Texas Legislators Pass Two-Year Budget That Shorts Schools by $4 Billion

Texas lawmakers passed a two-year spending plan today that cuts spending on health care, hospitals and higher education in the second most-populous U.S. state, and provides $4 billion less to schools than mandated by law.

Members of the House of Representatives and Senate voted mostly along party lines for the budget, which has been debated since February. The Senate voted 20-11 and the House 97-53.

The budget calls for $86.9 billion in general-fund spending in the two years that start in September, down 1.9 percent from the current period, state documents show. Including U.S. funds and money dedicated to specific uses, the state would spend $172.3 billion, or 8.1 percent less than the current period.

“It may not be the budget some would like but it meets the needs of our state with the resources we have available,” Representative Jim Pitts, a Waxahachie Republican and the House’s main budget writer, said today during floor debate. Yesterday, lawmakers agreed to change the school- funding law to jibe with the spending plan.

Governor Rick Perry, a Republican, and the members of his party who dominate the House and Senate rejected raising taxes or tightening business loopholes to boost revenue, and Perry refused to use reserve funds to curb cuts. During the budget debate, they cited the need for schools, hospitals and state agencies to operate more efficiently. The main elements of the proposal were agreed to by the Republicans on May 26.

‘A Betrayal’

“This budget is a betrayal of Texas families, especially women and children,” said Representative Mike Villarreal, a San Antonio Democrat. “Because of this budget, Texas will lose jobs today and worst of all will have a less-educated, less-skilled workforce to compete for quality jobs in the future.”

Lawmakers still must pass enabling legislation to change legal funding requirements for the more than 1,100 school districts in the state. They have until May 30, when the legislative session ends, to accomplish that goal. The plan, which Perry has indicated he will sign, covers the biennium that begins in September.

While the budget boosts general-fund spending on schools by 9 percent, U.S. aid cuts offset the gain, and the total would be little changed from the current biennium at $53.8 billion, the documents show. That doesn’t meet increases in students or costs, said Linda Bridges, an American Federation of Teachers union leader. She said it may trigger thousands of job cuts.

Under an agreement reached by budget negotiators yesterday, all districts would be shorted by 6 percent in fiscal 2012, said Senator Florence Shapiro, a Plano Republican who participated in the talks. She said a new allocation formula would start in 2013.

Changing Formula

“This is a way to get to where we want to be,” and gives schools an ability to plan their budgets for several years, Shapiro said yesterday. Both chambers still must vote on the formula change, and may take it up as soon as tomorrow.

The proposal doesn’t cover projected additions of 80,000 grade-school students a year, Pitts said.

While general-fund spending on health care and human services would rise 3 percent, the increase won’t be enough to offset an $11.8 billion, or 28 percent, drop in federal aid. As a result, total spending in that category falls 17 percent to $54.2 billion, the budget documents show.

Payments to hospitals treating Medicaid patients would drop 8 percent, according to Amanda Engler, a Texas Hospital Association spokeswoman in Austin, referring to the state- federal health program for the poor. The cut will be hardest on smaller and more rural hospitals that have fewer patients with private insurance, she said.

Federal Aid Cut

“Congress isn’t going to be spending the same amount of money in coming years, so state governments have to be structured to be ready for that change,” Representative John Otto, a Dayton Republican, said May 26 in an interview. “We reduced general-revenue spending by 2 percent, just like we did in our last budget two years ago, but this time we don’t have $12 billion in federal stimulus money.”

The budget plan also assumes a $4.8 billion Medicaid deficit through August 2013, Pitts said.

The proposal also cuts about $1.2 billion from higher education including community colleges and universities. General-fund spending for the institutions drops 7.8 percent to $14.4 billion, although additions from other sources shrink the reduction to 4.3 percent from the current period, documents show.

“The universities can raise tuition and they have a wider variety of ways to cover their costs,” Representative Larry Gonzalez, a Round Rock Republican, said May 26.

General-fund cuts also would affect public safety and the judiciary as well as the Legislature’s own operations.

To contact the reporter on this story: David Mildenberg in Austin at dmildenberg@bloomberg.net

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net

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