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Budget Plans May Be Larger Than They Appear

Leaders in the Legislature decided this was the year to move more than $6 billion in income off the books. While they argue it improves budget transparency in the long term, in the short term it creates the illusion that this year's budget plan is growing less than it is.

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A cursory look at the budget proposals developing at each end of the Capitol might make one think higher-education institutions are on the chopping block.

The House budget slashes higher-education funding by 25 percent. The Senate budget is more generous, only cutting by 22.5 percent.

There’s a good reason why you haven’t heard about universities up in arms: The cuts aren't real. In fact, higher-education funding will increase under both budget proposals.

The budget summaries give the impression of higher-education funding cuts because lawmakers decided this was the session for patient income received from health-related colleges and universities to be moved off the books.

For more than 20 years, the Legislature has included in its budgets income from patients patronizing hospitals and dental clinics operated by public higher-education institutions. The money comes into the schools and is used by the schools and never actually flows through the state budget, except on paper. The amounts have grown in that time, mostly because of the success of the University of Texas M.D. Anderson Cancer Center in Houston.

“It was money that was just appropriated out to the health-related institutions,” said John Barton, a spokesman with the Legislative Budget Board. “There’s some question of why it was ever included in the appropriations process.”

Barton compared including the patient income funds in the overall state budget to including the income raised by the University of Texas from its football program.

“That money is off-budget, and UT decides what they’re going to do with that money,” Barton said. “Patient income is the same thing.”

Last year, Lt. Gov. David Dewhurst cited income from M.D. Anderson as helping feed a perception that the Legislature is spending too much taxpayer money.

“We appropriate that money back to them,” Dewhurst said. “It gives the impression that there’s more growth in the budget than there is.”

If lawmakers opted to keep patient income in the next budget, it would end up $6.1 billion bigger and have about 15,000 more full-time employees. Almost all of that income, about $5.8 billion, is from M.D. Anderson.

Whether the money is in the budget or not has no impact on the state's constitutional spending limit, which lawmakers have been concerned about during budget discussions this year.  

Earlier this month, when Senate Finance Chairman Tommy Williams, R-The Woodlands, touted his budget plan on the Senate floor ahead of a 29-2 vote, he described the removal of patient income as a move toward “budget transparency.”

That may be true in future budgets but, for this session, the change is a source of confusion.

Because patient income is included in the current budget but not a part of the proposals for the next budget, it gives the false impression that the proposed growth in state spending is smaller than it actually is. If that $6.1 billion were added to the Senate proposal, the budget plan would represent a 6.1 percent increase over the current budget, instead of the 2.9 percent hike that has been touted by Senators.

In the context of a $195 billion budget, $6.1 billion isn’t a large figure. But removing it this year kept budget proposals below $200 billion, a nice round number that may be technically meaningless but would have still generated plenty of news headlines regarding the state’s spending growth.

Putting off that unwanted publicity may have been the most compelling reason for Republican leaders to choose this session to move billions of dollars off the books.

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