s need to gain federal approval to make “minor changes” to the program.

(You can read the budget rider here, under contingent provisions in Article 9, Sec. 17.12. Certain Medicaid Funds.)


The Senate has approved the rider, but the House approved a nonbinding motion directing budget conferees not to include the rider on the budget.

State Rep. Van Taylor, a Tea Party favorite from Plano, told the Tribune on Tuesday that the conservative faction of the House was prepared to vote down the budget, if it called for an expansion of Medicaid.

“John wants it. I want it — so there’s two of us” who want to include the rider in the budget, House Appropriations Chairman Jim Pitts, R-Waxahachie, said on Tuesday.

I presume Sylvester Turner, who is also on the House conference committee, would be in favor of this as well. If so, then that should be enough support to include it. What happens after that is anyone’s guess. I’m sure Pitts is smart enough to not doom his own budget, but I don’t know how much faith I’d put in the Republicans; Democrats will have their own incentives, which may or may not line up with what Pitts wants. And if we are going to a special session as Burka is convinced we are, then I wouldn’t put it past Rick Perry to veto the budget out of spite. Let’s just say that the conference committee, which is meeting again and making some progress, is likely the lowest hurdle for this to clear.

Perry works against his own stated interests

I don’t understand this at all.

A bill that would have increased vehicle registration fees to raise money for transportation projects met its demise in the Texas House on Thursday.

House Bill 3664 by state Rep. Drew Darby, R-San Angelo, was designed to generate money to pay down the state’s transportation-related debt and fund improvements on non-tolled roads across Texas.

After a spirited discussion, Darby postponed the bill until May 28 — one day after the session ends and lawmakers go home. He cited pressure from outside forces that made voting for the measure difficult for some legislators.

Gov. Rick Perry said Wednesday he would call a special session if fees were increased for transportation.

“Send me a balanced budget that has no fee increases for transportation and $2 billion for infrastructure for water, and everyone can go home and enjoy their summer,” he told reporters, explaining that he would call a special session if legislators don’t approve $1.8 billion in tax relief.


The bill highlighted divisions within the Legislature’s Republican majority. While some disagreed with the revenue raising approach to addressing transportation concerns, supporters of the bill said transportation funding needs were reaching a critical point.

“There’s no doubt that our transportation system is in dire crisis,” said Transportation Committee Chairman state Rep. Larry Phillips, R-Sherman, who amended Darby’s bill to reduce the proposed fee increase from $30 to $15.

Phillips said the state was facing a $4 billion transportation funding shortfall, and he asserted that not addressing it was “a failure to lead.”

“Are you going to be a leader or are you going to just follow?” Phillips shouted at his colleagues.

“Baaaaaaaaaaa”, most of his colleagues replied. What’s truly amazing about this is that the original proposal for vehicle registration fees was to double them, which is to say increase them by $50, three times as much as Darby’s watered-down bill. That was proposed by Sen. Tommy Williams and endorsed by the Texas Association of Business, who I would think is a little miffed to be dissed like this, both by Perry and the nihilists at Empower Texas, who pushed a typically dishonest alternative instead. I didn’t think raising the registration fee was the best solution, but it wasn’t a terrible idea, and I was crazy enough to think it might be an acceptable solution for a serious need. That’ll learn me. So now we’ve got no transportation solution, no water solution, and no easy way to fund those solutions if we make another attempt at it. What once looked like a productive session is rapidly devolving into a big mess. Good luck sorting it all out in overtime. Trail Blazers has more.

UPDATE: More from EoW and PDiddie.

Margins tax breaks passed

Someone’s getting a tax break. Probably not you, though.

Rep. Harvey Hilderbran

The Texas House on Tuesday tentatively cut hundreds of millions of dollars from the state’s primary business tax — cuts that proponents say will keep the Texas economy humming and opponents argue cost too much.

House Bill 500 is the primary legislative vehicle to address the state franchise tax, commonly called the margins tax, but it is just one in a series of bills this session that either cut taxes broadly or target specific industries.

The price tag for House Bill 500 has yo-yoed through the session, as Gov. Rick Perry last month called for $1.6 billion in franchise tax cuts, only to see a House committee shrink it to $396 million three days later.

The bill permanently exempts small firms from paying the tax if they have less than $1 million in gross annual receipts. It also attempts to fix inequities between certain classes of taxpayers.

On Tuesday, the House added amendments that swelled the bottom line to $667 million.


[Rep. Harvey] Hilderbran, chairman of the House tax writing committee, said the Legislature must reconcile the appropriations bill and several bills that cut taxes during the final days of the session. The Legislature adjourns May 27.

In 2006, the margins tax was part of a deal to cut property taxes for homeowners and businesses. Critics argue that it never raised as much as was projected, but it accounted for $4.5 billion in revenue in fiscal 2012 — or about 10 percent of the state’s tax revenue.

It remains unpopular among many small businesses, in part because it taxes companies whether they are profitable or not.

State Rep. Mark Strama, D-Austin, echoed that complaint, saying HB 500 makes an inequitable system more inequitable.

“House Bill 500 takes a stupid tax policy and makes it stupider,” Strama said. “We should have a profit-based tax on revenue.”

Hilderbran said the tax bill returns money to taxpayers to grow the economy, but [Rep. Sylvester] Turner said it did nothing for working families.

“Did you give anything to anybody who’s not a business owner?” Turner asked.

“If they work for these businesses, they’ll be better off,” Hilderbran said.

Here’s HB500. It should be noted that Rick Perry is still threatening to call a special session if taxes aren’t cut further. Remember that both the House and the Senate have passed budgets that didn’t take into account hundreds of millions less in revenue (some of these cuts won’t kick in till the next biennium), so that’s something the conference committee will have to deal with once they resume speaking to each other. And of course if the Supreme Court upholds the school finance ruling, that’s that much more money the Lege will have to scrounge from somewhere else to fill in the now-larger hole. But hey, all in a day’s work. The good news is that this still has to pass the Senate, and there’s no guarantee of that. The Trib and the Observer have more.

Weekend legislative threefer

That sound you heard on Friday was Rick Perry stamping his feet if he doesn’t get his way.

Corndogs make bad news go down easier

I can eat these all summer if I have to

Gov. Rick Perry is warning state legislators that it could be a long, hot summer in Austin if they don’t pass his top priorities: funding water and transportation projects and cutting business taxes.

With a month left in the regular session, Perry spokeswoman Allison Castle said Friday that the governor is prepared to bring lawmakers back in special session if they don’t act on his signature issues.

“The governor laid out his priorities in January to ensure a strong economy for the next 50 years, including instituting fiscally sound budget principles, significant tax cuts and making sure Texas has the necessary roads and water infrastructure to support our growing state,” she said. “His priorities haven’t changed.”

Castle said the Legislature still has plenty of time to act before the clock runs out on the 83rd Texas Legislature next month. But she said Perry won’t stand for incomplete work on his top items.

“He’s been very clear that he won’t sign the budget until he signs significant tax relief,” she said. “And if they don’t address all of these priorities by the end of the session, the governor is willing to keep them here as long as it takes to get it done.”

Whatever. Perry is very likely to get the first two items on his wish list regardless of any threats. His ridiculous tax cut, I hope not. I note that story came out the same day as this one about legislative Republicans pushing back against Perry this session. Not a coincidence, I daresay, but we’ll see whether that attitude survives Perry’s meetup with the GOP caucus.

Meanwhile, the House approved a supplemental budget that included more money for public education.

Debate over a routine budget bill in the Texas House became unusually topical Friday as lawmakers touched on a fertilizer plant explosion in West, the murder of two Kaufman County prosecutors and the Travis County district attorney’s drunken driving arrest.

Lawmakers ultimately voted 129-9 in favor of House Bill 1025, which would add $874.9 million to the state’s current two-year budget. The bill includes $500 million more for public schools and more than $170 million in payments to state and local agencies to cover costs related to wildfires in 2011.

Lawmakers filed 20 amendments to the bill ahead of Friday. Nearly all of them were eventually withdrawn or rejected by the House. Members agreed to an amendment by state Rep. Kyle Kacal, R-College Station, that allows the governor’s office to “prioritize” the use of $2 million for recovery efforts after this month’s disaster in West. Kacal’s district includes the town of West.

One of the amendments that was subsequently withdrawn came from Rep. Phil King, who is trying to force Travis County DA Rosemary Lehmberg to resign. He attempted to use the process to move the Public Integrity Unit from Lehmberg’s office to that of the Attorney General, but did not succeed. I wouldn’t put it past him to try again later, however. In any event, the best thing to come out of this debate was the wailing and gnashing of teeth by the slash-and-burn crowd.

Finally, the Texas Association of Business has endorsed the Zerwas plan for Medicaid “expansion”.

“If we can take the money on our terms and conditions then it is something we ought to do,” said Bill Hammond, president of the group, whose board voted in January to oppose expanding Medicaid as called for under the federal Affordable Care Act. The basis of Zerwas’ plan is to negotiate a deal that allows the state to use federal Medicaid expansion dollars to subsidize private coverage, which Hammond said is a workable solution. “We encourage them to march to Washington to try to cut a deal,” he said.

House Bill 3791, authored by Zerwas, R-Simonton, has four parts: It outlines what the state’s request for a federal block grant to reform the current Medicaid program could look like; identifies Medicaid reforms that Texas could implement already, such as cost-sharing requirements and co-payments; sets up a separate program to potentially draw down federal financing to help individuals at or below 133 percent of the poverty level find private market coverage; and sets up an oversight committee for both programs.

“This is not an expansion of Medicaid — this is the creation of a new program that leverages our private sector,” Zerwas told the House Appropriations Committee, which voted 15 to 9 on Tuesday to move the legislation out of committee and continue debate on the House floor.

Like I said, I’m lukewarm on the idea, but it is the best we could get at this time. Lord, we need a new government in this state.

Senate officially taps the Rainy Day Fund

Well done.


Texas senators hammered out a sweeping deal to increase state funding for water and transportation projects and schools on Tuesday, tackling some of the thorniest issues of the legislative session all at once.

The senators voted 31-0 for Senate Joint Resolution 1, which would ask Texas voters to approve taking $5.7 billion out of the state’s Rainy Day Fund. Of that amount, $2.9 billion would go to transportation, $2 billion to water infrastructure projects and $800 million to public education.

“I woke up at 2:30 this morning worried about how I was going to get this bill out of the ditch,” Senate Finance Chair Tommy Williams, R-The Woodlands and the bill’s author, said. “It’s a miracle.”

Senators also annonunced plans to allocate an extra $1.4 billion for schools that came about after the Comptroller’s office informed the senators that property valuations have come in higher than previously estimated. Put together, the Senate’s actions would restore $3.7 billion of the $5.4 billion in cuts to public education made in 2011, Williams said.


The measure passed Tuesday is significantly different than what Williams originally proposed. His original plan had no money for education. The $800 million in the package approved Tuesday includes $500 million in formula funding and $300 million in merit pay for teachers.

On transportation, Williams had wanted to spend $3.5 billion on a State Infrastructure Fund that would either loan out money to local communities for road projects or help them borrow money more cheaply to fund the projects. Williams said late Tuesday that a majority of Senators made clear to him they were not interested in a plan that increased public borrowing.

The measure approved Tuesday will put $2.9 billion directly into the state highway fund, which the Texas Department of Transportation will use instead of issuing that much in bond debt. That will save the agency about $6 billion over the next 30 years in avoided debt service costs, Williams said.

All things considered, not too bad. I prefer this way of using the RDF for transportation, and if the Senate water plan emphasized conservation in the same way as the House plan, it’s all to the good. There will still be plenty of money left in the RDF after these expenditures, and the way the energy business is going these days, it’ll fill back up soon enough. Comptroller Susan Combs has endorsed the idea. The best part of all this is that as a joint resolution, it doesn’t need Rick Perry’s signature, just 100 votes in the House. Of course, that could be a heavy lift, but if the likes of Patrick, Birdwell, Campbell, Paxton, et al can vote for this, there’s no reason why the House teabaggers can’t as well. A statement from Sen. Jose Rodriguez on the passage of SJR1 is here, and the Observer has more.

Texas Lottery Commission dies and is reborn

And we have our first curveball of the legislative session.

Is this the end?

The House voted Tuesday to defeat a must-pass bill reauthorizing the Texas Lottery Commission, a stunning move that casts doubt on the lottery as a whole and may potentially cost the state billions in revenue.

House Bill 2197 began as a seemingly routine proposal to continue the operations of the commission that oversees the lottery until September 2025. But opposition mounted after one lawmaker called it a tax on the poor, and the House eventually voted 82-64 to defeat the measure.

A short time after the vote, the House called an abrupt lunch recess and could reconsider the measure if any lawmaker who voted against it offers such a motion. Unless lawmakers reconsider, the commission would begin a one-year wind down, and cease to exist by Sept. 1, 2014.

“There are more members than I thought who are against the lottery and just have a psychological aversion of it,” said Rep. Rafael Anchia, D-Dallas, who sponsored the failed bill.

The state Senate has yet to consider the matter, but it can’t because the so-called “sunset bill” on the Lottery Commission initiated in the House.

For now, there’s no one to operate the lottery, which means a potential loss of $1.04 billion in annual revenue for the Permanent School Fund and $27.3 million to cities and counties from charitable bingo.

The state budget already under consideration in the Legislature has factored in the $1.04 billion — and losing the lottery proceeds would create a deficit lawmakers would need to fill.

Here’s HB2197. I think it’s fair to say no one saw this coming. Here’s more from the Trib:

During a spirited debate on the bill, state Rep. Scott Sanford, R-McKinney, got a round of applause in the House as he spoke against the bill, calling the lottery a “predatory tax” and “a tax on poor people.”

As soon as the vote was over, House leaders were already discussing possible workarounds to keep the programs going. Anchia said the House may reconsider the vote.

Texans spent $3.8 billion on lottery tickets in the 2011 fiscal year, according to the Legislative Budget Board. The majority of that was paid out to players and retailers, with $963 million transferred to the Foundation School Account. Another $8.1 million was transferred to the Texas Veterans Commission.

Anchia warned that charity groups around the state would be outraged at learning they could no longer host bingo games.

“VFW Bingo’s dead now,” Anchia said. “They’re going to have to go back to their constituents and explain why bingo is illegal.”

I don’t disagree with what Rep. Sanford says, though I wonder if he will feel the same way when the payday lending bill comes to the House floor. In the end, however, everyone sobered up after taking a lunch break.

In a 91-53 vote Tuesday afternoon, the Texas House passed House Bill 2197, continuing the the Texas Lottery Commission. An earlier vote Tuesday had failed to continue the commission.

Bill supporters spent the hour after the first vote impressing on those who voted against it the impact of cutting $2.2 billion from schools. The House Republican Caucus hastily assembled to discuss the situation.

“I think when people took a sober look at the budget dilemma that would ensue, they voted different,” said state Rep. Rafael Anchia, D-Dallas, the bill’s author.

Several lottery critics in the House saw the day’s drama as a victory, setting the stage for a more thorough debate on the lottery in the future. Public Education Chairman Jimmie Don Aycock, R-Killeen, said he originally voted “no” largely to make clear his opposition to gambling. Once that statement was made, it made more sense to back the Lottery Commission for now.

“I don’t like gambling, but I do like school funding,” Aycock said. ‘It was, for me, at least, a signal vote. I sort of anticipated I would switch that vote when I made it.”

State Rep. Lon Burnam, D-Fort Worth, said school funding was also the primary motivator for his switch.

“When you weigh principle vs a billion dollars in public ed, I set aside my principle for a billion dollars in public ed,” Burnam said. “I still hate the lottery.”

I had always wondered why they vote on bills three times in the Lege. Now I understand. Having had their fun and having made their statements of principle, if the Lege is serious about wanting to eliminate the Lottery, let’s go about it in the next session by filing a bill and letting it go through the usual committee process, mmkay? Thanks. BOR, who notes that failure to pass this bill could have led to a special session, and Texpatriate have more.

It’s always time for a tax cut

I have three things to say about this:

A corndog in every pot

A corndog in every pot

With less than two months remaining in the 83rd legislative session, Gov. Rick Perry on Monday called on state lawmakers to find $1.6 billion to give Texas businesses relief from the state’s franchise tax.

Perry’s proposal consists of four parts: reducing the overall franchise tax rates by 5 percent, making permanent a $1 million deduction for businesses with up to $20 million in gross receipts, lowering the rate for businesses that file their taxes using the state’s simplified “EZ form” and allowing out-of-state companies that relocate to Texas to deduct their moving expenses.

Perry said Texas needs to invest in more tax relief because other states are considering cutting their taxes to match Texas.

“The idea that we can just sit here and think we can stay at the top of the heap is just not correct,” Perry said Monday at a news conference at the Austin Chamber of Commerce.

1. All through the session, as Democrats have called for restoring the brutal cuts that were made to public education in 2011, one of the main arguments made by Republicans for not doing so is that we ought to wait and see how the Supreme Court rules on the school finance lawsuit, since it won’t be until that point that the Legislature will know what (if anything) it needs to do to comply. One would think that the same logic would apply here. In particular, if the Court upholds the ruling on adequacy, the Lege will have to find several billions of dollars in new revenue for the schools. Seems like a bad idea to be cutting one of the primary sources of that revenue before you even know what will be needed. Not that Rick Perry cares about such trivia, of course.

2. Speaking of the schools, as we know the margins tax has consistently fallen well short of replacing the revenue lost to the schools when the property tax rate was cut in 2006 in response to the previous school finance lawsuit. I don’t see that fact being mentioned in any of the stories I’ve seen so far.

3. As with the other form of tax relief being offered so far this session, the benefits are going (exclusively in this case, primarily in the other) not to individuals but to businesses. If you think tax relief is what is needed this session – I don’t, but it takes all kinds – wouldn’t you at least like to actually see some of that relief? Unless you happen to be a business owner affected by the margins tax, you won’t. Too bad for you.

Still arguing about road funding

I still don’t quite get why the obvious solution is so blithely dismissed.

With most of the work of developing a state budget behind them, lawmakers can now drill deeper into the state’s spending plan to find a way to fund billions of dollars in road maintenance, highway upgrades and other projects under the umbrella of the Texas Department of Transportation.

Highway department officials went into the session estimating the agency needed $4 billion more per year, about as much as it currently spends on new highway construction annually. To seriously dent the congestion crisis, some have said TxDOT needs about $12 billion per year. The agency is carrying about $23 billion in debt, as estimated by Senate Transportation Committee Chairman Robert Nichols, R-Jacksonville.

Under present scenarios, TxDOT will have about $2.5 billion for new construction in 2015. Lawmakers say this isn’t enough to meet the needs of a growing state.

“It is within our means to address it; we just need to do it,” said Sen. Tommy Williams, R-The Woodlands, chairman of the Senate Finance Committee.

Some revenue can come from relatively easy fixes, Williams and others said, such as ending diversions – mostly to law enforcement – from the revenue collected from Texas’ 20-cent-per-gallon fuel tax. Ending the diversions, about $1.5 billion a year, would create a funding gap somewhere else but would fulfill a goal of using all transportation tax revenues for roads, ports and rail.

The gas tax alone cannot pay for the improvements, however. Texas lawmakers have not increased it since 1993, creating a huge funding gap for road projects. Because of changed driving habits and better fuel mileage, Pickett noted, the average driver paid about $12.50 a month in fuel taxes two decades ago. Now that driver pays about $9.54. TxDOT estimates road construction costs have increased 62 percent in those 20 years.

Increasing the gas tax isn’t an option, officials said. For one, no one supports raising taxes, Williams said. Secondly, as cars become more fuel efficient and electric vehicles grow in popularity, the usefulness of the tax is declining.

Ending diversions, most of which is funding for the Department of Public Safety, is a popular option, but as noted no one ever discusses how to fill the hole in general revenue that would leave. It now looks likely that money from the Rainy Day Fund will be used to start an infrastructure bank, but that’s one-time money and all this would really do is push more of the responsibility for transportation away from the state and to counties, which among other things would mean a lot more toll roads. Williams’ preferred solution is raising vehicle registration fees, which has support from the Texas Association of Business. I don’t necessarily oppose this, but I haven’t seen a comparison of how much revenue that would bring in versus how much a ten-cent increase in the gas tax would bring. I recognize that advances in fuel efficiency and the advent of hybrids and electric cars makes the gas tax a declining source over time, but it’s still the single biggest source of revenue for transportation, and it’s the only one that has any connection to how much one uses roads and highways. It’s also the case that a small increase in the gas tax plus indexing it to inflation of construction costs would wipe this problem out. Down the line, a transition to a vehicle miles traveled tax can deal with the issue of less revenue from better fuel efficiency. I know, I know, nobody likes raising taxes but now that we are finally admitting to the need for more revenue it just amazes me at how quickly the most obvious solution is dismissed. Can’t we at least talk about what it would look like to raise the gas tax so we can have a basis for comparison to all these other proposals? A more informed discussion, that’s all I’m asking for.

Senate to tap that Rainy Day Fund

It is just sitting there, not doing any good if it’s unused.

Senate Finance Committee Chairman Tommy Williams, R-The Woodlands, laid out an ambitious plan to spend $6 billion from the state’s Rainy Day Fund on Thursday morning while also setting the stage for a serious debate in the remaining weeks of the session on whether to tap the fund for public education.

Williams’ proposal, called Senate Joint Resolution 1, would ask Texas voters to approve spending $3.5 billion on transportation projects and $2.5 billion on water projects. The comptroller’s office has projected the fund, fed largely by taxes on the state’s oil and gas production, will grow to $11.8 billion by the end of the next biennium.

The Senate Finance Committee unanimously voted the resolution out of the committee to be considered by the full Senate.

Williams said he was willing to consider amendments to the resolution that would put money toward public education. Since last year, Democrats in both the House and Senate have suggested tapping the fund to help restore some of the cuts made to schools in 2011. Most Republicans in the Legislature have dismissed the proposal as a nonstarter, explaining that the fund should not be used for recurring expenses such as school spending.

“I’m willing to consider a thoughtful amendment that would address some of our public education concerns,” Williams said. He also didn’t rule out considering amendments related to spending from the fund on health-related state expenses.


Williams’ proposal as drafted would create two new state funds: the State Water Implementation Fund of Texas, also known as SWIFT, and the State Infrastructure Fund. The former would be used to fund projects in the statewide water plan, which lists $53 billion in water-supply projects including reservoirs, wells, pipelines and desalination facilities.

The Senate Finance Committee was unanimously supportive of the part of the plan spending money on water projects. State Sen. Kel Seliger, R-Amarillo, described it as “visionary.”

The portion of the plan going to transportation was less well-received, as some senators worried the plan wouldn’t do enough to address a projected funding shortfall at the Texas Department of Transportation and would increase public debt. Under Williams’ proposal, TxDOT would largely make use of the State Infrastructure Fund to help local communities move forward with road, port and freight rail projects by either loaning out money for the projects or helping public entities borrow money for the projects at lower interest rates.

Williams, a former Senate Transportation Committee chairman, made it clear that he did not believe his plan was enough to address the state’s transportation issues. TxDOT has said it needs $4 billion in new revenue each year just to keep traffic levels around the state from getting worse.

“I don’t believe this is the silver bullet that’s going to solve our transportation problems, but I believe it’s part of a solution that must include robust new funding for road construction,” Williams said.

The House has already passed a bill to use Rainy Day funds for SWIFT. I feel about the same way as described above – it’s a decent idea for water projects, less so for transportation projects, since it will mostly push the cost of those projects to local government, which will mean a lot more toll roads, not all of which will be successful. As for the debate about using some funds to make school districts whole (or at least whole-r), all I can say is that I wish everyone had been this enthusiastic about the Rainy Day Fund two years ago when we really needed it. Of course, at the time the Lege was likely counting on the Rainy Day Fund to cover the planned shortfalls they built in for Medicaid and the delayed payments to school districts. Turns out they didn’t need to be so tight, and they can thank Rick Perry and his lines in the sand for enabling them to avoid public discussions of why they weren’t planning to use the RDF to help schools. The Texas AFT is unimpressed.

The debate about using Rainy Day funds for schools when SJR1 hits the floor promises to be a lively one.

Sen. Royce West, D-Dallas, said he wants to add $2.4 billion to the package to fully restore $5.4 billion in education cuts made two years ago.

“I think there’s information that I’d like to share with all the members of the committee and take a look at what really happened,” Williams responded, “because when we consider on an all-funds basis, there weren’t $5.4 billion in cuts.

“There were cuts and I wish that we hadn’t had to make any of those cuts,” he added. “But I think it was more on the order of $800 million when we look at the total impact on school districts.” Williams added that, as a result of a proposed state budget, school districts are now “up by about $4.5 billion from where they were.”

Williams’ assessment brought a fiery reaction from state Sen. Wendy Davis, D-Fort Worth, who has made restoration of education cuts one of her top priorities.

“It’s absurd,” she said following the committee meeting. “I’ts the same fuzzy math that the Republican leadership used we we finished the (2011) session claiming to have added money in public education when school districts all over Texas were laying teachers off and enlarging classroom sizes.

Davis said that cuts to education have totaled $8.3 billion since 2009.

Nothing like a dispute about the basic facts to keep things fresh. I’ll be greatly disappointed if at least some of the livestream video doesn’t get put on YouTube afterwards.

One more thing:

Williams’ resolution explicitly states that none of the State Infrastructure Fund’s spending can go toward passenger rail projects, which Williams described as “a black hole for money.”

“One passenger rail project would burn up the money in this fund,” Williams said. “I just don’t think it’s a wise use of state resources.”

I think that’s needlessly restrictive, but whatever. If the folks pushing that high speed rail network do a good job of it, I suspect there will be state money available to them if they ask nicely.

House debates its budget

As you know, yesterday was Budgetpalooza in the House.

The House budget puts more money into public education and less into health and human services than a Senate proposal that passed the upper chamber last month.

“No one is or will be entirely happy with this bill, but there is something for everyone this year,” House Appropriations Chairman Jim Pitts, R-Waxahachie, said two weeks ago after his committee approved its version of Senate Bill 1.


It will be a strikingly different scene from the Senate, which passed its budget proposal last month after about four hours of discussion. Traditionally, senators do not amend their budget plan from the Senate floor. State Sen. Wendy Davis, D-Fort Worth, offered an amendment on the bill related to school finance but then withdrew it.

After the House passes a budget bill, both the House and Senate will appoint conference committees to resolve differences between the two proposals.

Neither budget completely reverses last session’s $5.4 billion in cuts to public schools, a goal many Democrats have said is a priority. Several House members have filed amendments attempting to put more money into schools.

Other legislators hope to amend the budget to put more money for uninsured care or specific types of care.

An amendment from state Rep. Donna Howard, D-Austin, aimed at increasing payments to health care providers serving Medicaid patients could spark a protracted discussion over whether Texas should accept federal dollars made available through the Affordable Care Act and expand Medicaid.

House members could also see themselves drawn into debates on hot-button cultural issues. State Rep. Jessica Farrar, D-Houston, has several amendments aimed at reducing state funding earmarked for “alternatives to abortion” and putting it toward other women’s health services. An amendment from state Rep. Bill Zedler, R-Arlington, would block funding for “gender and sexuality centers” at higher-education institutions.

A group of Republican freshmen have filed more than three dozen amendments that would take money away from various state programs and agencies and putting the funds into TRS-Care, the group health insurance program for the Teacher Retirement System, which is projected to have a shortfall by 2016.

TRS-Care has since said that they did not support the freshlings’ effort to de-fund various things on their behalf. A number of those hot-button amendments concerning abortion and women’s health were subsequently withdrawn in a bit of bipartisan detente, which if nothing else should make the whole thing go by a bit more quickly. There are still a lot of other issues to be debated, not all of which get much attention but all of which matter a lot to the people affected by them, and a few messages to be sent. One of the messages sent was about vouchers.

About eight hours into the House’s debate on the state budget Thursday, lawmakers in the lower chamber sent a clear signal about their position on private school vouchers.

An amendment from state Rep. Abel Herrero, D-Corpus Christi, that would ban the use of public dollars for private schools, passed 103-43 with bipartisan support.

“What this amendment basically does is say that you cannot use public money to support private institutions with vouchers,” said state Rep. John Otto, a Dayton Republican who is the House’s head education budget writer.

As they say, this is a big deal. Even Tom Craddick voted against vouchers, amazingly enough. If you listen carefully, you can hear Dan Patrick grinding his teeth. The Observer, Trail Blazers, and Texas Politics, which notes that despite this vote vouchers aren’t quite most sincerely dead yet, have more.

In the end, the House debated the budget well into the night, until almost 10 PM according to Rep. Gene Wu, who heroically live-tweeted the whole thing; BOR liveblogged it as well. Given the big vote in favor, it’s likely that nothing too horrible happened, but we’ll assess the damage later. It’s on to conference committee from here.

More details on the House budget

Consider this to be written in pencil, because it’s going to change.

More than $1.6 billion and disagreements on how much Texas should spend on public education and Medicaid separate the budgets proposed by the House and Senate.

The Senate budget proposal, passed 29-2 by the upper chamber last week, spends $195.5 billion, a 2.9 percent increase from the current two-year budget. The House budget, which is scheduled for a vote on the House floor on April 4, spends $193.8 billion, a 2.1 percent increase.

While the House budget is smaller, it spends nearly $1 billion more on public education. The Senate plan spends $604 million more on higher education.

The Senate also invests $2.1 billion more in health and human services. A large portion of that extra spending, $974.5 million, covers projected growth in costs associated with Medicaid such as more Texans enrolling in the program and general medical cost inflation. The House budget does not address those costs.

“Our bill does not include cost growth, does not include rate increases, and we need to address those things,” state Rep. Jim Pitts, R-Waxahachie and the chamber’s chief budget writer, said last week.

Assuming the House proposal passes that chamber, members from both the House and Senate will meet in conference committee to resolve differences between the two plans.

The final product is likely to be larger than what either side has proposed. Neither budget addresses large shortfalls in transportation or water funding, two issues many lawmakers have discussed tackling this session. Legislators have also said they are considering additional spending on tax reform and further reversing last session’s public education cuts.

Lawmakers are also waiting on an updated revenue projection from Comptroller Susan Combs. If she tells them there is more revenue available than what she estimated in January, lawmakers may feel more comfortable spending more.

As the story notes, don’t be fooled by the graphic for higher education. There was an accounting change that makes it look like there was a cut, but in actuality there’s more money being appropriated, so that’s good. The budget still isn’t where it needs to be to account for growth and need, and we suffered needlessly for two years thanks to Comptroller Combs’ lousy revenue forecast, but things are better and that’s no doubt why this session has been less contentious so far. I do believe the House will account for Medicaid and the Senate will bump up its public education spending, with both being abetted by a higher revenue projection for the biennium. Beyond that, watch for the usual shenanigans in the amendment and rider process.

House Appropriations releases its budget outline

Better news for schools in this version.

The House Appropriations Committee voted unanimously Thursday to boost funding for public schools by $2.5 billion in the next two-year budget period.

Schools would get an additional $500 million in the current fiscal year, which ends Aug. 31, under a second proposal by Appropriations Chairman Jim Pitts that is likely to be approved by the committee as part of a separate spending bill.

That $3 billion total is twice the increase approved so far by senators. But Senate leaders have said they want to give schools a bigger increase than the $1.5 billion in their two-year budget proposal.

House lawmakers are eager to put a dent in the $5.4 billion cut from public education two years ago, Pitts said. Budget cuts were made in 2011 because Comptroller Susan Combs projected a severe revenue shortfall. A rebounding economy instead has given the Legislature billions more to spend than expected.

“It is a priority of the Texas House – Republicans and Democrats – to fund public education. We challenge the Senate to have that same priority,” said Pitts, R-Waxahachie.


Houston ISD’s Jason Spencer said the district didn’t yet know what the House committee proposal would mean for its funding, but that Thursday’s move was a positive step.

“We’re encouraged to see that state lawmakers seem to be moving toward restoring the cuts that were made two years ago,” Spencer said. “We’d like to see the cuts fully restored, and we expect that is what is going to happen as a result of school finance litigation. Nonetheless, we are encouraged by this. We need to see how the numbers shake out.”

Given that HISD has talked about raising the tax rate to make up for a $50 million shortfall in the next fiscal year, this is good news. Still not a full restoration of funds, but getting closer, and this might help nudge the Senate a little farther. On the downside, the total amount of spending in the House budget is less than that of the Senate budget, so where they’re giving here they’re taking away there. They have only released a framework, not a complete document, so we don’t know the details just yet. The bill will come to the full House for a vote on April 4. Stace has more.

Why do we give tax breaks to country clubs?

As you know, I’ve talked before about sunsetting tax expenditures. Sens. John Carona and Rodney Ellis have filed a bill to require a periodic review of the many exemptions, exceptions, and other special cases in the tax code, with the aim of requiring legislative approval to renew or extend them. This is a good idea for many reasons, and State Impact Texas highlights one of those reasons.

Whaddya mean we have to pay our fair share?

One break Sen. Ellis says could be targeted right now is one used by country clubs. Ellis will be the first to tell you what a lovely time one can have on the links of the exclusive River Oaks Country Club in Houston.

“I have a lot of good friends who are members there, have had the benefit of being able to play once or twice, would like to get invited again, may not get invited the day you run this story,” Ellis told StateImpact.

Two decades ago as a newly-elected legislator, Ellis saw a news article about how some local country clubs took advantage of a big break and avoided paying millions in property tax. Known as the Greenbelt Act, it gives enormous property tax discounts to owners of tracts of green space that is used only for recreation.


Ellis’s staff found that in the 10 most-populated counties in Texas, a total of 36 clubs took advantage of the break (some counties had no clubs that used it including those in Dallas, Fort Bend, Travis and Bexar counties).

Harris County had by far the most clubs utlilizing the break with 22 of 26 private clubs saving millions in taxes. Ellis’s office found that the River Oaks Country Club had the biggest savings, about $2 million a year from getting its golf course’s market value of about $80 million marked down to only $4.2 million. A call to the club did not result in obtaining a comment.

OK, I’m open to suggestion here. What’s a good public policy rationale for giving this tax break to the River Oaks Country Club? Are we afraid they might lay off a groundskeeper or something if they paid taxes based on the actual appraised value of their property? Make your case in the comments, I’d love to hear it.

Senate passes its budget

Let the damning with faint praise for this jerry-rigged excuse for not adequately funding our needs yet not eviscerating them as badly as last time begin.

Adjusted school spending chart from Rep. Gene Wu

The Texas Senate approved a $195.5 billion two-year budget Wednesday, with Democratic state Sens. Wendy Davis of Fort Worth and Sylvia Garcia of Houston voting against the spending plan.

Senate Bill 1 spends $94.1 billion in general revenue — the part of the budget lawmakers have the most control over — a 7.7 percent increase over the 2011 budget. Spending would increase in most areas, including education and health care, but still drew criticism from those who argued that more spending is needed in light of the size of last session’s budget cuts and the amount of money now available.

“We did what we had to do last session, but we can be proud of what’s included in this budget,” said the chamber’s chief budget writer, state Sen. Tommy Williams, R-The Woodlands.

Even those who supported the bill said it remains a work in progress. The budget leaves untouched nearly $12 billion available in the state’s Rainy Day Fund. Members in both the Senate and the House are eyeing the fund for proposed water infrastructure and transportation projects.

The House Appropriations Committee is expected to vote on its version of the budget Thursday, with that version likely to reach the House floor in early April. Both chambers will then appoint conference committees to formally meet and resolve differences between the two proposals.

Williams said after the vote that he expected there would be more agreement than differences between the House and Senate budgets.

Davis offered the sharpest criticism of the proposal, accusing Republican senators of using an ongoing school finance lawsuit as an excuse to avoid properly funding public schools this session. Senate Bill 1 adds about $1.5 billion in funding to public education. Lawmakers cut $5.4 billion from education last session. Various lawmakers have predicted that the lawsuit will prompt a special session on school finance in 2014.

“We are expected to fix the finance problem, and I believe that we can start to do that work today,” Davis said.

Sen. Davis’ statement on SB1 is here. She wasn’t the only critic of the bill.

Williams acknowledged the Senate’s budget wouldn’t bring school funding back to levels that existed before lawmakers whacked $5.3 billion from basic aid and grants in 2011. But Williams, R-The Woodlands, said senators put back nearly $1.4 billion. He predicted higher property values and economic growth would allow lawmakers to fill more of the hole before the session ends in late May.

“While we still have a ways to go, we can make more progress as this whole process moves forward,” said Williams, who heads the budget-writing Senate Finance Committee.

Sen. Rodney Ellis, D-Houston, though, gently chided Williams for worrying more about staying within a constitutional spending limit and preserving state savings than about educating children. The state is expected to have nearly $12 billion in a rainy day fund by August 2015. GOP leaders currently plan to spend about $4 billion of it to create two infrastructure improvement revolving-loan funds.

“If there are the votes to go into the rainy day fund for water or for transportation, I will be one advocating we also use the rainy day fund to help those children,” said Ellis, who ran the budget panel in the 2001 session.

Ellis said the budget falls about 3 percent short of funding current services enough to cover population growth and inflation.

The embedded chart, courtesy of Better Texas and Rep. Gene Wu, is a reminder that we’re still behind on what we had been spending on public education. I do hope that more will be added as the process continues and better revenue estimates come in, but there won’t be a game-changer. A statement from the Texas AFT is here, a statement from the TSTA can be found at BOR, a statement from Sen. Jose Rodriguez is beneath the fold, and Stace has more.


We have a budget

It is what it is.

Texas budget spending per resident

The 15 members of the Senate Finance Committee unanimously voted on Wednesday for a $195.5 billion two-year budget that undoes some of the cuts from the 2011 legislative session.

The budget, which now heads to the full Senate, is 2.9 percent higher than the estimated size of the current two-year budget, which is $189.9 billion after factoring in extra spending lawmakers are expected to approve later this session.

Senate Bill 1 spends $94.1 billion in general revenue, the portion of the budget lawmakers have the most control over. That’s an extra $6.7 billion over the current budget, a 7.7 percent increase.

“These decisions are never easy,” said Senate Finance Chairman Tommy Williams, R-The Woodlands. “There aren’t any of us that got everything they wanted but I think we came up with a good work product given the budget constraints that we have.”

The committee added about $8.9 billion more than the base budget it released in January. SB 1 now includes an extra $1.4 billion for public schools, $746 million for higher education and $207 million for Child Protective Services.

Williams said the extra money for schools should support the state’s case in an ongoing school finance lawsuit.

The House Appropriations Committee added a smidgeon more for education, though obviously it’s still well short of what it was before the cuts of 2011. This budget isn’t as bad as it could be, but it isn’t as good as it could be, either.

Senators in charge of the various workgroups for the budget wanted to add $8.1 billion in General Revenue to the starting-point SB 1’s $88.9 billion, for a total of $97 billion allocated to schools, public universities and community colleges, health and human services, public safety, and other basic state functions. This $97 billion was also the amount estimated to be the bare minimum needed to pay for population and cost growth in the next two years while leaving most of the 2011 budget cuts in place. Instead, the $94 billion in CSSB 1 is $3 billion below that “bare bones” current services line, meaning $3 billion (3%) more in cuts to current services. These cuts could still be avoided if House and Senate budget-writers are willing to use remaining General Revenue and the Rainy Day Fund.

There are still a lot of things that aren’t being funded; click the link above to see more, including the explanation for that embedded chart. We have the means to do the things that need to be done, but we don’t have the will.

Nine hundred million reasons why expanding Medicaid is a good idea

It’s all about the money.

It’s constitutional – deal with it

Expanding Medicaid could make available at least $900 million in state money that otherwise would be slated for health care as lawmakers work to pay for Texas’ priorities, according to an analysis released Tuesday.

“More efficient health spending means there’s more money available for other needs like water and education,” said Bee Moorhead of Texas Impact, a faith-based advocacy group that commissioned the analysis with Methodist Healthcare Ministries of South Texas Inc. Both groups support Medicaid expansion.


Moorhead said in a statement that moving people out of programs that are funded piecemeal with general revenue and into “prevention-focused managed care” would “give lawmakers more resources to tackle the other big issues on their plate this session.

The analysis was prepared by Billy Hamilton Consulting. Hamilton is a former longtime state deputy comptroller.

His analysis says that under starting-point legislative budget proposals, at least $1.2 billion in general revenue funds would be spent over the next two years on state programs serving people who would potentially be eligible for Medicaid. Additional federal funds under Medicaid expansion would take the place of that state money, according to the analysis.

Hamilton estimated that Medicaid expansion would require about $300 million in general revenue for state-paid administrative costs in Texas for the next two-year budget period. The Legislative Budget Board previously has cited a $50 million estimate for administrative costs over two years.

Using the higher figure for administrative costs, the groups said that would mean $900 million could be spent on as lawmakers would like – whether on health care or other programs – and it would not count against the state spending cap because it is considered current spending.

The Trib has a breakdown of the numbers. I’m not sure if this is a new report, a previously unpublicized section of the original report from January, or a summation of Hamilton’s testimony – there’s no obvious link on the Texas Impact webpage, and there’s no link or download in the Trib story. It’s also not clear how these numbers might change under an “Arkansas solution” scenario. Private insurance costs more than Medicaid, but the feds are picking up the full tab through 2015, which is the time period covered by this report, so it may not vary for the first two years. The point is that every way you look at it, this is the right thing to do, and the only rationale for opposition is ideology and a deep indifference to the suffering of others. Burka has more.

TSTA polls about public education

From the inbox, via the TSTA:

A strong majority of Texas voters support using some of the $12 billion in the state’s Rainy Day Fund to restore the $5.4 billion cut from the public education budget two years ago, and the support is strong across party lines, a poll commissioned by the Texas State Teachers Association shows.

The statewide telephone poll of likely voters, conducted Feb. 19-25 by Democratic pollster Keith Frederick and Republican pollster Jan van Lohuizen, also indicated strong growth in public awareness that the funding cuts were hurting educational quality in classrooms. The poll included an oversampling of Republican primary voters.

The question about restoring school funding was asked two ways. One version simply informed respondents of the recent, rapid growth in the Rainy Day Fund and asked if they favored putting $5 billion back into public schools. Some 79 percent said yes, including 93 percent of Democrats, 76 percent of independents and 61 percent of Republican primary voters.

The second version asked respondents if they favored spending $5 billion of Rainy Day money to hire more teachers, reduce class sizes and restore important academic programs or if they believed spending that money could lead to future tax increases and schools should first do a better job of cutting waste, bureaucracy and overhead. Some 69 percent favored restoring the funding, including 83 percent of Democrats, 64 percent of independents and 52 percent of Republican primary voters.

Answering another key question, 61 percent said they believed the funding cuts hurt the quality of classroom instruction, and 32 percent said the cuts were absorbed by cutting waste in schools. That was a marked difference from responses to a similar poll question asked in late 2011, before the full impact of the spending reductions was widely known. At that time, only 47 percent thought the cuts hurt classroom quality, and 49 percent believed they would be absorbed by eliminating waste.

Presented with options, two-thirds of Texas voters (66 percent) would use the nearly $12 billion Rainy Day Fund to restore public school funding. This includes 39 percent who chose education funding over roads (4 percent) or water (5 percent) plus 27 percent who would spend Rainy Day money on all three needs. Only 22 percent would save the entire Rainy Day balance for future needs.

“Texans are not fooled by the rhetoric coming from the education-cutters in Austin,” said TSTA President Rita Haecker. “The vast majority of voters – Republicans, Democrats and independents alike – know that the budget cuts have hurt our classrooms. They also know that the Legislature has enough money to restore the funding without raising anyone’s taxes, and they demand that their legislators do the right thing for our children.”

The poll has a margin of error of plus or minus 3.5 percent for the entire 800-person sample and plus or minus 7 percent for the oversample of 200 Republican primary voters.

Four Democratic Senators – Ellis, Davis, Lucio, and Rodriguez – have filed legislation that would use Rainy Day funds for the purpose of restoring public education funding. See beneath the fold for their joint press release. You can see the poll data in this PowerPoint file, which for some reason isn’t on the TSTA webpage but which I’ve uploaded for your perusal. It’s great to have public opinion on one’s side. But there’s a disconnect right now between public opinion and what’s happening in the Capitol. Part of that is a function of the way legislative lines are drawn, since the opinion of Republican primary voters is so often at odds with the opinion of everyone else, including Republican non-primary voters. Part of that is the lack of a fully functional Democratic Party at the statewide level, or of a communications infrastructure to get the message about this disconnect through. More people need to lose elections over this. Nothing will change until the leadership changes. Burka has more.