SENATE PASSES BUDGET

(AUSTIN) —The Senate approved Wednesday its version of the state budget for 2012-2013, a bill its author says reduces the cost of government while protecting essential state services. Finance Committee Chairman Senator Steve Ogden said that, given the state of the national economy, the Senate budget is a good bill. "This bill maintains and preserves critical state programs. This is a smart bill," he said.

The Senate budget would spend $176.5 billion over the next two years, or about $12 billion more than the House appropriated in its budget plan. This represents a cut of $11 billion to current funding levels. The majority of state and federal money would go to state health and human services and public education, which combined make up more than three-quarters of state spending.

The bill passed Wednesday is more generous to health and human services than the House budget. It preserves eligibility in the Children's Health Insurance Program, keeps money for assistive and rehabilitative services, and doesn't cut Medicaid reimbursement rates for providers. The extra money the Senate wants to spend in this arena comes in part from the work of the Subcommittee on Medicaid, a panel led by Flower Mound Senator Jane Nelson. Her subcommittee was able to identify about $3 billion in efficiency savings, which Nelson said would actually increase the quality of some services.

Education spending also sees a cut, but one that budget supporters said wouldn't decimate school districts. Work on this section of the budget was led by Plano Senator Florence Shapiro and her Subcommittee on Education Finance, which also developed a new school finance plan. The Senate budget anticipates passage of that plan in the form of SB 22 in order to balance. That bill would reduce target revenue, pegged at 2005-2006 levels, and move gradually to a formula funding system. Shapiro said that under the Senate budget, no district will see more than a 9 percent reduction in funding.

Probably the most contentious issue surrounding the budget revolves around methods of finance, specifically the use of the state's Economic Stabilization Fund, better known as the Rainy Day Fund. When it left committee, the budget included a contingency rider for using $3 billion of the $9 billion fund, but some lawmakers wouldn't support the use of that money. In order to secure the votes for passage, Ogden amended the bill on the floor to remove that rider and replace it with one that would institute a $1.25 billion shift in health and human services in fiscal year 2013 and a 1.2 percent across-the-board cut to state agencies, excepting the Permanent School Fund and debt service.

Senator Ogden believes that these cuts won't actually be necessary as the Texas economy continues to improve. Sales tax receipts, the state's primary source of revenue, are significantly up, and April collections outpaced the Comptroller's predicted income by double. Rising oil and gas prices will flow more money into the Rainy Day Fund, and Ogden said that if the Comptroller certifies more revenue for the 2012-2013 budget then these contingency cuts won't come to pass.

This bill will now head to a conference committee, where five Senators and five members of the House will work out the differences between the two chambers' versions of the budget. That committee report will come back before the Senate for a vote before session ends on May 30.

The Senate will reconvene Thursday, May 5 at 11 a.m.

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