SENATE BEGINS CHALLENGING SESSION

(AUSTIN) — The Texas Senate began the 82nd Session Tuesday, facing a massive budget shortfall. Monday, State Comptroller Susan Combs released her biennial budget estimate for 2012-2013, predicting state budget writers will have nearly $27 billion less to work with than last session. The Senate's Finance Committee Chairman, Senator Steve Ogden of Bryan, laid out the specific challenges lawmakers will face in creating the budget for this session. "Our job in this Texas Senate is to manage the problem and not let the problem manage us," he said. "It will not be easy, it will not be painless, but we can do it."

Lt. Governor David Dewhurst presides over the Senate on the first day of the 82nd Legislature which began January 11, 2011 at noon.

Ogden was elected President Pro Tempore of the Senate, a largely ceremonial position that puts him third in line for the Governorship. Nomination to this position is based on seniority, and Ogden used the opportunity of the new President Pro Tem's traditional address to the Senate to draw a map to a balanced state budget. The biggest obstacles to overcome, he said, lie in Articles 2 and 3, healthcare and education spending, which together make up more than 81 percent of general revenue appropriated in the biannual budget. "It is impossible to balance the budget without making cuts in Article 2 and Article 3", said Ogden.

Ogden anticipated an increase in Medicaid costs to the state of $4.5 billion for this budget cycle due to the end of the federal stimulus package lawmakers used last session to cut the state's cost of healthcare programs. The other major issue with state spending facing the Legislature this session is that the current public education finance system, which promises school districts the same amount of money per student that they received in 2005 or 2006. As the population rises, the cost to the state increases; more than $5 billion according to an analysis Ogden commissioned from the Legislative Budget Board. Reforms to education and Medicaid funding are critical to balancing the state budget, he said. "There's where your hole is," said Ogden. "$4.5 billion in Medicaid and $5.5 billion in the Foundation School Program. We've got to fix that. We can."

Senator Steve Ogden of Bryan speaks after being elected President pro tempore of the Texas Senate for the 8nd Legislature. He is joined by Beverly Ogden, his wife of 37 years, along with (rear, L-to-R) Lt. Governor David Dewhurst, Senator Eddie Lucio, Jr., Senator Robert Duncan, and Senator Tommy Williams.

Aside from spending, Texas needs to fix one of its primary revenue streams, said Ogden. The gross margins receipts tax, enacted in 2007 to reduce state property taxes, has brought in much less revenue than predicted, about $2 billion per year less. Without finding a way to increase revenue from the margins tax, the state would have to find another way to pay for services. "None of us were elected to go out and raise taxes on anybody," Ogden told his colleagues. "If we don't fix the margins tax, at least change the trajectory of the margins tax, then school property taxes will go up for sure."

The budget process will begin in coming weeks with hearings before the Senate Finance committee, with state agencies trying to convince lawmakers to avoid drastic cuts to state programs, and suggesting where savings can be made. The Finance Committee will work to generate a budget to present on the Senate Floor. If it is approved by the Senate, then budget writers will work with their counterparts in the House to meld both versions of the budget, Senate and House, to create a final budget that must be approved by the Legislature before the 82nd session ends in June.

The Senate will reconvene Wednesday, January 12, at 11:00 AM.

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