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Analysis: Cutting the Texas budget, even with money on hand

If Texas legislators cut the state budget this year, it won't be because they didn't have the money. It'll be because they didn't want to spend the money they have.

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The budget conversation in the Texas Capitol is coming down to how much money is available — but not in the way you normally think about that.

It’s not about how much money the state has to spend, but about whether to spend the money that the state has. Generally speaking, the Senate is trying to use money that’s expected to come in from taxes and fees and such, while the House seems a lot more willing to tap alternative sources, like the state’s savings account.

Preface all of this by saying the clock on this legislative session has another nine weeks on it and there is plenty of time to work things out — if lawmakers want to work things out.

Maybe they’ve been thinking about this too much and it has them all twisted up. So let’s break this down.

On the day before the Legislature convened in January, Comptroller Glenn Hegar issued an official estimate of the state’s revenue over the next two years: $104.87 billion.

That’s less than the Legislature had at this time two years ago, and if the story ended there, the budget battle would be entirely confined to quiet arguments over which programs and services to cut or kill. (Texas lawmakers remain allergic to taxes.).

Those quiet conversations are, in fact, well underway.

But Hegar was only talking about the state’s income over the two years beginning on September 1, 2017. He then noted the current balance of the state’s Rainy Day Fund, officially known as the Economic Stabilization Fund: $10.25 billion. He also said that, left untouched, that balance will grow to $11.92 billion by the end of the next two-year budget cycle. It’s a big savings account.

Texas legislators have been saying for a long time now that the savings account shouldn’t be used for ongoing expenses. But they’re talking openly about tearing into that fat bag of money to get through the current tight budget without big cuts to programs that Texans have said they want.

The House is louder here than the Senate, and by a good distance. House Speaker Joe Straus is writing editorials on the Rainy Day money, saying the balance could fall as low as $5 billion without affecting the state’s credit rating. He’s also dangling some items that might not survive the budget without opening the Rainy Day bag, like proposed cuts in higher education, needed repairs in the state’s mental hospitals, funding for nursing homes and a $1 billion shortfall — his term — in the state’s health care insurance program for retired educators.

House Appropriations Chairman John Zerwas, R-Richmond, has suggested using $2.4 billion from the fund to supplement the current budget in a way that would also ease the need to cut the next budget.

His counterpart, Senate Finance Chairman Jane Nelson, R-Flower Mound, hasn’t taken her committee into that territory yet. They’ve made noises about tapping the fund for one-time expenses — the repairs to the state’s mental health facilities came up there last week.

That’s only the most obvious bag of money available to the state’s budget writers this session. Their predecessors regularly employed a date-shifting trick, moving payments due on the last day of one budget to the first day of the next to make current budgets balance.

They can also tap sales tax money bound for transportation projects if they so desire, snagging up to half of the $4.71 billion that voters decided in November 2015 to dedicate for roads. And they’ve already taken advantage of the state’s public school funding formulas, decreasing the state’s share of education spending and allowing local school districts to make up the difference with rising local property values and the resulting taxes.

It adds up to a lot of money that’s available to the people writing the next state budget. If legislators cut the budget this time — as they have proposed to do in both the House and especially in the Senate — it won’t be because they didn't have the money, whether from income, savings or accounting tricks.

It will be because they didn’t want to spend the money they have.

More columns from Ross Ramsey:

  • At about the same time this week, one set of Texas lawmakers was working on ways to limit the growth of property taxes that fund local governments while another was considering legislation that could cost local governments a lot of money.
  • The federal judges who said the state's congressional maps are invalid last week are in position to take another step — to require Texas to get federal permission whenever it wants to change election and voting laws.
  • The Texas Legislature is going to be busy this week with issues that ordinarily belong to other governments, as it considers the wisdom of local ordinances on restrooms, ride-hailing, short-term rentals, sanctuary cities and plastic bags.

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State government 85th Legislative Session Budget Jane Nelson Joe Straus Rainy Day Fund Texas Legislature