Big Week for the Budget

Last week the Senate Finance Committee approved an updated $218 billion budget proposal for 2018-2019, and the full Senate will vote on it this week.
Overall, the Senate budget proposal is troubling and should concern all Texans. Yes, SB 1 includes several improvements over the budget proposal as originally filed, especially as it relates to Medicaid caseload growth funding. There are also some common-sense plans to study aspects of the school finance system in other Senate bills.
But if Senate budget writers were trying to cover our state’s population growth and consumer inflation, their proposal would be 8.4 percent higher than 2016-2017. Instead SB 1 proposes only 0.7 percent growth, and this includes a $2.5 billion budget gimmick that might not be constitutional.
The Senate budget proposal also includes some steep cuts to higher education, reflecting a long trend of trimming away at state support for colleges and universities. And a cost containment rider requires substantial additional cuts to Medicaid. Unanswered questions also remain about whether the Medicaid shortfall for 2016-2017 will be funded in a supplemental budget bill. Senators should reasonably expect to know the status of that funding before voting on SB 1.
The heads of the various state agencies – all appointed over the last decade or so by Governor Abbott or Governor Perry – collectively said that it would take closer to $232 billion to deliver the services Texans need effectively. Comparing $232 billion to $218 billion shows how severely the Senate budget would underfund education, health care, public safety, and other services.
The Senate doesn’t need to underfund so severely. The Comptroller says Texas will have almost $12 billion in its Rainy Day Fund by 2019, and the Senate should use the Fund to prevent cuts to education and health care. This is exactly the situation the Rainy Day Fund is supposed to address, and Senators would be irresponsible not to use it.
We’ve heard plenty this legislative session about it being a “tight budget” that will require cuts. It’s worth remembering that the Legislature’s short-sighted tax breaks and diversions did more to limit General Revenue collections than anything else, especially as the Senate proposes additional tax cuts.
Decisions from recent legislative sessions make it all the more concerning that the Senate is proposing more unhelpful cuts and expenses that would put Texas in an even deeper hole:
*SB 2 and SB 4 – The so-called “sanctuary cities” bill would mean more local enforcement expenses, while SB 2 would limit those same governments’ abilities to raise the funds they need to cover police, jails, fire and other services.
*SB 3 – The voucher scheme would use state dollars to fund private school for wealthier families while simultaneously draining tax dollars from public education.
*SB 9 – The spending cap proposal would create a new, arbitrary limit on General Revenue spending in education, health care, public safety, and other areas. There is already a backstop to prevent the state from spending too much; the official comptroller’s revenue estimate dictates how much the state can invest, and the budget does not exceed that. The tighter limits proposed in SB 9 are arbitrary and unnecessary.
*SB 17 — The franchise tax cut proposal would guarantee tight state budgets in the future by automatically cutting the rate of the franchise (or margins) tax over time. The franchise tax is the third largest source of state taxes in the budget.
When you’re in a hole – especially a self-induced one – stop digging. The Senate should boost investments in the services Texans need and stop pushing for new cuts to revenue.
Meanwhile the House budget package, HB 1 and HB 2, demands that lawmakers wisely use the Rainy Day Fund to prevent severe cuts to health care, education and more. Without using the Rainy Day Fund, the House budget would be catastrophic for Texas. The House Appropriations Committee will take up HB 1 and HB 2 this week. Read more about what’s at stake in the House.

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