Given the limited pot of money, unavailability of the Rainy Day Fund, and significant growth in the number of people needing state services, balancing the budget may seem impossible at times. However, we have 181 dedicated Legislators and their staff working around the clock to accomplish this difficult task while ensuring the continued health and well-being of Texans.
So what happens?
Without an increase in the current revenue pool from taxes, the only real option is to increase available revenue by reducing or eliminating current expenditures. To do that, the Legislature will need to develop a prioritized list, with the goal of preserving essential public services while reducing or eliminating those public services deemed less essential. This would mean reducing or eliminating the expenditures the less essential programs require. Overall, it is not too different from the process a family goes through when the household income declines.
For Texas, the scenario could look something like this:
Start by focusing on services that require most of the state's resources (excluding business/economic growth and development expenditures):
· Health and Human Services Commission (HHS): Maintain existing programs that serve the state's most fragile and vulnerable populations by reducing benefits, lowering reimbursement to providers, and limiting eligibility (assumes no growth in programs)
· Public Safety/Prisons: Maintain “Texas Tough on Crime” policies by keeping the large and growing offender population behind bars but reducing costs associated with infrastructure and maintenance (such as staffing, food, health care, and diversion and rehabilitation programs)
· Education: Reduce state-subsidized programs/services and shift more of the responsibility for education to local communities and families
Higher education is particularly vulnerable in this scenario because many view it as a luxury — a personal choice and responsibility — rather than a public good or investment. What this view doesn’t take into account is the future economic benefit of higher education to the state. A well-educated workforce is the prime attractor for business growth and development. Lack of education is one of the key drivers for poverty, crime, and poor health.
The Senate and the House face the same challenges. But each chamber has different priorities.
So where do they go from here?
Most likely to conference. (For further study, check out Budget 101: A Guide to the Budget Process in Texas at http://www.senate.state.tx.us/SRC/pdf/Budget_101-2011.pdf.)
And what will that mean?
Both legislative bodies may elect to pass out HB1 and SB1 with little modification from the original bills as filed. Since there are substantial differences in the two budget bills, the Speaker of the House and the Lieutenant Governor (who leads the proceedings in the Senate) would then appoint a Joint Conference Committee to hammer out a budget that is acceptable to both chambers. The Conference Committee would also work to ensure that the budget they submit will be acceptable to the Governor.
What might that look like?
No one really knows, but it could go something like this:
Remember that about $4.3 billion of the available revenue for the next biennial budget will have to go toward a supplemental appropriation (which covers emergencies or other needs not covered in the regular appropriations act; in this case, budget shortfalls from the last biennium). That would reduce the available revenue pool from about $76 billion to $72 billion. At that point, the Conference Committee might recommend that $4.3 billion be taken from the Rainy Day Fund and used to fund the supplemental appropriation.
This scenario would add $4.3 billion to the funds available for appropriation by the Legislature, which would permit our senators and representatives to rethink some of their current reductions.
Might that happen?
It’s impossible to predict exactly what will happen over the next few weeks, but as the Legislature gets deeper and deeper into the tough decisions that establish budget priorities, there is more talk in both chambers and among both parties about tapping the Rainy Day Fund. Stay tuned for ongoing developments in the challenging, high-stakes and oh-so-important process of balancing the state’s budget.