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Plan Emerging for Legislature to Pay IOUs

As they do every two years, state lawmakers are preparing to pay billions in lingering bills. What is usually an easy process could become challenging as House Democrats plan to push to restore public education cuts made in 2011.

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Like a family with past due notices piling up at the door, the Texas Legislature has some current bills it needs to pay before it can plan the state's next two-year budget.

That’s where a supplemental budget comes in. It is literally a second budget added to the original one lawmakers approved in 2011. It’s not an unusual course for lawmakers to take to address lingering IOUs, but this year’s efforts are becoming more complicated and politically fraught than in the past.

For starters, lawmakers are planning at least three bills to address the state’s supplemental needs instead of the usual one. The first measure needs to be signed by Gov. Rick Perry in March so the state can pay billions in upcoming health care bills on time. A second supplemental bill will address the state's costs from fighting wildfires and providing prisoner health care, but it won't need to pass so quickly. A third measure, also not a rush item, will reverse $1.75 billion in delayed funds to school districts. 

State Rep. Jim Pitts, R-Waxahachie, chairman of the House Appropriations Committee, said separate bills were needed to ensure that the emergency item makes it to Perry's desk quickly.

Texas has $6.8 billion of unmet costs in the current budget, nearly all of it related to Medicaid and public education, according to the Legislative Budget Board. Lawmakers plan to use most of the extra $8.8 billion the Texas comptroller reported collecting from this biennium to pay those costs.   

The House Appropriations Committee passed its first supplemental bill on Monday, and Pitts plans to bring it to the House floor for a vote early next week. The bill, House Bill 10, has “emergency” status, a parliamentary designation that allows legislators to vote on the measure during the first 60 days of the session if Pitts can get the support of 120 of the 150 House members.

“It’s the first time I’ve ever had an emergency supplemental,” Pitts said.

The emergency stems from the last Legislature’s decision to fund Medicaid and the Children's Health Insurance Program for only 18 out of 24 months in the budget cycle, a move that allowed lawmakers to delay $4.5 billion in spending from state coffers. HB 10 will fund those programs for the full two years with $4.5 billion in state money, which will automatically trigger an extra $6.6 billion in federal funding. 

The bill needs to get to Perry's desk by early March so that health care workers aren't left in the lurch, Pitts said. 

“If we do not pass House Bill 10 for Medicaid, the doctors, the hospitals, the nursing homes will not be paid after the middle of March. … That is the emergency,” Pitts told his colleagues on the House floor Monday. The bill also includes $630 million owed to schools districts.

The second supplemental bill is less pressing, Pitts said. It's expected to come to the House floor in mid-March, and will include $155 million in extra funding to the Texas A&M Forest Service for battling recent wildfires and $39 million to the Department of Criminal Justice for increased inmate health care costs. This bill will be more like a traditional supplemental bill lawmakers pass most sessions. Lawmakers could attempt to amend the bill and add more spending to the current budget, Pitts said.

A third measure will use the current budget to pay $1.75 billion in public education costs that lawmakers had previously pushed to the next budget cycle, Pitts said.

Hanging over the supplemental budget process are House Democrats' efforts to force a vote on restoring last session’s $5.4 billion in cuts to public education. State Rep. Yvonne Davis, D-Dallas, leader of the House Democratic Caucus, announced last week that House Democrats want to amend one of the supplemental bills to restore the education cuts. She cited the recent ruling by a state district judge that the state's school finance system is unconstitutional.

"This ruling reaffirms what the House Democratic Caucus has been saying for years," Davis said in a statement. "Our school finance system is broken! The Legislature most act now to fix it."

Pitts said Monday he was worried that efforts to attach such an amendment to HB 10 next week would jeopardize payments to thousands of health providers. Davis did not respond to a request for comment Tuesday as to whether she or other House Democrats planned to amend the emergency supplemental bill or one of the later bills. 

“I think that you can’t help but be concerned, but I think that most of the members out there know that you don’t want to mess with this,” Pitts said. “This is really an emergency.”

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