WEEK IN REVIEW

FINANCE COMMITTEE PASSES BUDGET

(AUSTIN) — The Senate Finance Committee voted out its version of the state budget on Thursday, a plan that would spend billions more on education and health care than the House. The Senate proposal would pay for the additional appropriations with nearly $5 billion in non-tax revenue and accounting shifts and would use no more than $3 billion from the Rainy Day Fund. It also includes provisions to allow for a change in the way the state pays for public education, aimed at reducing the structural shortfall that Finance Committee Chair Senator Steve Ogden blames for the current fiscal crisis.

The Senate budget would preserve more funding for education, but would still cut about $4 billion from current appropriations. Education Committee Chair Senator Florence Shapiro of Plano laid out a bill before Finance on Wednesday that intends to spread cuts evenly across all districts, as well as moving away from the current target-revenue method of school finance. "No single district takes such a drastic cut that their operations would be irreparably harmed," she said.

The current school finance system arises from the tax shift the Legislature approved in 2005. In order to cut property taxes by a third, lawmakers created a new franchise tax, intended to pay for money lost from lower property assessments. School districts were promised to be funded at 2005-2006 levels, called target-revenue, in order to hold schools harmless from any deficits that arose in case the new tax underperformed. The new tax brought in about $5 billion per biennium less than was anticipated at the time of passage. This gap between the money promised to districts and actual revenue means each year the state owes more and more money to pay for education. Ogden said on Wednesday that if the state didn't address this structural shortfall and merely appropriated the money needed to fund education, lawmakers would be looking at an $8 billion shortfall in education at the beginning of next session.

The Senate bill would phase out target revenue by 2017, slowly moving districts into a formula system. Shapiro said that the biennial cuts to districts this year should be no more than 8 or 9 percent for any one district.

Tuesday, Senator Robert Duncan of Lubbock delivered subcommittee recommendations on almost $5 billion in non-tax revenue the Senate could use to cover the appropriations it made that exceed the House budget. Senators wanted to spend more money on health care, education, and other essential services, so they formed a panel that would look for available money from non-tax sources. Most of the extra money comes from accounting shifts, moving certain payments into next fiscal year and collecting franchise and sales taxes earlier. Many of the same strategies were used by lawmakers to deal with a $9 billion shortfall the state faced in 2003.

Ogden said that the bill will come before the full Senate sometime next week. Once the body approves the measure, five Senate members will partner with five House members to hammer out difference between the two appropriations plans. Shapiro took a moment at the end of Thursday's Finance Committee meeting to encourage her colleagues to enter negotiations with the House prepared to work as partners and not adversaries. "There are people all over this Capitol who are chomping at the bit to make sure that the House and the Senate are in disagreement," she said. "At the end of the day, we've got to work together on this. I know that none of us will go out of here thinking that we don't need to work together with them."

The Senate will reconvene Tuesday, April 26 at 11 a.m.

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