Here are our top 6 insights
The Texas Senate and House of Representatives have each released their 2020-2021 draft budgets, SB 1 and HB 1 respectively. What are the potential impacts on education, health care, and other essential programs and services?
- It’s encouraging to see that the proposed budgets from both chambers are not as far apart as they have been in the recent past. The House proposes a state budget of $115 billion in General Revenue for 2020-2021, which is about a six percent increase over 2018-2019. The Senate proposes a state budget that uses $112 billion in General Revenue for 2020-2021. But these numbers only tell part of the story.
- The House proposes to use $633 million of the Economic Stabilization Fund (Rainy Day Fund) in 2020-2021 with a third of it going to retired teachers’ health care. The Senate proposes using $2.5 billion of that Fund, including at least $1.2 billion for Hurricane Harvey costs in 2019, and $711 million for 2020-2021 budget items. CPPP supports these responsible uses of the Economic Stabilization Fund, especially when the Comptroller predicts the Fund will grow to the unprecedented level of over $15 billion while the state still has serious financial needs.
- We are pleased to see $7.4 billion more in General Revenue dedicated to public education in the House proposal, but it is important to understand that this may NOT necessarily result in a “massive” windfall of new money for schools. Much of the new state aid for schools that the House proposes may be earmarked for pushing down local taxes. That could change the balance between state and local shares of school funding but without real increases in total funding per Texas student.
In the Senate, budget writers propose an across-the-board pay raise for public school teachers, who certainly deserve more compensation for their dedication and hard work. However, we’re concerned the current proposal will provide greater benefits to the districts already able to offer low student-teacher ratios and could fail to address serious inequities in educational outcomes for Texas kids. A teacher compensation plan that focuses on districts and children with the greatest need would serve the state better and result in more equity in the short and long term. - Both chambers propose enough funding to cover caseload growth for Medicaid but keep most of the average costs at the same level as 2019. Budget writers do not sufficiently account for the increase in health care costs (like rising prescription drug prices, for example). This is a recurring approach to funding Texas Medicaid, which will mean that lawmakers would once again have to pass a substantial supplemental budget for health care costs in 2021, just to finish out the two-year budget cycle.
- Both the House and Senate leave a significant amount of General Revenue “on the table” that lawmakers could use as the budget moves through the committee process. Lawmakers can use all of this untapped General Revenue without exceeding the spending growth cap adopted by the Legislative Budget Board on January 11, 2019. In other words, there is enough revenue to improve education and health care; if that doesn’t happen, it’s because state leaders don’t want to make those improvements.
- Now for the hard truth. Whether analyzing All Funds (which includes federal money and other sources) or General Revenue, total spending in both budgets is insufficient to keep up with projected population and inflation by 2021. Lawmakers will eventually deal with some of this shortfall when the 2021 Legislature approves supplemental funding for Medicaid (see #4 above). Some of that unfunded cost growth, however, may show up in the form of rising public college tuition or local communities increasingly paying for essential services that the state budget doesn’t cover.
CPPP will continue crunching the numbers and analyzing the impact of the budget proposals on core Texas services. We look forward to working with leaders to build state and local revenue and budgeting systems that meet Texans’ needs.
Leondria R. Thompson
Chairwoman, President & CEO
Tri-County Regional Black Chamber of Commerce
Member of Mayor’s International Trade Development CouncilCentral & South America, and Caribbean
