DALLAS — The Texas House balanced the current biennial budget on Thursday with $3.1 billion from the $9.4 billion rainy-day fund and $853.6 million of spending cuts for state agencies and higher education.
The move resolves a revenue gap for fiscal 2010-2011 that had been $4.3 billion, part of a $27 billion shortfall over the current and next two-year state budget cycle.
The now-closed deficit was created when sales tax revenue slumped and a new business tax generated almost $5 billion a year less than expected. The gap narrowed by $300 million in early March when Comptroller Susan Combs raised her estimate for sales tax revenues in fiscal 2011.
The House adopted HB 275, which authorizes transferring $3.1 billion to the general fund from the Economic Stabilization Fund, on a 142-2 vote. Democrats proposed 27 amendments to provide more money for public education and social services, but all were tabled.
The spending-cut measure, HB 4, was approved on a party-line vote, 100 to 46, after more than 10 hours of debate on 65 amendments. Only one of the 49 Democrats voted in favor.
Both bills were given final approval Friday morning on the third reading in less than 10 minutes, after tentatively passing late Thursday.
The spending-cut bill actually reduces agency spending by $1.5 billion, but some of the money was redirected to public education and other areas.
The bill endorsed spending cuts already put in place over the past two years by Gov. Rick Perry, Lieut. Gov. David Dewhurst, and House Speaker Joe Straus, R-San Antonio.
The rainy-day fund currently contains about $8 billion, but was expected to grow to $9.4 billion by the end of the fiscal 2012-2013 biennium if left undisturbed.
Perry was re-elected in 2010 on a pledge not to tap into the rainy-day fund, but last month agreed to a one-time transfer of $3.2 billion to resolve the revenue shortfall.
Following the vote, Perry said the House demonstrated “a commitment to the fiscally responsible government Texans have called for.”
Having balanced the current budget, on Friday the House began to consider the next two-year budget bill approved last week by the Appropriations Committee. With more than 400 amendments filed, the debate was expected to last several days.
HB 1, the budget bill developed by the House Appropriations Committee, contains $164.5 billion of spending over the next two fiscal years. Debt service will total $3.3 billion, an increase of 18.5% from the current biennium.
The current Senate version of the budget provides more money for public education and social services than the House proposal. Spending totals some $10 billion more than the House legislation.
With the $3.1 billion transfer authorized by lawmakers, the rainy-day fund should contain more than $6 billion when the next biennium ends on Aug. 31, 2013.
Most of the money in the rainy-day fund comes from oil and gas production taxes. The $9.4 billion estimate is based on oil prices of $70 per barrel.
Economist Stuart Greenfield, a former revenue estimator for three Texas comptrollers, said last week that the fund could total $11.6 billion in two years if oil prices remain at or near current levels.
