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Good Times or Bad, the Budget Remains Tight

When money was tight two years ago, the state's top budget writers employed cutbacks and accounting tricks to balance the budget. Money is flowing again, but the budget folks are still finding it easy to say no.

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Two years ago, Texas lawmakers didn’t have enough money to spend. Now, it seems, they can’t spend all the money they have.

Back in 2011, they were forced to cut programs and services — in part by their own promises not to raise taxes and fees.

Now they’re fenced in by self-imposed spending caps, the need to fill some of the gaps in the current budget and a school finance lawsuit that could require a multibillion-dollar remedy this year.

The lead budget writers two years ago said the money wasn’t available for everything the state was already doing. They didn’t expect the state to bring in enough to keep existing programs and services, and they wrote a budget that fit those expectations.

Those leaders now — Rep. Jim Pitts, R-Waxahachie, and Sen. Tommy Williams, R-The Woodlands — say they have enough money to make some repairs to the current budget, and to take care of some long-ignored infrastructure needs as well. They want to hold money back as insurance against the school lawsuits. And they are bound by law to keep their spending within a legal growth limit that takes into account current spending and a multiplier for the state’s economic growth.

They’re allowed to break that law, but only by coaxing a majority of those tightfisted conservatives elected by voters who told them to shrink government.

The list of important programs and services begging for dollars — in 2011 and now — is about the same: education, health care, transportation and water, to name a few.

Last time, the solution was to play some accounting tricks and ignore certain expenses. A monthly payment from the state’s education endowment to public schools was moved from the last day of the current budget to the first day of the next — the equivalent of ducking your landlord until your next paycheck puts enough money in the checking account to cover your rent.

Legislators decided to delete five months of Medicaid expenses from the back of the budget in the hope that the money to cover those costs would arrive before the bills did.

Two years later, the comptroller said the state had $8.8 billion left, unspent, in its current accounts. Lawmakers will need most of it to fill that Medicaid hole and for other expenses that have surfaced since the budget was written.

The comptroller said the state would have almost $12 billion available in its Rainy Day Fund during the next budget period. State leaders have informally but firmly agreed not to use that for continuing expenses. And it takes a two-thirds vote from legislators to go into that account. Neither Pitts nor Williams, who spoke last week at a forum held by The Texas Tribune, was willing to say whether they would have the votes to do that, whether for infrastructure, tax cuts or something else.

There is even an esoteric argument over which kind of spending is limited by the legal cap; Williams and Pitts maintain that it doesn’t apply to money from the Rainy Day Fund. That might give them a little leeway, but not as much as some might want.

“We’re going to run out of room under the spending cap before we run out of money,” Williams said.

Then there are the courts to consider. Pitts and Williams would like to hold back some money — $2 billion or so — in anticipation of the school finance lawsuits. Both said the Legislature would not have cut education financing two years ago if it had known the money would be available, as it turned out. But Pitts said last week that he doesn’t think public schools are underfinanced — and why would he, in the middle of a court fight?

The budget writers and other state leaders expect an expensive loss in the school suits. They will hold back on spending until some future session to consider those results. “I’m looking for an epic battle in 2014 on school finance,” Williams said.

That puts an odd spin on the budget being written now, at a time when the state’s economy is pretty good. To those seeking support for particular programs or services, things haven’t changed.

The money is not there when the state’s fortunes are bad, and it is not there when the state’s fortunes are good.

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Economy Politics Public education State government 83rd Legislative Session Budget Rainy Day Fund Texas Legislature