DALLAS – A Texas legislative board unanimously adopted a growth plan Thursday that would limit increases in state spending from non-dedicated revenue to less than 11% over the next two years.

The newly adopted outlook would increase to $77.9 billion the portion of the fiscal 2014-2015 budget funded by taxes and fees not dedicated to a specific purpose. Non-dedicated spending accounts for $70.4 billion of the $173.5 billion state budget for fiscal 2012-2013.

The Legislative Budget Board adopted the prediction from Comptroller Susan Combs of a 10.7% increase in personal income of Texans over the next two years. A constitutional amendment approved in 1978 links increases in non-dedicated spending to growth in the Texas economy, but does not specify how economic growth should be determined.

Total general fund collections, including taxes and fees, are estimated at $86 billion over the current two-year budget cycle.

The comptroller’s estimate was the second lowest of the five considered by the 10-member panel. The highest was 12.2% by Moody’s Analytical Service with a low of 8.7% from the University of North Texas Center for Economic Development.

The Legislative Budget Board includes four senators and four representatives, plus as joint chairs House Speaker Joe Straus, R-San Antonio, and Lt. Gov. David Dewhurst.

The budget board’s outlook will be used by lawmakers to develop the state’s next biennial budget when the 83rd Legislature convenes Jan. 8 for a 140-day session.

The last Legislature adopted a budget for fiscal 2012-2013 that under-funded the Medicaid program by $4.7 billion with the expectation that state revenues would come in higher than predicted. 

State general fund revenues in fiscal 2012 were $3.7 billion more than the $40.3 billion that had been expected when the state budget was adopted, Combs said in September. The Rainy Day Fund will total more than $8 billion when the Legislature meets in January.

Dewhurst and Sen. Tommy Williams, R-The Woodlands, chairman of the Senate Finance Committee, said the Senate’s proposed budget will use a spending formula promoted by Gov. Rick Perry.

Spending growth in the Senate budget will be based on population increases and inflation rather than personal income, Dewhurst said.

“At the present time in my judgment, we can fund our priorities within a number representing inflation plus population growth,” Dewhurst said.

The Senate’s growth rate of 9.85% would reduce the increase in non-dedicated spending to $600 million less than would be available with 10.7% rate adopted by the Legislative Budget Board.

Perry’s and Dewhurst’s budget stance is arbitrary and limits the state’s ability to deal with its problems,  said Sen. Kirk Watson, D-Austin.

“Things like regressive budget-writing regulations just aren’t designed to promote an honest conversation about what Texas needs, what that costs, and how it can be provided as efficiently and transparently as possible,” Watson said.

Sen. Dan Patrick, R-Houston, has filed a proposed constitutional amendment that would extend the limit on spending growth to all state revenues, including dedicated taxes.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.