DALLAS — The Texas House Appropriations Committee on Wednesday adopted a $164.5 billion, two-year operating budget that reduces spending by $22.9 billion from the current biennium.

The version of House Bill 1 adopted by the committee is not as austere as the original plan proposed by chairman Jim Pitts, R-Waxahachie. But it still includes significant cuts to public education and health care programs, and could result in the loss of 8,000 state jobs.

HB 1 would slash spending on public education to $7.8 billion below what current law would provide, resulting in a drop in state support for local districts of $800 per student.

In addition to the per-student reduction, the budget does not provide additional funds for the 160,000 new students expected to enter Texas public schools over the next two years. 

The original House proposal called for a $10 billion cut in public education.

The budget also reduces the state’s Medicaid program, which provides health care for 3.1 million poor Texans, by $4 billion, not the $6 billion reduction in Pitts’ original plan.

The spending proposal assumes the Legislature will approve taking up to $3.2 billion from the rainy-day fund to resolve a $4.3 billion revenue shortfall in the fiscal 2011 budget. Covering the current budget gap will free $4 billion for the next biennium.

The drawdown would leave the rainy-day fund at more than $6 billion at the end of fiscal 2012-2013. Gov. Rick Perry has agreed to use the fund for the current shortfall, but said he would veto any attempt to tap it for the next budget.

The House is expected to consider the budget bill next week.

The final state budget will be a compromise between the House version and a less-austere Senate plan. Republicans control 101 of the 150 House seats and 19 of the 31 Senate seats.

The Appropriations Committee adopted the budget bill on an 18-7 party line vote, but Lieut. Gov. David Dewhurst said there is little support in the Senate for the House budget plan.

“Right now, I don’t think there are the votes in the Senate for the bill that the House is considering, even among Republicans,” said Dewhurst, a Republican. He said the Senate would restore some public education funding.

Pitts said conservative members in the House would resist changes that would result in additional spending.

“The Senate’s going to have to come way down. That’s the message that I give to every senator that’ll listen and the lieutenant governor,” Pitts said.

“There’s a lot of members of the House that this is as far as we can go,” he said. “They feel like they were elected to make cuts, and this accurately reflects what their constituents want.”

Pitts said spending must be cut because revenues are expected to be $14 billion short of what’s needed to spend at current levels and account for growth. He said the proposed budget would require the elimination of at least 8,000 state jobs.

The revenue shortfall is caused by an anemic state franchise tax that brings in $5 billion a year less than lawmakers thought it would when it was levied in 2005, and sales tax collections that over the last two years were $3.2 billion less than expected when the current budget was written. 

The proposed budget for fiscal 2012-13 includes $77.6 billion of general fund revenues over the two-year span, down from the $82 billion expected in the current biennium.

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