SENATE OPENS BUDGET HEARINGS

(AUSTIN) — The Senate Finance Committee held its first meeting of the 82nd Session Monday, one of many to follow as Senators consider how to balance a budget facing a major revenue shortfall. The Legislative Budget Board released its preliminary version of the Senate budget, one that reduces spending by almost $29 billion over the last biennium. Senate Finance Committee Vice-Chair Juan "Chuy" Hinojosa urged committee members to use all the tools at their disposal to create a balanced but fair state budget. "We as a state have a lot more tools with which to pass a balanced budget, a lean budget, but not a mean budget," he said. "I hope at the end of the session we have a consensus to do what is best for the State of Texas."

The preliminary Senate budget would appropriate $158 billion in all funds, state and federal, of which $79.7 billion would come from state general revenue. The biggest cuts come in health and human services and public education. The proposed budget would trim nearly 25 percent of spending on health and human services, or about $16 billion. Part of these savings would come from a projected 10 percent cut to provider rates and an expected increase of a billion dollars in federal funds. General education budgets would be cut by almost nine percent, or $6.6 billion in all funds. This includes a 61 percent cut at the Texas Education Agency and a 35 percent cut to the Texas Higher Education Coordinating Board. LBB Director John O'Brien suggested to the committee a number of statutory changes that could increase available revenue, including: increasing state employee contribution to health insurance, increasing state traffic fines, a surcharge on inefficient vehicles and suspending the sales tax holiday for 2 years.

The meeting began with a briefing from the Comptroller's Office on the current state of Texas' finances. According to John Heleman, Chief Revenue Estimator for the Comptroller, the state is beginning to come out of the recession that began in 2009. Sales tax revenues, which account for almost two-thirds of state income, have increased over the past months. The Texas job picture is looking up; the state has gained back more than half of the jobs lost beginning in 2008, and should be back to pre-recession levels by the second half of fiscal year 2012. Housing prices have not seen the same level of improvement, dropping between one and two percent last year, and average home price is at the same level as 15 years ago.

The Senate will reconvene Tuesday, February 1, at 11 a.m.

###