The following are excerpts taken from The House Research Organization Focus Report No. 83-5 released in February 2017. To view the report in full, go to http://www.hro.house.state.tx.us/pdf/focus/writing85.pdf.
Writing a two-year budget is one of the Texas Legislature’s main tasks. During the 2017 regular session, the 85th Legislature will consider a budget for fiscal 2018-19, the two-year period (“biennium”) from Sept. 1, 2017, through Aug. 31, 2019.
Comptroller’s Revenue Estimate
Before each regular legislative session, the comptroller must estimate the revenue and expenditures for the current fiscal year and anticipated revenue for the upcoming biennium. (Art. 3, sec. 49a of the Constitution) A supplemental estimate is required before any special session.
The revenue estimate issued in January 2017 projected the 85th Legislature would have $104.9 billion available for general-purpose spending for the next biennium. This is a 2.7 percent decrease from last biennium. The comptroller projected the state will have a beginning balance of $1.5 billion from fiscal 2016-17. Added to this are collections from taxes, fees, and other income, estimated at $106.5 billion, of which $3.1 billion of severance tax revenue will be transferred to the Economic Stabilization Fund (“rainy day fund”) and the State Highway Fund. The revenue estimate takes into account that under Proposition 7, a Constitutional amendment approved in 2015, $4.7 million of sales tax revenue will be sent to the State Highway Fund. The comptroller may revise the initial revenue estimate at any time. The only revenue estimate that applies in determining if the state budget is balanced is the one made when the comptroller certifies the general appropriations bill.
Rainy Day Fund
The Economic Stabilization Fund (“rainy day fund”) is expected to reach $11.9 billion by the end of fiscal 2018-19, absent appropriations from the fund, according to the comptroller’s biennial revenue estimate. Revenue for the rainy day fund comes almost entirely from oil and natural gas production taxes. Before fiscal 2015, the rainy day fund received 75 percent of any oil or natural gas production tax revenue that exceeded the amount collected in fiscal 1987. A constitutional amendment adopted in 2014 requires the comptroller to send one-half of this amount to the State Highway Fund (Fund 6), with the rest continuing to go to the rainy day fund.
The rainy day fund may not exceed 10 percent of the total amount deposited into general revenue (minus certain types of income and funds) during the previous biennium. The cap for fiscal 2018-19 is $16.9 billion. Money drawn from the rainy day fund counts toward the state’s constitutional spending limit, according to the Legislative Budget Board.
Spending money from the rainy day fund requires legislative approval. At least three-fifths of the members present in each house of the Legislature must approve spending from the fund to cover but not exceed an unanticipated deficit in a current budget or offset a decline in revenue for a future budget. However, any amount from the fund may be spent for any purpose if approved by at least two-thirds of the members present in each house.
The Legislature has appropriated money from the rainy day fund during six legislative sessions, including four times since 2000.
General Appropriations Bill
The Senate and the House general appropriations bills for fiscal 2018-19, SB 1 by Nelson and HB 1 by Zerwas, are the starting points for the Legislature to prescribe agency spending and to set state accounting and performance measures and other budgetary provisions.
While the House and the Senate each works on the budget and holds hearings simultaneously, they traditionally take turns originating the general appropriations bill and chairing the budget conference committee. For the 2017 regular session, the bill is expected to originate in the Senate so the final version of the bill would be SB 1.
In the House, the Appropriations Committee (HAC) has jurisdiction over appropriations bills. The chair of the HAC usually appoints standing subcommittees to consider different parts of the budget, such as general government, health and human services, education, criminal justice, and business and economic development. Subcommittees hold public hearings and make recommendations on budget proposals for agencies, programs, or funding under its jurisdiction.
House Rule 8, sec. 21(g) requires the HAC to report the general appropriations bill to the House by the 90th day of the session, which will be April 9 for the 2017 session. Under House Rule 8, sec. 21(a), during the first 118 days of the session the speaker may not lay before the House any bill appropriating money unless the general appropriations bill already has been enacted and the comptroller has certified it. If the HAC does not meet its 90th-day reporting deadline, this rule is suspended. The 118th day of the 2017 session is May 7.
House Rule 8, secs. 21(b) and (f) further restrict consideration of certain appropriations bills. To ensure compliance with the constitutional limit on spending from state tax revenue not dedicated by the Constitution, no bill appropriating such revenue may be considered before final approval of the general appropriations bill, and no bills may be considered that, when added to amounts previously appropriated, would exceed the limit.
Limit on Amendments
The House Calendars Committee usually adopts a special rule limiting floor amendments to the appropriations bill to changes that do not increase the budget’s overall expenditures. The rule generally has required that any amendment adding or increasing an appropriation item must contain an equal or greater reduction in one or more other appropriation item. For a special rule proposed by the Calendars Committee concerning a general appropriations bill to take effect, House members must adopt it by a majority vote (House Rule 6, sec. 16(f)). Second-reading amendments must be filed at least 72 hours before the calendar on which the bill appears is eligible for consideration (House Rule 11, sec. 6(h)). The House usually considers numerous floor amendments before approving its version of the budget.
The Senate Finance Committee develops the Senate budget proposal. Budget hearings often have occurred before the entire committee, although in past sessions workgroups have heard testimony on specific areas of the budget. Unlike in the House, the Senate Finance Committee version of the budget often passes the full Senate without floor amendments.
Conference Committee Action
After both chambers adopt their versions of the general appropriations bill, the speaker appoints House members and the lieutenant governor appoints senators to a conference committee to reconcile differences between the bills. The conference committee usually includes the chairs and four other members of the House Appropriations and Senate Finance committees, although the rules do not restrict who may be chosen.
House Rule 13, sec. 9(b) and Senate Rule 12.04 allow conferees to reconcile only points on which the House and Senate bills differ. They may not alter figures that are identical in both bills. On any given spending item included in both bills, the conferees may not set the amount lower than the smaller of the two amounts nor increase it above the larger amount. If an item appears in only one bill, the conferees may include or delete it.
The conferees may not include an item in the conference committee bill that does not appear in either the House or the Senate bill. However, House Rule 13, sec. 9(b)(5) and Senate Rule 12.04(5) allow the conference committee to add contingent appropriations for purposes or programs authorized by bills that have been passed by at least one house. The conference committee may seek permission from the House and the Senate to make changes otherwise prohibited by the rules –
“outside the bounds” – by means of a resolution specifying the changes.
House Rule 13, sec. 10(a) requires that the conference committee report on any bill, including the general appropriations act, be distributed to members at least 24 hours before it may be considered. Senate Rule 12.09(a) requires that the conference committee report be laid out for 48 hours before being considered in a regular session and 24 hours before being considered in a special session. HH – Excerpts from this article were reprinted with permission from the House Research Organization, a nonpartisan department of the Texas House of Representatives that examines state issues and analyzes legislation being considered by the Texas Legislature. To view the report in full, go to http://www.hro.house.state.tx.us/pdf/focus/writing85.pdf.