State budget issues for 2006 07 and effects on substance abuse programs
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900 Lydia Street - Austin, Texas 78702 Phone (512) 320-0222 – fax (512) 320-0227 - www.cppp.org. State Budget Issues for 2006-07 and Effects on Substance Abuse Programs. February 3, 2005 Presentation to Texas Association of Addiction Professionals Legislative Conference

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State budget issues for 2006 07 and effects on substance abuse programs

900 Lydia Street - Austin, Texas 78702

Phone (512) 320-0222 – fax (512) 320-0227 - www.cppp.org

State Budget Issues for 2006-07 and Effects on Substance Abuse Programs

February 3, 2005

Presentation to Texas Association of Addiction Professionals Legislative Conference

Eva De Luna Castro, Senior Budget Analyst

deluna.castro@cppp.org


State budget issues for 2006 07 and effects on substance abuse programs

Discuss:

  • What happened last session

  • Current state budget picture, in general and for substance abuse

  • Budget needs for 2006-07

  • Revenue available for 2006-07


State budget issues for 2006 07 and effects on substance abuse programs

The “Balancing” of the 2004-05 State Budget

Cuts to 2003 Budget: $1.4 billion

Cost shifting: $1.0 billion

“Smoke and mirrors”: $1.2 billion

Rainy Day Fund: $1.3 billion

Federal Fiscal Relief: $1.4 billion

Revenue Measures: $1.8 billion

Cuts to 2004-05 Budget: $7.5 billion

Estimated General Revenue shortfall of $15.6 billion for 2004-05


State budget issues for 2006 07 and effects on substance abuse programs

Where Budget Cuts Were Made

  • Health Care (not just Medicaid and CHIP, but also teachers’ and state employees’ health coverage)

  • K-12 textbook funding; grant programs such as kindergarten and pre-K expansion grants; Telecom Infrastructure Fund (now funds Technology Allotment)

  • Layoffs of state employees

  • More details available in CPPP’s July 2004 report, at http://www.cppp.org/products/reports/budget-impact04/index.html


State budget issues for 2006 07 and effects on substance abuse programs

State vs. Federal Funds, 2004-05 Budget

Source: Texas Legislative Budget Board, Fiscal Size Up 2004-05.


State budget issues for 2006 07 and effects on substance abuse programs

Drafting the 2006-07 Budget

  • Agencies were told in June 2004 how to request funding for next budget cycle

  • For most programs, budget requests described what could be done with 5% less General Revenue

  • Exceptions: More GR needed for K-12 enrollment; maintaining a constitutional school finance system; debt service; maintaining caseloads for federal entitlement services (Medicaid, foster care)

  • What’s left out of original baselines: growth in entitlement caseloads, higher ed enrollment, and inmate populations; more money needed to cover inflation and utilization

  • LBB added some of these, such as higher ed, inmate, and entitlement growth, to draft budget (SB 1); left many other “current services” items out, along with most restorations

Source: Texas Legislative Budget Board, Fiscal Size Up 2004-05.


State budget issues for 2006 07 and effects on substance abuse programs

Budget Proposal for 2006-07 (SB 1)

Source: Texas Legislative Budget Board, Fiscal Size Up 2004-05.



State budget issues for 2006 07 and effects on substance abuse programs

Substance Abuse Funding by Program Services

TDCJ = Texas Department of Criminal Justice; DSHS = Department of State Health Services




State budget issues for 2006 07 and effects on substance abuse programs

SB 1 Assumptions: Caseloads Services (cont’d)




State budget issues for 2006 07 and effects on substance abuse programs

More Details: Federal Substance Abuse Prevention and Treatment Block Grant

  • In state fiscal year 2004, this grant brought $137.2 million to Texas

  • Funds allocated to states based on weighted population and criteria that take into account different states’ costs of delivering services

  • Maintenance of effort requirement: States at a minimum must maintain spending at the average level spent for two years before the grant year in question. Spending on services for pregnant women and women with dependent children must be kept at or above levels for fiscal 1994.

  • Uses: at least 35% has to fund alcohol prevention/treatment activities; at least 35% on prevention and treatment for other drugs; at least 20% for primary prevention services. 5% cap on administrative expenses.

  • Eligibility: No eligibility criteria for chemical dependency primary prevention services. For treatment programs, client’s income must be at or below 200% of poverty for free services, 200 to 300% of poverty for sliding scale fees. (For one person, poverty in 2004 < $9,310)


State budget issues for 2006 07 and effects on substance abuse programs

Indicators of Texas’ Need Treatment Block Grant

for Public Social Services

Source: U.S. Bureau of the Census, March CPS and American Community Survey


State budget issues for 2006 07 and effects on substance abuse programs

State Health Services: Major Exceptional Items in original request (Fall 2004)

  • $107 million in GR to restore 5% cuts to GR: major programs include child immunizations; HIV/Sexually Transmitted Disease & Hepatitis C Prevention; TB, Hansen’s, & Refugee Health; Kidney Health; Children with Special Health Care Needs; Mental Health Services for Adults & Children; Northstar Behavioral Health; Women & Children’s Health Programs; Family Planning; Substance Abuse Prevention, Intervention, & Treatment; County Indigent Health Care; State Hospitals; Radiation Control; Food (Meat) & Drug Safety

  • Medicaid match rates and loss of one-time funding: $8 million

  • Texas HIV Medication program: $5.7 million

  • General Revenue restoration for Substance Abuse programs: $10 million

  • State facilities/infrastructure: $29 million

  • Salary upgrades for nurses/LVNs: $10.5 million


State budget issues for 2006 07 and effects on substance abuse programs

Other Price Tags request (Fall 2004)


State budget issues for 2006 07 and effects on substance abuse programs

Outcome Depends on Available Revenue request (Fall 2004)

  • Comptroller gave legislators the official revenue estimate on January 10. Good news: 2004-05 revenues show higher-than-expected growth, unspent balance of $2.3 billion by end of fiscal 2005. Rainy Day Fund balance will be back up to $2 billion by fiscal 2007 (RDF not part of General Revenue)

  • Bad news: health care costs—one-third of state budget—expected to continue rising at double-digit rates

  • Long-term structural inadequacies of state/local tax system are putting too much pressure on property taxes

  • Heavy reliance on sales taxes also makes Texas taxes very regressive (take more from families with the lowest incomes)




State budget issues for 2006 07 and effects on substance abuse programs

From a Taxpayer’s Point of View Fund Basic Services

Source: Comptroller of Public Accounts, Annual Property Tax Report; Cash Report.


State budget issues for 2006 07 and effects on substance abuse programs

From the State’s Point of View: Fund Basic ServicesAll Revenue


State budget issues for 2006 07 and effects on substance abuse programs

From the State’s Point of View: Fund Basic ServicesTaxes Only


State budget issues for 2006 07 and effects on substance abuse programs

Revenue Options Likely to be Considered Fund Basic Services

  • Cigarette tax: $1/pack increase raises $1.7 billion biennially

  • Video lottery terminals: $1.1 billion biennially. “Crack cocaine” of gambling.

  • Revised Franchise Tax (Business Activity Tax): Pre-tax net income, add back compensation minus first $30,000 per job times 1.95%

  • Sales tax rate increase — but this is extremely regressive, and TX already has one of the highest rates

  • Sales tax base expansion (to services not covered now)