On Thursday, April 6, the Texas House of Representatives will vote on the budget, a sprawling document that spells out the state’s funding priorities for the next two years.
To understand the big picture of the budget process, start with our infographic on the two-year Texas budget cycle. For more detail, the Texas Senate Research Center’s Budget 101 is a great resource. The budget originates each session with agencies’ requests for appropriations, after which the Legislative Budget Board (LBB) reviews those requests and prepares a draft bill for the House and Senate budget-writing committees, where they each take on lives of their own.
The budget is the only bill the Legislature must pass each session. At this point, we’re over halfway through the 88th Legislative Session, and both the House and Senate have prepared their draft bills – similar but different.
The Senate’s version of the budget bill remains pending in the Senate Finance Committee with an expected vote in mid-April, after which the bill will advance to the full Senate.
On the House side, the bill has been reviewed, marked up, and passed out of the Appropriations Committee as Committee Substitute for House Bill 1 (CSHB 1). Its next stop is the full House on Thursday, April 6. In light of that floor debate and vote, this blog post focuses on the House version of the budget. Eventually, the two houses will appoint a conference committee to hammer out a single compromise document to be signed and passed into law.
How much money is there to spend?
This is the first question budget writers must answer. The Legislature is required to balance the budget and keep expenditures below five specific spending caps. One such cap is the pay-as-you-go cap, determined by the Comptroller’s estimate of projected tax revenue over the next two years. According to the LBB, however, this biennium’s controlling cap is the tax spending limit, which the LBB calculates by adding a certain calculated percentage to the previous budget accounting for expected economic growth.
Additionally, lawmakers this session have an unusually high beginning balance from the last biennium, thanks to our strong economy, high tax collections, and inflation – around $32.7 billion, according to the Comptroller. While some refer to that additional money as a “surplus,” Every Texan prefers to more accurately call it a “beginning balance” because it results from misplaced priorities and perpetual underinvestment in our state’s people.
The current version of the House budget bill (CSHB 1) would spend about $136.9 billion in general revenue (GR) over the next two years. “General revenue” is the state’s primary discretionary fund and does not include dedicated funds, federal funds, and others. (As a comparison, the entire budget, including all funds, is $302.7 billion for the 2024-25 biennium.) The GR portion of CSHB 1 is about $1.2 billion below the tax spending limit discussed above.
Besides the main budget for the 2024-25 fiscal year, the other piece of the biennial appropriations process is the supplemental appropriations bill, SB 30. This bill settles up items from the 2022-23 budget that needed more (or less) funding than was allocated two years ago. One prominent example is Medicaid and the Children’s Health Insurance Program (CHIP), which in recent cycles have often been underfunded in the budget and paid in the supplemental at the end of the biennium.
What’s in the House budget?
The 979-page budget document is arranged into articles that are used to classify state agencies and entities. By far, the largest expenditures are under Article II, Health and Human Services, and Article III, Education.
The budget spells out the amount planned for each state agency and entity’s programs, strategies, and staff. Some budget items come with strings attached – contingent on the passage of legislation or other conditions (“riders”). Budget Day can get exciting and unpredictable as officials amend and vote on riders.
Every Texan spelled out our goals for this session in our policy roadmap, offering our education, health care and food justice, economic opportunity, and tax policy recommendations. With our roadmap as a guide, here are some noteworthy items that are – or aren’t – in the House budget.
Public Education
The budget includes $60.3 billion in all funds for the Foundation School Program, the basis of public pre-K-12 funding – a $12.5 billion increase from the last biennium. Significantly, the budget includes a much-appreciated increase of $5 billion in GR over previous funding levels.
Much of this increase, however, merely represents a shift from local to state revenue due to a proposed $17.3 billion in property tax cuts (see below) – not an infusion of additional funding. This would include reducing recapture payments by about $6.8 billion. Instead, Every Texan strongly supports increases in public education funding through a higher basic allotment. This foundational amount of per-student funding, $6,160, has remained unchanged since 2019, even in the face of recent dramatic inflation that has affected schools as much as the rest of us.
Enrollment, a higher number than average daily attendance, is a more accurate metric to determine school funding needs. As such, we also strongly support HB 100, a game-changing school finance proposal that would fund public schools based on student enrollment rather than attendance.
The Legislature is likely to pass legislation that would raise pay for teachers, but just how much is unclear. SB 9, for instance, is still in committee, but it would likely raise teacher salaries by at least $2,000. Every Texan supports more substantial raises for teachers and cost of living adjustments (COLA) for Teacher Retirement System retirees. One good example is HB 600, which would provide a COLA between 2% and 6% depending on the retirement date.
Additionally, the House budget bill includes $875.4 million to increase TRS ActiveCare premiums by 5% per year.
Higher Education
Among the provisions for higher ed is $1.1 billion to cover enrollment growth, increase funding to some financial aid programs, and allow universities to freeze tuition increases for two years. Every Texan has previously submitted testimony encouraging the Legislature to raise funding for the TEXAS grant and Tuition Equalization grant programs, and the additional funding in CSHB 1 helps.
But even with the additional money, funds do not cover even half the students eligible for those grants. HB 8 would boost need-based financial aid for economically disadvantaged students and move toward a more equitable outcomes-based funding model. See our brief on community college financing for more.
Finally, Every Texan adds our voice to the chorus of those demanding the House remove a controversial budget rider forbidding higher education institutions from using any funding on diversity, equity, and inclusion (DEI) programs.
Health Care and Food Justice
Much of the news in this budget area is related to the “unwinding” of Medicaid, as post-Covid eligibility testing resumes and threatens to eliminate benefits. CSHB 1 allocates funding to the Health and Human Services Commission (HHSC) for additional staff to support that process. As noted above, the LBB’s analysis of CSHB 1 points out that “full funding for anticipated increases in [Medicaid] cost due to medical inflation, higher utilization, or increased acuity is not included” in the budget and will presumably be provided in next session’s supplemental appropriations bill.
Furthermore, several additional Covid-related federal funding provisions are closing, requiring more GR funding.
Recent Every Texan testimony noted that the budget adopted many other helpful HHSC requests, including greater funding for the Early Childhood Intervention program and Healthy Texas Women and Family Planning services. Additionally, CSHB 1 provides $9.6 billion for various inpatient and outpatient mental health services, as well as substance abuse help and mental health assistance for Medicaid and non-Medicaid recipients.
Every Texan would like to see wage increases for community attendants paid by Texas Medicaid. Currently, those workers are paid only $8.11 per hour with no paid leave or health benefits. We believe people doing those difficult jobs should earn at least $15 per hour. Additionally, a rider that would have provided $2 billion to support childcare services has been left out of the budget for now.
Tax Cuts
Property tax breaks are priorities in both houses this session, but the House and Senate proposals are very different. The House budget includes a $17.3 billion property tax cut.
For its part, the Senate has already passed a trio of bills (SB 3-5) that:
- raise the homestead exemption by a flat-dollar amount (which we mostly support!),
- compress property tax rates (which reduces equity),
- and provide an additional tax break for businesses.
The House’s approach to reducing property taxes would cap property value appraisal increases in at only 5% per year. This proposal is a market-distorting, less effective, and less equitable way to reduce Texas property taxes than the Senate’s.
But the method aside, more than $15 billion in tax cuts is simply irresponsible. This biennium’s windfall won’t last forever, and when tax revenue returns to more normal levels, these cuts are likely to cause a serious revenue crunch. Many legislatures across the country are making the mistake of permanent tax cuts based on unusually high revenue, Texas should not follow suit.
State Worker Pay Raises
CSHB 1 commits to a state worker pay raise of 5% (or a minimum of $6,000) in 2024 and again in 2025. While a laudable start, Every Texan would love to see perpetually underpaid state workers – who are leaving state service in droves – get more substantial wage increases to deal with longtime stagnation and recent inflation. HB 202, for instance, would provide for $10,000 increases in 2024 and 2025, while HB 830 would provide a one-time 10% bonus and a 4% COLA going forward.
Border Security
CSHB 1 provides nearly $4.7 billion (in all funds) for border security, which Every Texan generally believes is excessive, unhelpful, and unnecessary. This price tag includes large appropriations to the Texas Military Department ($2.3 billion), the Department of Public Safety ($1.2 billion), and the Governor’s office ($1 billion). The appropriation for the Governor’s office is of special concern as there is a non-specific purpose, comparatively little oversight, and insufficient reporting requirements.
Border security funding has been widely criticized for wastefulness, militarizing the border, harassment of residents, and potential civil rights and constitutional violations. The budget should repurpose these funds to prioritize the benefit of all Texans.
Next: What happens on Budget Day?
Budget Day in the House promises to be a marathon day, as individual riders and amendments are debated and voted on. There are currently 388 pre-filed amendments to debate. Every Texan will watch closely, tweeting throughout the day/night, and provide a wrap-up when the dust clears.
The People’s Budget
At Every Texan, we aim to demystify the state budget and help explain to everyday Texans why it matters. The state budget is a moral statement that should reflect the priorities of most of us, not just a well-connected few. Our state’s greatest resource is our people, and policymaking in our state should reflect that. Texans are worth a state budget that invests in our communities and reflects our shared values. The People’s Budget initiative is a people-centered state policy roadmap combining our well-known policy expertise with community engagement to create solutions that work for every Texan. Learn more and get involved here.