DALLAS - With secession apparently off the table, Texas lawmakers begin negotiations over House and Senate versions of a $178 billion biennial budget that includes $63.6 billion of federal funds.
The federal funds, nearly 36% of the state's revenue, cover programs such as Medicaid, Medicare, education and transportation in Texas.
Gov. Rick Perry, the Republican successor to former governor and President George W. Bush and the longest serving governor in state history, stirred a political dust storm last week when he suggested that the state might secede from the United States over federal regulation and stimulus funding.
"Texas is a unique place," Perry told a gathering of conservatives at a media-inspired "Tea Party" protest of President Obama's policies. "When we came into the union in 1845, one of the issues was that we would be able to leave if we decided to do that."
"My hope is that America and Washington in particular pays attention," he added. "We've got a great union. There's absolutely no reason to dissolve it. But if Washington continues to thumb their nose at the American people, who knows what may come of that?"
Perry later sought to clarify that he did not plan a formal campaign for secession, but the comments provided fodder for comedians, bloggers and political commentators.
While the prospects of secession are dim at best, some saw the rhetoric as an echo of Texas' previous secession to preserve slavery in the name of "states rights."
"I'm talking about states' rights, states' rights, states' rights!" Perry shouted at the Tea Party, drawing strong applause.
But some in Texas were neither happy nor amused by the speech.
"There are certain rights of states that deserve to be protected, but a politician who wants to be leader of all the people doesn't use terms so tightly bound to such an ugly history," the Houston Chronicle editorialized, noting also that Perry invoked the name of Texas hero Sam Houston, who opposed secession.
The city that bears Houston's name, like Dallas, is counting on hundreds of millions of federal dollars for expanding light rail and relieving congested freeways. Dallas and Harris counties, the state's two largest, also have large minority populations and shifted into the Democratic column in 2006.
Political analysts noted that Perry was trying to appeal to the narrower Republican rural and suburban base in an attempt to edge out his right-wing challenger, U.S. Sen. Kay Bailey Hutchison.
Perry has sought to tie Hutchison to Washington, even though she has opposed every spending measure backed by the Democrats. The governor's campaign is also seeking material to use against Bailey's husband Ray Hutchison, bond counsel for major issuers in Texas and partner at the law firm Vinson & Elkins LLP.
Perry, who has had a rocky relationship with the Republican-controlled Legislature, received a rebuke when the House eliminated the entire $22 million operating budget for the governor's office the next two years, shifting the money to programs for the poor.
The governor's refusal to accept federal funds for extending benefits to jobless Texans has put Republicans in a tough spot, particularly in the House, where Democrats are within one seat of taking control.
The $22 million would be restored on the condition that Perry agreed to accept the $55 million in stimulus funds for extended unemployment benefits.
House Appropriations Committee vice chairman Richard Raymond, D-Laredo, suggested reporters use the headline: "Two days after governor says we ought to secede, House zeroes out the governor's budget."
Funding for the governor's office is expected to be restored in a conference committee that begins working on differences in the House and Senate spending bills this week.
The House budget calls for $3.1 billion in debt service over the two years. Debt-service outlays from the general fund would fall by $136 million. The Texas Public Finance Authority would see a $12.2 million decrease, or 1.8%, from the current biennium to $664 million in 2010-11. Debt service for tuition revenue bonds would fall 5.3%, or $36 million, to $640 million.
However, the transportation and water departments, both recipients of stimulus funds, would see large increases. The Texas Water Development Board would see debt service increase $51 million, or 50%, while the Texas Department of Transportation's state highway fund would rise by $455 million, or 116%. TxDOT's other bond program, the Texas Mobility Fund, would see debt service rise $181 million, or 35%, to $691 million.
The House budget provides $2 billion less in road construction bonds and $2 billion less for Medicaid. However, scholarships for college students from households making under $50,000 would increase by nearly 25%. Most state workers and retired teachers would also receive $1,000 bonuses, a provision not included in the Senate budget.
The House also shifted $200 million from the highway fund to relocate rail lines so that a high-speed train could be built connecting Dallas, Austin and San Antonio.
The deal is contingent on a declaration from Comptroller Susan Combs that the shift would not hurt existing road projects, according to sponsor Rep. Ruth Jones McClendon, D-San Antonio.
Under the new leadership of House Speaker Joe Straus, R-San Antonio, the House also approved a commuter rail line between Austin and San Antonio, a distance of about 80 miles.
Straus is the first state representative from an urban district to hold the speaker's post since Gib Lewis, R-Fort Worth, in 1993.
Texas' general obligation debt is rated AA-plus by Fitch Ratings, AA by Standard & Poor's and Aa1 by Moody's Investors Service, all with stable outlooks.
