Texas Senate, Facing Tight Budget, Hunts for Revenue

Lt. Gov. David Dewhurst
Lt. Gov. David Dewhurst

The Texas Senate isn’t allowed to raise money. It’s right there in the state’s Constitution, which says all revenue bills must originate in the House.

But there goes the Senate, sending Sen. Robert Duncan, R-Lubbock, and a subcommittee of budgeteers on a hunt for “non-tax revenues” that could be used to put enough meat on the skimpy proposed budget to get senators to vote for it.

To get the votes he needs to pass the budget through the Senate, Steve Ogden, the Bryan Republican who chairs the Finance Committee, needs to spend money the House won’t let him have. Next week, the Texas House is scheduled to debate a new budget that’s $23 billion smaller than the current one, partly because the chief budget writer there says he can’t get support for anything bigger right now. Ogden, who can’t get support in the Senate (or in his committee) for cuts that deep, is aiming higher.

If you think they can reconcile that before the end of the session, you’re in the minority. The conventional wisdom around the Capitol is that this legislative session will go into overtime, with one or more 30-day special sessions this summer to finish the budget and, perhaps, deal with some other issues.

The size of the budget depends on how much money is available. Legislators have more than $6 billion left in the Rainy Day Fund, but Gov. Rick Perry has said he wants to leave that for an even rainier day, fiscally speaking, than this one.

 

So the Senate is clipping coupons and digging for pennies, hoping to find enough money to cover its bigger budget without inciting the anti-tax furies in the lower chamber.

They cannot adopt anything they find, but at the very least, they’ll be able to hand the list over to the House with the idea that “non-tax revenue” is a preferable alternative to cutting this program or that one.

What’s under consideration? Everything without the “T” word in it. Ogden made the usual point this week, starting the hunt for money with the standard no-sacred-cows-everything-on-the-table speech.

Except taxes aren’t on the table. There’s that constitutional thing in the way of a tax coming out of the Senate, for one thing. Perry won’t sign off on taxes. And though it’s true that the Legislature can override a veto (on taxes or on Rainy Day funds, for instance), it hasn’t flipped a governor in Texas since 1979 and, before that, hadn’t overridden a veto since 1941. That’s a timing thing, partly, and an indication that governors are pretty smart about what they can get away with.

In this case, it probably doesn’t matter. It would require remarkable persuasive skill to get anything resembling a tax bill out of the current Legislature. That potentially takes a lot off the table, if lawmakers want to tweak tax exemptions or deductions to shake loose some cash to balance the budget.

Some early talk about taxes never made it out of the oven. Ogden suggested revising the state’s underperforming business margins tax so it would produce what lawmakers thought it would produce when they created it in 2006. That was shot down by Rep. Jim Pitts, Republican of Waxahachie and the chairman of the House Appropriations Committee, who said that sort of fiddling would constitute a tax increase. And shortly before last year’s elections, Ogden was suggesting a statewide property tax, which is currently unconstitutional, as one tool to help get the state out of its financial mess.

Now, Duncan and his six prospecting committee members are essentially doing a quick and dirty version of the performance reviews started by the comptroller in the early 1990s and now done by the Legislative Budget Board, digging for efficiencies and savings in an effort to free money for other programs. This year’s budget board effort includes $1.2 billion in general revenue gains — that’s non-tax revenue, folks — from initiatives like charging state employees to park in state-owned garages and speeding up the parole process to reduce prison populations.

The governor’s staff has produced a list of state-owned real estate that, if sold, could produce up to $300 million, according to Lt. Gov. David Dewhurst. The senators are looking at the $10.2 billion held by local school districts in state-required reserve accounts, at raising fees for driver’s licenses and various other fees, and at accelerated tax collections and delayed payments.

The target for Duncan’s committee is $5 billion, and if it finds the right $5 billion, it might even be able to sell it to the House, the well from which revenues are supposed to spring.

 

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