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Analysis: Is this Texas state budget trick constitutional?

The Texas Senate is proposing a new accounting trick to balance its 2018-19 budget. The contrivance would work, mathematically speaking, but it raises constitutional questions and faces derision from the House.

Road crews were prolific in the Midland region in 2016 following an oil boom, when heavy truck traffic obliterated highways.

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If you talk about the Texas budget long enough — even if you’re only talking about the parts that don’t require sleights of hand, smoke and mirrors, and other hocus-pocus — you’ll sound like a no-good dirty rotten cheater.

Sometimes you can get there without all the chit-chat: The state Senate’s proposed budget depends on an accounting trick that would send a lawyer running for the Texas Constitution.

The scheme is a familiar one to anybody who has come up a little short at bill-paying time: Delay a payment by a day or two to make things work without bouncing a check.

The Senate gets $2.5 billion it needs to balance its books by delaying a transfer from general revenue to the state highway fund. It would make the 2018-19 numbers balance on the last day of August 2019, and the Texas Department of Transportation would get its money a day late — an inconvenience that wouldn’t affect the flow of highway projects.

The problem — the subject of some tense chatter among the budgeteers in the State Capitol — is in Article 8, section 7-c of the Texas Constitution, where it says the state comptroller has to move money from general revenue to the state highway fund in the same fiscal year when that revenue is collected.

Comptroller Glenn Hegar appeared to paper over this in a letter to Senate Finance Chairman Jane Nelson, but he left himself some room. “If the estimated $2.2 billion in sales tax collections in fiscal 2018 for the highway fund were transferred in September 2018, and the $2.5 billion in fiscal 2019 sales taxes were transferred in September 2019, then there would be a gain to certification of $2.5 billion for the 2018-19 biennium,” he wrote.

The scheme is a familiar one to anybody who has come up a little short at bill-paying time: Delay a payment by a day or two to make things work without bouncing a check.

That says delaying the transfers would add that $2.5 billion to the 2018-19 budget — welcome news to the people trying to make that budget balance.

But did you see the weasel word?


He didn’t say he could do it, or that he would do it. He said that if he did it, that would be the effect.

If he had wings, he could fly.

We’ll hear about more of this as the House and Senate work out their budget differences, but some lawyers say that constitutional provision spoils the Senate’s ploy. It’s got a political impact, too, because the squabble over the budgets is noisy and because House Speaker Joe Straus called the Senate budget an example of Enron accounting.

He’s not completely innocent himself.

Lawmakers do this sort of thing with some regularity, pushing the payments for big stuff — the Foundation School Program that funds public education, or the pension funds for state employees and educators — from the last day of one budget to the first day of the next budget. It makes the first budget balance, because the accounts have more money in them that last day. And lawmakers can always pay it back when they have more money later on.

In fact, the Texas House is looking at a budget that would balance in part with a $1.9 billion delayed payment to that school fund — a delay that has been deemed constitutional in the past.

The creative accounting gets lawmakers out of spending — or spending more — from the $10.2 billion in the state’s Rainy Day Fund. Wherever they find the money — by hook or by crook, as the saying goes — they’re doing it to keep the programs their voters have demanded: schools, roads, prisons, health care and all that other stuff.

And the numbers don’t have to balance right now. This week marked this legislative session’s halfway point. The full Senate will vote on the budget next week. The House Appropriations Committee will follow, and the full House will vote in a couple of weeks. The final budget has to balance, but these draft budgets don’t.

The 2018-19 spending plan will have some accounting magic in it; budgets often do. And if the budget writers are cooking the state’s books, what does it matter if no one is harmed and it gets everybody a nice, warm meal?

More columns from Ross Ramsey:

  • Gov. Greg Abbott has hit tough sledding with his call for more spending on early education in Texas. Lawmakers aren't warm to the idea, to say the least, and the governor hasn't assembled an army of supporters to back up his position.
  • 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.
  • 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.

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Public education State government Transportation 85th Legislative Session Budget Texas Legislature