House Budget Proposals: Using Rainy Day Fund Critical to Health Care & Education

There’s only one thing the Legislature has to do before leaving Austin: pass a budget. The Senate budget proposal (SB 1) is out of committee and headed to the full Senate for a vote. The House proposal (HB 1) is almost out of committee. Together they will eventually become the General Appropriations Act for 2018-2019, the next state budget.
The Legislature is also expected to pass a supplemental appropriations act. The “supplemental” allows lawmakers to provide extra funds (“supplemental appropriations”) or to make reductions to the current budget (2016-2017 in this case), which can free up funding for the next budget cycle.
First, let’s take a closer look at the House supplemental proposal, HB 2. Then, we’ll explain why failure to adopt this proposal in its current form could mean that more than half a million Texans lose access to health care.
HB 2, by House Appropriations Chair John Zerwas, has changed significantly from the version filed in early March. HB 2 proposes spending almost $3 billion total in 2017 and $2.6 billion for 2018-2019. The Economic Stabilization Fund (aka Rainy Day Fund) would cover almost $2.5 billion of the state’s share of HB 2.
For 2017, most HB 2 appropriations would go to Medicaid, a critically important health care program in Texas. HB 2 would use $931 million in General Revenue for Medicaid, which would secure a $1.7 billion match in federal funds. Combined, this $2.6 billion would pay the health care costs of 4.1 million low-income Texans through the end of August 2017. Most of this funding was not included in the 2016-17 appropriations act by the 2015 legislature because budget-writers chose to leave medical cost inflation out of that legislation.
HB 2 would also provide funding or transfer authority in fiscal 2017 needed to deal with other budget decisions that have emerged since the last legislative session ended, such as
*undoing half of the 2015 Legislature’s cuts to Medicaid acute care therapy services ($51.3 million in state and federal funds)
*providing the Department of Family and Protective Services (DFPS) with staff and salary increases for Child Protective Services and foster care ($180.6 million, state/federal)
*a Texas Education Agency decision that mostly helps wealthy homeowners in wealthy school districts ($80 million)
*a shortfall in the state prison system’s managed health care system (also $80 million)
For the 2018-2019 period, which accounts for $2.2 billion of the $2.5 billion in proposed Economic Stabilization Fund uses, the largest appropriations include
*“border security” ($653 million)
*the TRS-Care (Teacher Retirement System of Texas) shortfall in retirees’ health coverage ($500 million)
*critical deferred maintenance at state buildings or office complexes ($263 million)
*state hospitals and state supported living centers critical life and safety needs ($189 million)
Certain sections of HB 2 would only take effect if two-thirds of the House and Senate approve the bill. This is because HB 2 would wisely use a portion of the Economic Stabilization Fund, which would otherwise contain almost $12 billion by the end of fiscal year 2019.
HB 2 is expected to be finalized soon, after which it will go to the full House of Representatives for amendments and final approval. If HB 2 fails to pass, or uses less than $2.47 billion from the Economic Stabilization Fund, the House budget (HB 1) would be cut by at least $4.6 billion due to an Article IX rider adopted in mark-up. This reduction would be necessary to comply with the “pay as you go” provision that limits the budget to available General Revenue.

How is HB 2 a part of the bigger House budget proposal, HB 1?

During House committee mark-up of the general appropriations act for 2018-2019, language was added (see below) that makes passage of HB 2 extremely critical to the House budget package.
house budget

Source: House Appropriations committee adopted riders for Article 9, March 16, 2017,

The rider indicates that, without HB 2, various state services would receive NO General Revenue at all in the 2018-2019 budget cycle, and some would lose federal matching dollars as well. Potential impacts include the following:
*No progress would be made on reducing wait lists for behavioral health services.
*The Health and Human Services Commission (HHSC) Women’s Health programs, which would no longer be able to serve 313,000 clients, could lose an additional $24 million in federal funds.
*HHSC’s “Children’s Health Program” refers to the Children’s Health Insurance Program (CHIP), meaning more than 430,000 children would lose coverage. Texas would also lose $1.9 billion in federal matching health care dollars.
*For HHSC “Long Term Care” programs, the amount indicated is the total General Revenue proposed in HB 1 as filed for Home and Community-Based Services (serving 28,091 individuals in 2018); Community Living Assistance (CLASS, 5,943 clients); the Medicaid Deaf-Blind with Multiple Disabilities waiver (305 Texans served monthly); the Texas Home Living Waiver (5,624 served in 2018); and the Program for All Inclusive Care (PACE, 1,341 clients). Clients would lose community care services and providers would also lose $1.9 billion in federal funds.
*The $263 million General Revenue cut to the Department of Family and Protective Services (DFPS) would mean no funding to continue the 2017 staff or salary increases that had been implemented to improve children’s safety.
Elimination of the $1.47 billion that the House was proposing for public education would mean no new state aid for HB 21 or any other attempts to keep pace with inflation and avoid harmful cuts to public education. By adding this Article IX rider to their version of the General Appropriations Act, the House’s budget-writers are making it clear that refusing to use even a small part (one-fifth) of the Economic Stabilization Fund will have drastic and damaging consequences on state-supported health and education services.
CPPP supports using the Economic Stabilization Fund to prevent sudden, massive cuts like the ones outlined above. We’ll watch for any changes to the House budget proposals as they advance through the committee process.

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