Strategic Partnerships, Inc.
Strategic Partnerships, Inc.
Click here to view past editions or to sign up for a free subscription to Texas' premier source for public sector news.
On November 18th, a major state daily newspaper reported "State spending limit set at $52 billion… The Legislative Budget Board on Wednesday adopted a state spending limit of $52 billion for the next two year budget cycle. The cap is nearly $3 billion less than the $54.9 set two years ago." Many other papers around the state carried a substantially similar story.
Two weeks later, The Lufkin Daily News reported "Senator says state may have $130 billion budget… Texas lawmakers are likely to approve a two-year state budget that reaches a record $130 billion…. That would be an increase from the approximately $118 billion current Texas budget." A similar story appeared in The Daily Texan.
What's going on here? One estimate seems to be two and a half times the other. One is said to be an increase from the last biennium; the other is said to be a decrease.
The Texas state budget is as complex as it is large. Funding for the state's needs is traditionally categorized into at least four sources (with approximate sizes shown for the current biennium):
Descriptions of these four categories can be found in Chapter 1 of Fiscal Size-up 2004-5, which was also the source for the dollar sizes shown. Note that the total is about $118.2B, which contrary to common impression, is a 2.2% increase over estimated expenditures for the 2002-03 biennium.
The Texas Constitution contains four limits on spending:
So how does all of this relate to the newspaper stories first mentioned above?
First, the accounts of $118B possibly increasing to $130B relates to total funds and is an accurate portrayal of the real spending levels of the state. The quoted Senator was Sen. Steve Ogden who, as Chairman of Senate Finance, is a recognized expert in this area.
The November 18th articles, on the other hand, really dealt solely with the fourth constitutional limit listed above. That limit is established as outlined in Section 316 of the Government Code, which among other things, requires a vote of the Legislative Budget Board. It took a 16-page staff memorandum to explain how to get to the answer, but the essence of the Spending Limits provision is that the rate of growth of appropriations in a biennium from state tax revenues not dedicated by the constitution may not exceed the estimated rate of growth of the state's economy. There are obviously a lot of revenue sources such as federal funds, bond proceeds and tobacco settlements that are not state tax revenues to begin with and then there are many state tax revenues that are dedicated by the constitution. No wonder this issue only relates to 40% of the budget!
So what is the message? It is that the state budget and its associated processes are quite complex and in their attempts to simplify things, the traditional media occasionally get it wrong. In fact, as shown in this case, many didn't even correctly state whether the budget was increasing or decreasing. The actual November 17th motion is quite specific and hardly sets the state spending limits. The media that ran that story were not named because it isn't the goal of this column to criticize. Rather, the goal here is to provide interested Texas Government Insider™ readers the tools to better understand these complexities. Here are some suggested references: