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House Votes to Reduce Reliance on Budget Diversions

House members on Wednesday passed two bills that take aim at the practice of budget diversions, in which fees collected for specific purposes are used in another manner. The measures now go to the Senate.

Statte Rep. John Otto, R-Dayton, explains an education funding amendment to SB 1 while House sponsor Chairman Jim Pitts, R-W…

Fees collected for specific purposes will have a better chance of going to those intended uses if two bills that tentatively passed the House on Wednesday succeed in the Senate.

For more than a decade, lawmakers have allowed money to stockpile in dedicated revenue accounts, using the money to balance the budget instead of spending it on their intended purposes. Currently, about $4.8 billion is sitting in more than 200 dedicated revenue funds, according to estimates from the Texas comptroller's office. Gov. Rick Perry and legislative leaders have said reversing the accounting gimmick is a priority this session.

House Bill 6, by Rep. John Otto, R-Dayton, would begin that process by limiting to $4 billion the amount of dedicated revenue the comptroller can use to certify that the budget is balanced. 

It is necessary to “wean ourselves off dedicated funds,” Otto said. The $800 million remaining would be used for the purposes for which those funds were collected, he said.

State Rep. David Simpson, R-Longview, called HB 6 a “wizard bill” and unsuccessfully proposed several amendments to ensure that funds in certain dedicated accounts would be used for the purposes they were collected for. 

A second bill, House Bill 7, by Rep. Drew Darby, R-San Angelo, would modify several of the state's dedicated funds to slowly reduce the amount of money built up in the dedicated fund accounts by collecting fewer fees and spending more of what is collected.

In the case of the Systems Benefit Fund, which is fed by fees paid by millions of Texans on their utility bills, the rate of the fee would be reduced and phased out in 2023. The fund is designed to be used to help low-income Texans pay for electricity. Lawmakers have allowed the fund to build up an unspent balance of nearly $1 billion over the years.

"Today the House took a critical step toward making our budget more transparent and straightforward,” House Speaker Joe Straus said in a statement Wednesday. “I look forward to working with members of the House and Senate to ensure that this important legislation becomes law."

Rep. Phil King, R-Weatherford, added an amendment to HB 7 that would tighten the state's spending limit, a goal of conservative groups this session. The limit is currently based on an estimate of growth in Texans' personal income. It only applies to some parts of state spending and has become an issue in budget debates this session as lawmakers have enough revenue to easily exceed the limit.

Under King's amendment, the Legislative Budget Board would set the limit based on the lowest of three measurements: the growth in state personal income, the estimated revenue available that session or the estimated combined rates of population growth and inflation in the state. 

Gov. Rick Perry and other Republican leaders have advocated for tightening the spending limit this session.

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