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GOVT 2306. The Texas Budget. The slides will provide you with a few links to material related to the Texas Budget. We will then walk through the process and I’ll outline its major features.

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govt 2306

GOVT 2306

The Texas Budget


The slides will provide you with a few links to material related to the Texas Budget.We will then walk through the process and I’ll outline its major features.


The most important institution related to the Texas Budget is the Legislative Budget Board. They provide a variety of functions related to the budget.They’ll be more on this institution below, but click through to get familiar with them.

click here for the link to info on the lbb in the texas state historical association website
Click here for the link to info on the LBB in the Texas State Historical Association website.

Legislative Reference Library has a page with links to the major documents related to the Texas Budget, in addition to a snapshot view of the budget process.

The most thorough resource is this report from the Senate Research Center: Budget 101: A Guide to the Budget Process in Texas.
The House Research Organization has a pretty good document too: Writing the State Budget – 82nd Legislature.
Here are useful external sites focused on the Texas Budget: Texas Budget SourceState Budget Solutions.

For differing ideological takes on budgeting, click on the following: The liberal Center for Public Policy Priorities: Budget.The conservative Texas Public Policy Foundation: Budgets and Spending.

And here are good sources for media coverage of the Texas Budget:Texas Tribune: BudgetAustin American Statesman: State Budget.
And an overview of the budgeting process in the 82nd Legislature – the one that put together the 2012-2013 budget.

And finally, The 2012 Texas Fact Book, a document produced by the LBB compiling various facts associated with the states, some related to the budget, some not. Its a great general resource about the state.


Suffice to say, there’s lots of material on the Texas budget out there. If you get familiar with the material in the previous link, you’ll come close to being an expert on the process.Now let’s take a look at the budget itself.


Simple definitions: 1. an estimate, often itemized, of expected income and expense for a given period in the future.2. a plan of operations based on such an estimate.3. an itemized allotment of funds, time, etc., for a given period.


Beyond that, a government’s budget contains the vision that the state has for its future. The vision begins with the governor, who establishes guidelines for what executive agencies will submit, and is adjusted by the legislature, which has to approve the budget in order for it to become binding.


A quick, major clarifying point.Texas has a two year budgeting cycle. The legislature – if you recall – only meets 140 calendar days beginning the first Monday the year following each election.

The LBB’s website has a brief statement on the history of budgeting in Texas.There was no effective system of budgeting until 1949.
The Texas Constitution of 1876 did not establish a budgeting process, but it did put limits on the ability of the state to assume debt.

Article 3, Section 49 – as originally written – states: SEC. 49. No debt shall be created by or on behalf of the State, except to supply casual deficiencies of revenue, repel invasion, suppress insurrection, defend the State in war, or pay existing debt and the debt created to supply deficiencies in the revenue, shall never exceed in the aggregate at any one time two hundred thousand dollars.

This falls short of requiring a balanced budget, but it ensures that spending stays in line with revenues.

As with much of the Constitution, it has been heavily amended.One of the amendments allows for the legislature to “submit to the eligible voters of this State one or more propositions that, if approved by a majority of those voting on the question, authorize the legislature to create State debt for the purposes and subject to the limitations stated in the applicable proposition.”


The state of Texas can issue bonds – which create debt – for defined purposes, like building prisons, highways or water development projects.


1942 the constitution was amended to mandate that the Comptroller of Public Accounts “in advance of each Regular Session of the Legislature to prepare and submit to the Governor and to the Legislature upon its convening a statement under oath showing fully the financial condition of the State Treasury at the close of the last fiscal period and an estimate of the probable receipts and disbursements for the then current fiscal year. . .


. . . Except in the case of emergency and imperative public necessity and with a four-fifths vote of the total membership of each House, no appropriation in excess of the cash and anticipated revenue of the funds from which such appropriation is to be made shall be valid.”


This states that the money appropriated for spending purposes from the treasury cannot exceed the anticipated revenue to be collected during the biennium.

Which establishes that the Texas budget is a pay-as-you-go state.At least for the general revenue – more on that later.

It also establishes that Texas must have a budget if it is to function at all. The first bills introduced in the Texas House and Senate each session are the general appropriations bills. These must pass. From the 82nd session: HB 1Enrolled version from the LBB.

As a consequence, the Legislative Budget Board was established to coordinate the budgeting process.This is how it describes itself:

The Legislative Budget Board (LBB) is a permanent joint committee of the Texas Legislature that develops budget and policy recommendations for legislative appropriations for all agencies of state government, as well as completes fiscal analyses for proposed legislation. The LBB also conducts evaluations and reviews for the purpose of identifying and recommending changes that improve the efficiency and performance of state and local operations and finances.


Design details: The Texas Legislative Budget Board is governed by a five person Board that is co-chaired by the Lieutenant Governor of Texas and the Speaker of the Texas House of Representatives. The Chairman of the Texas House Appropriations and Ways and Means Committees are also on the Board along with the Chairman of the Texas Senate Finance Committee. Two more House members are appointed by the Texas House Speaker while the remaining three Senate members are appointed by the Lieutenant Governor. There is an Executive Director and four Assistant Directors that oversee a 117 person staff.


Now a walk through the process.And some links from Texas Politics ( if they help): 1 – Planning and Proposal2 – Legislative Action3 – Review and Approval4 – Implementation and Monitoring5 – The Budget Cycle.

currently as of july 2012 the budget for the biennium beginning september 1 2013 is being assembled
Currently (as of July 2012) the budget for the biennium beginning September 1, 2013 is being assembled.

The process begins when the governor develops a statewide vision for the future of Texas government. The guidelines are developed in cooperation with the Legislative Budget Board.


This allows the governor to establish a vision for the state.Here’s on of Governor Perry’s recent statements.Here is the request from the LBB.

Agencies are asked to develop long term strategic plans which state the goals of the agency and where they are in implementing those goals.

Notice that this is a smaller version of a more exhaustive process each agency has to undergo every 12 years when they are subject to Sunset Review.


Governor’s Office of Budget, Planning and Policy issues guidelines to all agencies in how to prepare their requests. Different advisors specialize on different agencies. Click here for the agency’s history. It was established in 1976 in an effort to enhance the governor’s power. He became the Chief Planning Officer of the State.

Governor Perry’s most recent guidelines includes a request that agencies cut an additional 10% from their budgets.Here’s the letter.

Governor Perry has also proposed the Texas Budget Compact.Details from the Texas Tribune.More from the Chron.Support from Empower Texas.Criticism from the AAS.


The LBB then sends out LegislativeAppropriation Request (LAR) instructions to all state agencies.2014-15 Legislative Appropriations Request


Agencies then return their requests, which are then evaluated by the Legislative Budget Board.This is done in the summer prior to the election. Here is the current submissions deadline.


Public hearings are then held by the Legislative Budget Board and the Governor’s Office of Budget, Planning and Policy to discuss the proposals.This is where the public has the best chance to offer input on the merit of the agencies.


The LBB then drafts the appropriations bills that will be filed in the House and the Senate when the next session convenes.These are the first bills filed and are designated HB1 and SB1.


By law, about this time (just before the legislature convenes), the Comptroller unveils the Biennial Revenue Estimate. This is a projection of how much the state is projected to collect during the biennial. This can be a controversial process. Under estimating revenue can lower the amount the legislature can spend. 2012-13 Biennial Revenue Estimate.


In the last legislative session, the Comptroller’s office announced that revenues were likely to be over $25 billion short of projected expenditures. This led to a fight between those who wanted to acquire the additional revenue to maintain programs at the projected level, and those who wanted to trim back spending to fit the projected revenues.


Republicans – controlled over 2/3rds of the seats – wanted to cut spending, Democrats wanted to maintain it. Here’s an overview of the situation from the LBJ School.


The governor submits the bill to the legislature – usually along with a State of the State address to justify the requests contained in the bill.


Then each bill goes through the normal legislative process. Each is subject to modification, but ultimately the House and the Senate must pass the same bill.


In the House, the bill is reviewed by the House Committee on AppropriationsIn the Senate, the bill reviewed by the Senate Committee on Finance.


These are very competitive committees. Everyone wants to be on them, as you would imagine. The Speaker and the Lieutenant Governor make those decisions, which makes them very popular.


Budgeting during the 82nd Session was especially contentious given the cuts that were being made to the budget. A special session was necessary to resolve those issues and produce a budget. Stories in Texas Tribune,


Once it is passed, the Comptroller has to certify the bill in order to determine that there will be enough revenue to cover the spending contained in the bill.


Once this occurs, the bill can be signed by the governor and funding can be appropriated for state agencies. Their expenditures are monitored for the next two years by the LBB as well as the State Auditors Office.


The Texas Governor has line items veto authority which allow him to cross out specific spending items in the veto. This gives the governor power the president does not have over the nation budget.


The following document from the governor’s office details the vetoes the governor made to HB 1 on June 17, 2011. Since the vetoes happen after the legislature adjourns, they cannot override these vetoes, so they are final.


While the budget is presented as a rigid document, there is opportunity for funds to be shifted from agency to agency in order to make any adjustments that might be necessary. There is also a rainy day fund to make up for shortfalls that might occur when revenues slip. This happens often when the economy is in recession.


What is the Rainy Day Fund? Its boring (real) name is the Economic Stabilization Fund. It was established in 1989 after the oil bust, and it's basically a giant savings account. The fund is replenished every year with natural gas and oil tax revenues. Any tax revenue taken in above the amount collected in 1987 is split: 25 percent goes into the state's general fund and 75 percent is deposited in the Rainy Day Fund. The comptroller estimates the fund will have $9.4 billion available for the 2012-13 budget that lawmakers are currently writing. The Texas Constitution says money from the fund can be spent to “prevent or eliminate a temporary cash deficiency in general revenue.”


For more information on the Economic Stabilization Fund, click here, and here. It was added to the Texas Constitution (Article 3, Section 49-g) in an election in 1988.


For recent controversies regarding the rainy day fund:Texas Tribune: Topics.Is it time to tap Texas' rainy day fund? Texas Republicans Make $9 Billion Rainy Day Fund Off Limits.

Video comment from Texas Impact.A review from the Texas Public Policy Foundation.Texas Sunshine Review.

Commonly, various groups comment on how the budget impacts their interests after the budget is released.Many hire lobbyists whose principle purpose is to maintain whatever benefits they already have written into the existing budget.

Examples of Advocacy:GOVantageTexas Public Employees AssociationTexas Association of Community Health CentersACOGChildren at Risk
recent facts about the 2010 2011 texas budget revenue 182 188 billion outlays 182 188 billion
Recent Facts About the 2010 – 2011 Texas BudgetRevenue: $182.188 BillionOutlays: $182.188 Billion

RevenuesGeneral Revenue Funds: $80.6 B (44.2%)Federal Funds: $65.5 B (36%)Other Funds: $29.6 B (16.3%)General Revenue – Dedicated Funds: $6.3 B (3.5%)


OutlaysEducation: $75.4 B (41.4%)Health and Human Services: $59.7 (32.8%)Business and Econ. Dev: $20.7 B (11.4%)Public Safety and Criminal Justice: $10.7 B (5.9%)ARRA: $5.6 B (3.1%)General Government: $4.4 B (2.5%)


Revenue CollectionClick here for a more detail description of sources of revenue from the Comptroller’s office, and an Overview of Texas Taxes here.


22.8% of total revenue in the state comes from the sales tax. Texas charges a 6 ¼% sales tax on many items sold in the state. Counties can tack on another ½% - 1 ¼% at their discretion. Transit and special purpose districts can add some as well. Click here for an overall look at sales taxes in the United States.

OutlaysThe Comptroller’s office runs which allows you to drill into various categories of spending.