Waiting for the Senate budget debate? Get comfortable. Plans to bring the Senate’s substitute for the House’s budget, HB 1, up for a vote on the floor on Thursday have for now been pushed back to Friday or later, Lt. Gov. David Dewhurst said.
In order to hear the bill at all, Senate Finance Chairman Steve Ogden, R-Bryan, needs to have 21 votes, or two-thirds of the Senate. As of Wednesday evening, the numbers weren't on his side. Ogden said his plans are being derailed at every turn by Democrats, Republicans and outside groups.
(To see the progress of the budget bill, check out our flow chart at the end of this article.)
There are several sticking points. The Senate Finance Committee is proposing a $176.4 billion budget for the next biennium that would withdraw $3 billion from the Rainy Day Fund if no other revenue can be found. Overall, that’s about $12 billion more than the House wants to spend. Fiscal conservatives argue the Senate is spending too much and should leave the savings account alone. The left describes the Senate’s cuts to public education and health services as “draconian” and demands the Senate take even more out of the Rainy Day Fund.
Ogden emerged from a two-hour closed caucus meeting on Wednesday afternoon, describing a “delicate” situation in baseball terms. “The right foul line is, ‘Do not touch the Rainy Day Fund.’ The left foul line is, ‘We’ve got to have a tax bill to make this thing work,'” he said, adding that tax bills are out of the question. “What I’ve got to do is find the right formula to come between those two foul lines.”
Once Ogden can jump over the two-thirds hurdle, it will only take a simple majority to send the Senate’s budget to conference committee, where five House members and five senators will attempt to hash out the differences and come up with a compromise bill. But getting there is the challenge of the week. While most senators agree on the spending levels proposed in the finance committee’s budget, Ogden said the method of financing the bill remains contentious.
Sen. Dan Patrick, R-Houston, said he supports the overall bill but will fight tooth and nail to stop a contingency rule in the measure that would allow the state to spend $3 billion from the Rainy Day Fund. “There are other ways to balance that last $3 billion as opposed to taking it out of the Rainy Day Fund,” he said. “We have to keep every dollar moving forward in reserve, because I think we’re going to have a $10 [billion] to $15 billion budget deficit next session.”
Patrick said he will advocate for other ways to fill that gap this biennium, including speeding up sales tax collections, reducing state salaries by 5 percent, instituting a hiring freeze and cutting all agencies by an additional 2 percent. The bulk of those ideas have not gained traction in the Senate.
Ogden’s supporters include Sens. Florence Shapiro, R-Plano, and Bob Deuell, R-Greenville. Both support the rainy day provision and say they have faith in the Legislative Budget Board’s estimates showing oil and natural gas revenues are trending up and may leave the Rainy Day Fund about $3 billion richer than previous estimates. If two-thirds of both chambers end up signing off on the withdrawal, the account would be left with anywhere from $3 billion to $6 billion by the 2013 session. (Both chambers have already signed off on a $3.1 billion withdrawal to cover the state's deficits for the remaining months of this biennium.)
“I don’t know what the Rainy Day Fund would be for other than our current situation. We’re not increasing spending, we’re just making less cuts. We will still spend less money than the last budget,” Deuell said, warning the House’s cuts could lead to higher costs in the long term and huge supplemental requests in two years.
Despite sending some mixed messages over the last two days, Dewhurst sent a press release to the media on Wednesday stating he “strongly supports” the Senate Finance Committee’s draft, which does not raise taxes and cuts state spending by $11 billion. Under the Senate plan, schools would face $4 billion in cuts. The House bill cuts education spending by $8 billion. In addition, the upper chamber is trying to restore funding for Medicaid and nursing home reimbursement rates. Under the House proposal, some advocates have suggested up to half the state’s nursing homes could be forced to close.
Sens. Juan “Chuy” Hinojosa, D-McAllen, and Royce West, D-Dallas, are the only two Democrats who’ve voiced support for the senate budget. Confronted with limited options, Hinojosa said the bill they passed out of committee is the only plan that stands a “realistic” chance of passing the conservative House.
Other members of the minority caucus remain steadfast in their opposition. Sen. Judith Zaffirini, D-Laredo, said the Senate’s draft makes unacceptable cuts without addressing the state’s ongoing structural deficit, caused in part by a margins tax that continues to under perform. Sen. Kirk Watson, D-Austin, said he will not vote for a bill that perpetuates “debt diversions and deceptive” methods.
“If we’re going to use the Rainy Day Fund, it ought to be in conjunction with reform so that when we use the people’s savings account, we’re not back here two years from now facing the same issue,” Watson said. “It’s not enough to simply say, ‘Yeah, but it could be worse.’ I don’t believe we should judge our success by the lowest common denominator.”
Ogden’s response to Senate Democrats: “I don’t see a scenario if we cannot agree to spend the Rainy Day Fund that would improve the level of spending in this budget. I believe this is the very best we can do, and failure to support this budget will almost certainly result in additional budget cuts and hurt the people that you’re trying to help.”
The caucus will meet Thursday morning to continue working through its differences, but Ogden said other forces are also at play. He said organizations from the liberal Center for Public Policy Priorities to the conservative Texans for Fiscal Responsibility have launched budgetary media campaigns. At times, he said it appears they are pushing for a “Senate meltdown.”
“One of the strengths of the Senate has always been it was pretty hard to penetrate the club, but these outside groups have done it and it’s making it hard to pass the bill,” Ogden said.
In the end, Ogden said he’s confident something will be worked out. But it all goes back to the 21 votes he needs to get the bill to the floor. If lawmakers can’t agree to use the Rainy Day funds or find additional revenue, the Senate Finance Committee will have to cut $3 billion from the budget. Ogden said most of that reduction would have to come out of education.