Monday, March 14, 2011

All Eyes on the House

A balanced budget is the only bill that the Texas legislature must pass. However, the budget that the legislature passed in May 2009 is no longer balanced because of the economic downturn. According to the Comptroller, in January the budget was approximately $4.3 billion short for the state's fiscal year ending August 31, 2011. Budget cuts and sales tax revenue increases have reduced the shortfall, but there remains a need for additional cuts, payment deferrals or withdrawals from the Rainy Day Fund in order for the state to avoid running out of money in July of this year.

House Appropriations Chairman Jim Pitts has filed HB 275 proposing to spend $4.3 billion from the Rainy Day Fund. This bill is planned to be voted out of House Appropriations tomorrow and to hit the House floor as early as this week. It will require 90 votes (3/5ths) for HB 275 to pass the House. Gov. Perry has opposed spending the Rainy Day Fund for this shortfall, stating that it is too early to dip into the Fund before considering all possible budget cuts. Chairman Pitts says that the Appropriations Committee has scrubbed the budget and that they have made all available cuts for the current biennium.

It is unclear whether there are currently 90 votes to spend the Rainy Day Fund to balance the FY2011 budget. Republicans, particularly the freshman, want the political cover of having the Governor say it is okay. Democrats strongly believe that the FY 2012/2013 budget is too draconian, and could vote no on HB 275 in protest.

In my judgment, there is no way that the Senate will support a budget that does not at least spend the Rainy Day Fund to close the shortfall in the current biennium. Thus, all eyes will be on the House. If HB 275 does not pass in some form, we will be looking at a long, hot, summer Special Session in Austin.