Next month, the Legislative Budget Board will meet to choose a growth rate, the kind of fascinating government business that made it so tempting for some of us to ditch civics class in high school. The rate will be a limit on how much the state budget will be allowed to grow during the next two years.
Some of this is pure process, but stick around — process can bleed into policy, and affecting one can decide the other.
When lawmakers meet in January, they’ll decide pretty quickly just how big the current budget will be. You’d think that was set when lawmakers met two years ago, and it was — sort of. Faced with a budget shortfall, the 2011 Legislature left $4.7 billion out of the Medicaid budget, cut a couple billion dollars from what it would normally have spent on public schools and deferred some spending from this budget to the next one to free up some more money.
All of that has to be paid back somehow, and some of it has to be paid back quickly. Specifically, the Medicaid program doesn’t have enough money to make it to next August, the end of the fiscal year. Lawmakers know that, and knew it in 2011 when they wrote the budget. They wrote themselves an I.O.U., knowing that they had left a hole they and their successors would have to fill in 2013.
They’ll do that with a so-called supplemental appropriations bill early next year, and the spending in that legislation will be added to the budget already in place to determine the overall size of the base budget.
That number (math is a peach, right?) is what the budget writers call the base budget. That base budget, multiplied by the LBB’s growth rate, helps set the outer limit of what lawmakers are allowed to spend in their next budget.
You will be shocked to know that there are ways to cheat.
The growth limit only applies to that part of the state budget that isn’t set aside by the constitution and other laws. It’s a big part, and includes a lot of the state’s discretionary spending, but it’s only a part. Spending that goes into other parts of the appropriations bill escapes the limit.
That base budget is subject to argument. If lawmakers only add in the cost of Medicaid, only $4.7 billion or so will be added to current spending to determine the size of the base. If they decide to replace some of their education cuts, that will go in. If they decide to unwind their accounting tricks — to include spending they thought about deferring until the next budget — that will be added back in. The more they pay back, the higher the base. The higher the base, the more they’ll be allowed to spend in the next budget when the growth rate is applied.
Here’s another way to cheat, but it’s the most difficult.
With a vote from the House and Senate, lawmakers can blow through the spending limit. A like-minded majority has the power to do whatever it thinks is necessary.
It would be a mistake to think that a majority of the Texas Legislature wants to vote to grow government faster than its self-imposed limit. That would be hard to explain to voters who have taken a conservative turn in recent elections. It would invite the Tea Party to burn down some more political houses in the state.
If lawmakers want some leeway, the easiest way to get it is with a fat growth rate and a large base budget. Watch that LBB vote next month for the growth rate, and the negotiations and deliberations over the supplemental appropriations bill in the first eight to 10 weeks of the legislative session for the base budget.
Legislators don’t like getting caught between their price-sensitive constituents, the ones who make tax and fee hikes dangerous, and their program-sensitive constituents, the ones who want schools, roads and prisons. Those are hard fights to win, whether the legislators in question are conservative or liberal.
So they bury some of those arguments in the process, the part that’s too boring to attract much attention. They can set policy without upsetting their politics.
[Editor's note: an earlier version of this story said a supermajority has to vote to exceed the spending limit; a simple majority can vote to do that on an "emergency" basis.]