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Budget Update

Last week, the Texas House of Representatives passed legislation that addresses the state's current and future fiscal situation. These bills, which I authored, close the state's current budget shortfall of $4.3 billion and reflect that the state will have less money to spend over the next two years.

The current shortfall exists because our state tax revenues in 2010-2011 have not met the expectations we had when that budget was written; and in August of this year the Comptroller must pay billions of dollars in bills the state owes. These include everything from payments for doctors treating patients in the Medicaid program, to more than $1 billion in payments to local school districts, to state employee salaries. These bills must be paid, but without action by the legislature the state will not have the money to pay them.

I am proud of the success we have had since last January in identifying $1.5 billion in savings to the state through reductions made to state agencies, while still providing Texans with essential government services. These cuts have made significant progress in reducing the shortfall. Yet, with less than five months left in the fiscal year, it is impossible for us to get there through cuts alone.

To address the remainder of the shortfall, last week the House voted to approve House Bill 275, which appropriates $3.1 billion from the Economic Stabilization Fund, commonly known as the Rainy Day Fund. Created by the Legislature and approved by voters in 1988, the fund serves as a savings account for the state to turn to if faced with emergencies. Addressing the effects of this recession is a perfect example of why the fund was created. Accessing the Economic Stabilization Fund was the most prudent and responsible option available to us to ensure the state will be able to pay its bills this summer.

With the current budget problems fixed, our attention turns to the state's financial future. Last Sunday, the House voted to pass House Bill 1, the budget for the 2012-2013 biennium. The House Appropriations Committee, of which I am honored to serve as Chairman, has been working on this bill since mid-February.

In that time, the Committee met 59 times, either in full committee or subcommittee hearings, and spent over 215 hours listening to public testimony, exploring possible budget cuts, and debating and questioning how best to address the state's budgetary challenges.

The Texas Constitution requires us to pass a balanced budget every two years. We base our spending on what the Comptroller predicts our state revenues will be for the next two years.

This budget lives within this amount of available revenue and does not include any new taxes or spend a single dollar of the Rainy Day Fund on ongoing expenses. To be clear, this budget does not grow government.

In fact, House Bill 1 cuts total spending by $22.9 billion, or 12.3 percent, from current levels. The majority of the reduction comes from the withdrawal of federal funds. In terms of state spending, this budget cuts $4.5 billion, or 5.4 percent, from 2010-2011 levels.

This budget is still a work in progress. The next step will come when the Senate passes their version, and the House and Senate begin negotiating the differences in Conference Committee. Meanwhile, I will continue to explore further savings or non-tax revenue that might be available to help us minimize some of the cuts we had to make in critical programs like public education, financial aid, and health and human services.

Ultimately, I am confident that this process will lead us to passing a state budget that addresses the basic needs of Texans and upholds the strong fiscally conservative principles that have made Texas the great state that it is today.

Republican Rep. Jim Pitts of Waxahachie is Chairman of the Texas House Appropriations Committee

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