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Budget Surplus May Not Stretch Far

At first glance, the first drafts of the House and Senate budgets leave billions of dollars on the table. A closer look shows there may not be as much left as many have hoped.

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The 2014-15 budget process kicked off in earnest this week and the change in tone from two years ago is striking. Instead of debating where to cut, the fight is shaping up over what to fix.

As with every session, the “broken” list is long. Water. School finance. Transportation. Republican leaders are also talking about unwinding long-standing budget gimmicks and maybe offering up some tax relief. There’s real money available this year to address some of these objectives but not enough to tackle all of them fully.

Members of the House and Senate have unveiled base budgets of about $89 billion in general revenue spending. That leaves more than $12 billion of the $101.4 billion in general revenue that Comptroller Susan Combs said lawmakers have to work with this session.

But unpaid bills left over from the last session are expected to suck up nearly $7 billion of that surplus. That still gives lawmakers roughly $5 billion in general revenue. There’s also $11.8 billion in the Rainy Day Fund.

So where does that leave us? Around $17 billion left for lawmakers to play with, right? Not quite.

There are some expensive holes in the base budgets. The Senate budget assumes no Texans will join the Medicaid rolls after August 2013. Neither budget accounts for Medicaid services getting more expensive during the biennium.

Members of both chambers have all but said that no one should view these initial plans as realistic proposals. “Starting point” is a phrase that comes up again and again.

Also looming large over all of this is school finance, which dominated budget talk two years ago but will be stuck in a strange sort of limbo this time. Various groups and activists hope the Legislature will restore last session’s $5.4 billion in public education cuts. Lawmakers will be wary of taking any of that on until the resolution of an ongoing school finance lawsuit, which likely won’t happen before the summer. Lt. Gov. David Dewhurst wants to set aside some money under the assumption that the state is going to lose the lawsuit and be ordered to spend more on schools.

Underlying all this jockeying for dollars is a constitutional spending limit which could curtail lawmakers’ budget plans. The limit only applies to some parts of spending and remains a moving target, but a house official speaking on background predicted the limit will ultimately allow for spending some but not all (and maybe not even a lot of) the Rainy Day Fund.

That would likely sit well with Gov. Rick Perry, who has talked about tapping $1 billion from the fund for water infrastructure projects and perhaps for tax relief, but not much else.

“The most important use of that rainy day fund is to keep your hands off of it so that we keep a substantial savings account there,” Perry told KXAN earlier this month.

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