DALLAS - Separate versions of a two-year state budget introduced Tuesday in the Texas Legislature may require a draw on the state's $9.1 billion budget stabilization fund to avoid a revenue shortfall of as much as $3.7 billion.

Usually the Legislature submits a single proposed budget based on numbers from the Legislative Budget Board, but this year both chambers offered their own versions.

Spending in both proposed budgets is up about 1% from the current two-year budget. Despite the modest increase in spending, both budgets exceed the expected revenues over the two-year period.

SB 1, the Senate's version of the state's biennial budget, calls for general fund spending of $40.9 billion in fiscal 2010 and $43 billion in fiscal 2011. Total spending, including federal funds, is set at $84.8 billion in fiscal 2010 and $86.7 billion in fiscal 2011.

The Senate budget calls for drawing $3.7 billion from the rainy-day fund, but that would drop by $1.4 billion if school textbooks can be purchased through the Permanent School Fund. The budget includes automatic spending reductions in several categories if the surplus funds are not available.

The House budget is similar in most aspects to the Senate's proposal, but calls for spending $450 million less over the two years.

The House version includes general fund spending of $40.5 billion in fiscal 2010 and $42.9 billion in fiscal 2011. Total spending is set at $84.2 billion in fiscal 2010 and $86.6 billion in fiscal 2011.

The House budget bill would use $3.3 billion from the budget stabilization fund, but only $1.9 billion if the market-battered Permanent School Fund can be used for textbook purchases.

State Comptroller Susan Combs said last week that the state can expect $77.1 billion of revenue available for general fund spending over the next two fiscal years, down from $86.2 billion in the current biennium. She said the rainy-day fund will contain $6.7 billion on Aug. 31, the end of the current biennium. A fund designed to provide property tax relief to homeowners will have a $3 billion beginning balance.

Lieut. Gov. David Dewhurst said Texas is one of the few states in good fiscal condition, in large part because the last Legislature developed a two-year budget with a $7 billion surplus.

"Last session I made it a priority to set aside revenue to protect Texas from the economic downturn and today we have the funds necessary to deliver essential services instead of a deficit like 44 other states," Dewhurst said.

He said the Senate budget meets his priorities of "holding the line on state spending, continuing the record local school property tax cuts, and funding essential services for the most vulnerable in our society."

SB 1 puts in place several conditions to ensure that proceeds from $5 billion in bonds approved by voters in November 2007 for the Texas Department of Transportation are spent on the most congested roads. Enabling legislation must be passed before the bonds can be sold.

Both budgets provide appropriations to TxDOT in fiscal 2010 consisting of $397 million in proceeds from Texas Mobility Fund bonds, $30.7 million of state general obligation bonds, and $884 million of highway fund bonds.

In 2011, TxDOT will receive $153.4 million in proceeds from Texas Mobility Fund bonds, $24 million of state GOs, and $599 million of highway fund bonds.

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