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Is an Incomplete Budget Better Than a Shrunken One?

There’s a widely held belief around the Capitol that lawmakers balanced a troublesome budget in 2003 with a convenient underestimation of how many people would need to be served. So why not do that on purpose, and out in the open?

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The only reason the budget looks like a precision instrument or a true mathematical document is because it’s full of numbers.

The numbers are full of assumptions, pulled out of some very smart ears, but pulled out of ears just the same.

There’s a widely held belief around the Capitol that lawmakers balanced a troublesome budget in 2003 with a convenient underestimation of how many people would be in line to receive the many social services to which they were legally entitled.

Two years later, the 2005 Legislature came back with a “supplemental appropriations” bill to cover the difference between that low estimate and what was actually needed. Lawmakers were rescued, in part, by an economy that bounced back after the first budget was written and before it was time to actually spend the money on those services.

It’s easy to be cynical about that sort of thing, but it worked. And it’s the basis, sort of, for the idea of writing an 18-month budget for the next two years. Rep. Trey Martinez Fischer, D-San Antonio, put that forward during the debate over the House budget last weekend, arguing that the economy might well improve during the next year and that the deep cuts in the House plan might not be necessary after all.

His amendment — which failed by 98-49 — would have cut general revenue spending in half in 2013. (That includes money from state taxes and fees and leaves out federal and other sources.) That would have set up a crisis of sorts — no government after March 1, 2013, without legislative action. But it would also have put lawmakers in position to write the last six months of the two-year budget based on 2013 economic conditions instead of 2011 predictions about those conditions.

One might argue that this is already the way things work, only without anyone actually admitting it. The day before the House began the budget debate, it approved a supplemental appropriations bill designed to fill a $4.3 billion hole in the current budget. That included some cuts, some found money (the comptroller added in $300 million because of improving sales tax collections) and $3.1 billion from the state’s Rainy Day Fund.

That deficit, by definition, is the difference between what the state planned to spend on government and the amount of money available. When they finished writing the current budget in 2009, it all balanced. Eighteen months later, it was $4.3 billion out of whack.

So what’s wrong with knocking it out of whack on purpose? The budgeteers expect enough revenue over the next two years to easily cover 18 months of spending. The House’s budget — the standard of austerity for the moment — is 12.3 percent below current spending. It doesn’t include any of the $6.3 billion or so still collecting interest in the Rainy Day Fund, so there’s money out there if things get worse over the next two years. If that adjustment were made just for Medicaid, it would put about $4.7 billion in play. The state currently spends $779 million per month in general revenue on that program.

Assuming that maintaining the current level of services is the goal, and it’s not for everyone, then short-sheeting the budget is one way to balance the budget, and gives lawmakers time to react to the results in the 2013 session. That can be done explicitly, telling voters and everyone else what’s going on, or implicitly, by just lowering forecasts of program costs to fit revenue now and coming back later to make it all better. The Rainy Day account might be safe after all, if the economy improves by early 2013.

Another way to balance the budget is to put together a list of programs that can be resurrected as money becomes available. Lawmakers did that in the 1990s, telling then-Comptroller John Sharp to bring programs back to life if the money became available. It worked, but the budget writers didn’t get the credit — Mr. Sharp did. They’ve been using supplemental spending ever since.

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Economy Health care State government 82nd Legislative Session Budget Medicaid Texas Legislature Trey Martinez Fischer