DALLAS – Texas’ debt-service payments would increase 29% under the $193.8 billion state budget bill that easily passed in the state House of Representatives.

The House version of Senate Bill 1 provides $4.1 billion in debt service over the two years beginning Sept. 1, with $2.2 billion in fiscal year 2014 and $1.87 billion in FY 2015.  That compares to $3.16 billion for the 2011-12 budget that runs through Aug. 31.

The Texas House approved its amended version of the budget on Thursday by a vote of 135-12.

The Senate approved $195.5 billion for the two-year budget last month by a vote of 29-2. Differences in the House and Senate versions must be resolved before final passage.

Funding includes a biennial increase of $80 million in debt service from general revenue–dedicated funds, or 107%, primarily related to debt service for cancer prevention and research bonds.

The future of the $3 billion bond-funded Cancer Prevention Research Institute of Texas that was championed by Gov. Rick Perry is uncertain after a series of scandals and investigations of alleged insider dealing with Perry’s donors.

The Senate last week unanimously passed legislation to restructure CPRIT, removing Attorney Gen. Greg Abbott from the board to avoid conflict-of-interest issues.

Abbott, who is planning to run against Perry for governor, is investigating the agency and a private foundation that last week announced it was shutting down in the wake of the scandal.

The Texas Department of Transportation will also see a big increase in debt-service funding under the House version of the budget.  The State Highway Fund debt service would grow 69% to $1.27 billion, while the Texas Mobility Fund would gain 5.1% to $734 million.  TxDOT’s general obligation bond program would grow 134% to $449.6 million.

On a bipartisan vote of 103-43, the House approved an amendment banning the use of state dollars for a private school voucher or scholarship program.

House members who voted against the budget cited its failure to fully restore funding for public education that was cut in the 2011 session.  The severe funding cut, the first in the state’s history, prompted a lawsuit and court ruling in Austin that the school funding formula violates the state constitution.

“We clearly had the means to restore the cuts from two years ago but budget writers chose not to restore the full $5.4 billion,” said State Rep. Joe Farias, D-San Antonio, saying the House version restores only $2.9 billion while leaving the state rainy day fund untouched.

Republican leaders in the state have supported tapping the $11.8 billion rainy day fund for a $4 billion water bond program and for TxDOT but have not responded to the court ruling on school funding, waiting for the completion of the appeals process.

With $14.6 billion of general obligation debt outstanding, Texas carries GO ratings of AA-plus from Standard & Poor’s and triple-A from Moody’s Investors Service and Fitch Ratings.  Outlooks are stable.

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