The State Budget

What is the Texas Budget Approval Process?

As outlined by the Senate Research House Committee , the Texas two-year budget takes roughly twice that amount of time to prepare, produce, and administer. The first step in preparing the budget is the development of a statewide vision for the future of Texas government. The governor's office is responsible for creating that vision, which provides a framework for the development of the budget.

The second step is the development of a strategic plan by each state agency. A strategic plan is a long-term plan that sets forth, where that agency is, where the agency plans to go, and what funds are necessary to function successfully.

Taking the governor's vision and the agencies' stategic plans into account, the Legislative Budge Board then prepares an appropriations draft, during the fall prior to the legislative session.

At long last, the appropriations bill is filed in both houses of the legislature so that both the Senate and the House can work concurrently. When both houses are able to agree upon the document, it is then submitted to the Comptroller for approval.

The Texas Constitution requires that the Legislature budget for no more than the amount of revenue that the Comptroller certifies will be available. The requirement that Texas must balance its budgets is a major difference between state and federal budgeting, for Texas cannot run a defecit, while the national government clearly can (Its at 10 trillion). The fact that Texas must only spend what is available pressses the legislature to FIRST spend it's money on federally mandated programs (like Medicare) and constiutionally required systems (like Education).

In the last step, the governor can either choose to leave the bill as is, or utilize his line-item veto authority to change the document. This authority grants the governor a large degree of control over the budget, becuase he or she can choose specfically what they want to become official policy.

What is the budget breakdown?

Eduation- 44.4%

Health- 31.6%

Business & Economic Development- 12.2%

Public Safety & Criminal Justice- 6.2%

General Government- 2.4%

Natural Resources- 1.9%

Other- 1.3%

What is the state's rainy day fund?

States use rainy day funds(RDFs) as a cushion against financial shocks. Every state except Vermont has some sort of balanced budget requirement so that, unlike the federal government, they must balance expenditures and revenues in any given budget cycle. States can have RDFs that allow money to be carried over from good years to lean years. In Texas, voters created the Rainy Day Fund in 1988, requiring that deposits be made: 1.) When unencumbered revenue remains after a legislative biennium, and 2.) When, oil and gas production taxes collected exceed those collected in 1987. This fund is important so as to protect the state from suffering when times are bad. Keeping Rainy Day Funds is much like ensuring that you have enough money in your savings account. RDF funds have recently been used to cover un-anticipated expenses like Medicare shortfalls and increased costs of the Children's Health Insurance Program, commonly referred to as CHIP.

Does the state have a surplus?

From a description of Rainy Day Funds, one might receive the impresion that the Texas' buget has a large "surplus". This is a mischaracterization of the situation. Because of the accounting methods used for state governments, Texas can claim a "surplus" in any time period during which the beginning balances plus expected revenues exceed expenditures. The problem with this perspective is that it fails to take into account the fact that the money one plans to spend is often less than the amount one must spend. So, even though the state currently anticipates having some unspent revenue, in the long run the cost of things like replacing school property taxes and paying for increased healthcare costs will exceed whatever surplus we have available.


How does Texas spending compare to Other States?

National data consistently demonstrates that Texas is at or near the bottom of the 50 states in spending when its economy and population are taken into place. Per capita, Texas ranked 50th in state government spending and 49th in state taxes in 2006. State aid per K-12 pupil-- another meausre often used to compare state government spending--rose in Texas in the late 1990's, but subsequently declined. In 2005-2006, state revenue per student in average daily attendance (ADA) was only $3,129, putting Texas in 47th place nationally on this measure.