While the Legislature was adjourned this week, the major news out of Austin came in the form of the budget. In keeping with the tradition of alternating which chamber produces the budget, the Senate Finance Committee released Senate Bill 1 on Thursday. The base budget bill proposes $119.7 billion in general revenue spending for the 2022-2023 biennium, a 4% growth in general revenue. This is greater than the $112.5 billion that Comptroller Hegar announced last week will be available to lawmakers for general revenue spending. Senator Jane Nelson (R-Flower Mound), Chair of the Senate Finance Committee, stated the goal is to protect the investments towards supporting public education and vulnerable citizens in 2019.

The Economic Stabilization Fund (ESF), also known as the Rainy Day Fund, is expected to reach $11.5 billion by the end of the 2022-2023 biennium. It is possible the Legislature could tap the ESF to balance the budget. It is also not unusual for the Legislature to utilize creative accounting maneuvers to allow funds to be spent beyond those outlined by the Comptroller.

Public Education
With the Senate budget bill filed, we have our first look at how the Legislature may fund public education. The base budget includes an increase in overall funding for public education by over $9 billion. This increase accounts for statewide population growth and the automatic tax rate compression requirement passed during the 2019 legislative session, which requires property wealthy school districts whose property tax values increase by over 2.5 percent to compress their tax rate or go to the voters with a tax ratification election.

In addition to the overall increase in funding, legislators fund most of the critical programs and formula elements included in House Bill 3, the landmark school finance package passed last session. Some of those programs include math and literacy academies, career readiness programs, the educator quality and leadership program, and early childhood learning. However, legislators cut funding for a majority of the programs outside the formulas by 5 percent, which is consistent with the state leadership’s directive for the majority of state agencies to cut 5 percent across the board.

The state budget sustains all elements of the formula funding system for the next biennium. We believe the base budget reflects the Partnership’s Executive Priority of maintaining a well-funded and equitable public education system that serves all children and protects high-impact programs.

Health Care
Total funding for the Health and Human Services agencies is $91.6 billion. This is a decrease of $4.1 billion from the previous biennium. The decrease reflects $1.8 billion in one-time federal appropriations directly tied to COVID-19 pandemic response, and a decrease of $1.3 billion in the federal share of funding for Medicaid and Children’s Health Insurance Program (CHIP) guaranteed under the federal 2020 Families First Coronavirus Response Act, which is set to expire currently in 2021. Additionally, the budget reflects agency-identified reductions for the 2022-2023 biennium.

In 2019, the Legislature prioritized resources to address mental health, specifically childhood mental health. Funding continues for these programs in the proposed budget with a projected $8 billion for mental health, including an increase of approximately $20 million to operate the Texas Child Mental Health Consortium and $145 million to continue community mental health programs.

The proposed budget also maintains funding for Graduate Medical Education formulas, projected caseloads for the Medicaid program, and enhancements for post-partum care services and Maternal Mortality and Morbidity safety initiatives.

Transportation
The Senate Texas Department of Transportation budget includes a 7.5 percent decrease, from $32.8 billion last session to $30.3 billion this biennium. This does not threaten or delay the state's commitment to the State Highway Fund, serving transportation needs, and TxDOT's reductions primarily reflect the loss of one-time funding sources.

Higher Education
Funding for Higher Education totals $21.3 billion for the 2022–2023 biennium, a decrease of $3.3 billion, or 13.6 percent from the previous biennium. Formula funding appropriations are maintained for the biennium. With formula funding intact, the Partnership will support policies that advance Houston regional higher education institutions' development of the future workforce.

Economic Development
Economic development appropriations are reduced, compared to the current budget. Historically, early budget drafts appropriate fewer incentive dollars compared to the final version, and the levels allocated in Senate Bill 1 are similar to amounts initially proposed in 2017 and 2019. The Texas Enterprise Fund is funded at $100 million. The Texas Enterprise Fund decreases by $50 million, from $150 to $100 million. Skills Development Fund dollars, used for workforce training, are reduced by $5.3 million, to $54.7 million. Monies allocated to the Governor for broad economic development efforts are reduced from $121 million to $37 million. The Governors University Research Initiative, which is designed to lure top-tier academics to Texas universities, increases to $40 million, up from $23 million.

To learn more about this week of the 87th Texas Legislative Session or the Partnership's priorities, check out Houston.org/txlege.