Lens on the Legislature: R - E = ?

Junior high students are taught that to solve the equation X = R - E you must know the value of two of the variables in order to solve for the third.

Article III, Section 49a of the Texas Constitution provides that It shall be the duty of the Comptroller of Public Accounts in advance of each Regular Session of the Legislature to prepare and submit to the Governor and to the Legislature upon its convening a statement under oath showing. . . an itemized estimate of the anticipated revenue based on the laws then in effect that will be received by and for the State from all sources showing the fund accounts to be credited during the succeeding biennium.

That would be the R in the above equation.

The Comptroller fulfilled this responsibility last week by sending her Biennial Revenue Estimate 2006-2007.

Chapter 316 of the Government Code prescribes the process by which the Legislature develops and passes appropriations bills, subject to the Governor's veto. Chapter 314 also mandates that fiscal notes be used to estimate the impact of individual bills that may be passed outside of the appropriations process.

That would be the E in the above equation.

As noted in last week's column, the legislature will spend the next 4 � months hammering out legislation. The governor then has 20 days to act on such bills. In the case of the appropriations bill, the governor can also veto individual line items and the current governor exercised that authority following the last session. Therefore, E will not be known until June.

We know that if E is not yet known, than neither is X. However, that didn't stop elected officials and "news" reporters from opining about X after the Comptroller's report was issued and before even seeing the LBB's proposed baseline budget. Here are some headlines from major Texas papers:

LEGISLATORS HAVE SLIGHT SURPLUS

STATE WORKING WITH A SURPLUS, BUT MORE MONEY IS NEEDED

UNEXPECTED WINDFALL WILL EASE LAWMAKERS' JOB

WHO'S RIGHT ABOUT TEXAS' BUDGET SURPLUS?

The first key step in developing E was Friday's release of budgetary estimates by the Legislative Budget Board as required by Section 322.008 of the Government Code and the concurrent introduction of SB1 and HB1 (also prepared by LBB) by Senator Steve Ogden and Representative Jim Pitts respectively. Ogden chairs the Senate Finance Committee while Pitts chairs the House Appropriations Committee.

The Legislative Budget Board is co-chaired by the Lieutenant Governor and the Speaker and includes Chairmen Ogden and Pitts plus six other key legislators, so the LBB-recommended baseline bill carries great weight. In fact, in stark contrast to the federal budget process or the processes of many states, Section 316.022 of the Government Code allows hearings on this bill without waiting for the submission of a bill prepared by the governor.

The LBB-recommended base budget bill proposes a total state budget of $134.4 billion for the next biennium. It holds funding for many state services to 95% of their 2004-05 General Revenue spending levels, but makes exceptions for the following:

Enrollment growth, other current law requirements, and equity within the Foundation School Program;
Higher education enrollment growth;
Projected population levels in adult and youth corrections systems;
Caseload growth in Medicaid, Children's Health Insurance Program, and foster care/adoption subsidies;
Employer costs for staff benefits; and
Existing debt service.

Future Lens on the Legislature columns will discuss subjects such as how agencies propose exceptional items that are in addition to the baseline budget, how budget hearings are conducted and decisions are made, and where the money to fund the budget comes from.