Rainy Day Fund, Comptroller, Legislators

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The Rainy Day Fund, Comptroller Finds Money, Legislators Work to Lower Deficit

Governor Perry has agreed in principle to use about $3.2 billion from the Rainy Day Fund to meet the needs of the current budget (2009-11).  Since the state’s deficit represented funds needed for the ’09-’11 budget and funds needed for the ’11-’13 budget, the Governor has improved conditions and the outlook for Public Education.  Governor Perry has stated that no rainy day funds will be used for operational purposes in 2011-13.  Therefore, most agree that use of the Rainy Day Fund for the current budget cycle is a “best case scenario”.  At this time, it appears that no additional Rainy Day Funds will be used to lower the anticipated deficit for 2011-13.

The State Comptroller has found an additional $300 million in tax revenues for the 2011-13 State Budget.  No one should be surprised that additional funds have been found, by the Comptroller, and that additional funds will be found.  The Comptroller is part of the Legislative process and will continue to adjust her estimate of revenue for the next biennium.

Senator Ogden and Senator Shapiro continue to work behind closed doors to reduce the deficit.  Working with other Senators, Senator Shapiro is working to reduce the current deficit of $9 Billion for Public Education to $4 Billion.

House Appropriations Committee Chairman Jim Pitts, R-Waxahachie, faces tremendous pressure from fiscal conservatives  after his showdown with Governor Perry about usage of the Rainy Day Fund.  Pitts has not backed down from his belief that use of the Rainy Day Fund is essential. 

 Pitts is also working on a measure to reduce the shortfall in the next two-year budget period by a slight delay in state payments which would push them into the following fiscal period. That would make available $2.4 billion, the largest part from delaying payments to school districts.

Pitts other idea would yield $3 billion through tax collection changes, including a requirement for the state's business tax to be paid quarterly.

The House Appropriations Committee recommends 2 Major Items:

a.       Increased funding to the Foundation School Program by $2 billion, contingent on the passage of House Bill 275(Use of Rainy Day Fund)

b.      $6.6 million cut from education service centers

Senators Discuss School Funding Models

One model would phase-out the hold-harmless provision over six years while increasing the basic allotment.

The second model anticipates stepping up school funding reductions over the next two years so that $1.5 billion would be reduced from school funding in 2012 and $2.5 billion would be cut in 2013 to achieve the committee’s goal of $4 billion in biennial savings.

Sen. Shapiro asked the LBB and TEA to come back with one more model. The model would have:

                $2.0 billion in cuts over the next two years;

no additional cuts after FY2013;

an illustration of how to grow the system with new money until 2017 when the state would achieve 85% equity.

Another $400 million that is set aside in the Senate budget bill, to be distributed by TEA through grants, could be placed into the Foundation School Program to reduce the deficit.

Both the House and Senate will continue to look for ways to reduce the deficit.  The state of Texas has a large budget and there are many avenues to close the gap between revenue and expenditures.