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Texas Republicans Propose Tight Grip on Spending Amid Rising Revenues

DALLAS – Texas lawmakers are proposing reductions in spending over the next two years, despite schools and state agencies clamoring to restore funds cut in the last legislative session.

Both houses of the legislature are also proposing freezing funds for a $3 billion bond-funded cancer research program that has been plagued by claims of insider deals with donors to the campaigns of Gov. Rick Perry, Lt. Gov. David Dewhurst and others. Perry championed the program in 2007, winning voter approval for the bond program.

Texas’ general obligation bond rating is AA-plus from Standard & Poor’s, and triple-A from Moody’s Investors Service and Fitch Ratings. Outlooks are stable.

The budget proposed by Republicans in the state House of Representatives would provide $187.7 billion, down 1.2% from the current budget. General revenue spending would come to $89.2 billion, a 2% increase.

State Senate Republicans are proposing an even sharper decrease in spending, with both houses maintaining caps in education funding from the 2011 session that brought strong protests in local school districts and a lawsuit over the statewide funding formula.

The Senate version of the budget provides about $1 billion less than the House budget but spends nearly the same amount in general state revenue. General revenue comprises about half of the total budget. Federal funds make up roughly 36% of the budget.

State Comptroller Susan Combs announced at the beginning of the session that the state’s general revenue collections from taxes, fees and other income are estimated to be $96.2 billion for the 2014-15 biennium, of which about $3.6 billion would be set aside for future transfers to the Rainy Day Fund. The Rainy Day Fund is expected to grow from the current $8.1 billion to $11.4 billion at the end of fiscal year 2015.

When federal funds are included, the legislature will have $208.2 billion for the 2014-15 biennium, Combs estimated. 

The budget covers fiscal years 2014 and 2015. The Texas fiscal year begins Sept. 1. The Texas Legislature, which meets every two years, will reconvene in 2015.

The Senate proposed a $186.8 billion budget, representing a 1.6% decrease from $189.9 billion, the amount the current budget is estimated to grow to after lawmakers pay unpaid bills in the current session. General revenue spending makes up $89 billion of the budget, up 1.5% from the current budget.

Minority Democrats protested the tight-fisted approach during a time of robust economic recovery and continued growth in the state’s population. Republican leaders noted that the proposed budgets are just starting points and could increase during the session that ends in May.

The anticipated $300 million of appropriations for the Cancer Prevention and Research Institute of Texas could be restored with changes in how the program awards grants. Lawmakers have sidelined CPRIT amid media investigations of large donors to Perry’s and Dewhurst’s campaigns winning state funds for their companies. The funding process is under investigation by the Travis County District Attorney and Texas Attorney General Greg Abbott, who is represented on the CPRIT board that awards the grants.

According to the Legislative Budget Board that submits estimates to the legislature, funding for debt service totals $4.06 billion for the 2014-15 biennium. A $287 million increase, or 19.6%, is mainly due to higher debt service for highway construction, the board said.

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