House, Senate Negotiators Reach Deal on Budget

Top House and Senate negotiators on Friday agreed to a two-year state budget that restores about $4 billion of $5.4 billion in cuts to public education made in 2011. It also creates a path for lawmakers to put $2 billion toward water infrastructure projects.

The five House members and five senators of the budget conference committee voted unanimously to adopt a final draft of the portions of the budget that remained unresolved, including Article 3, the portion focused on education and the area on which most of Friday’s negotiations focused.

The main numbers of the budget are still being calculated by the Legislative Budget Board. But John Opperman, Lt. Gov. David Dewhurst's budget director, said the total budget would be less than the $195.5 billion budget the Senate approved earlier in the session. The budget is about $700 million below the state's constitutional spending limit, he said. The budget still needs to be approved by the full House and Senate and signed by the governor.

The plan adopted Friday does not include a controversial rider setting guidelines around how Texas might negotiate with the federal government over reforming Medicaid. Senators had adopted the rider in their budget plan, but the House had voted it down.

“The House wouldn’t agree to it,” said Senate Finance Chairman Tommy Williams, R-The Woodlands.

Under Friday's deal, the $2 billion in water funding will come from the state's Rainy Day Fund, a reserve made up mostly of oil and gas taxes. That funding will be found in House Bill 1025, a supplemental budget bill that addresses funding on various issues.

The roughly $4 billion for public education is close to what Democrats had pushed for all week after acknowledging they were not going to be able to completely restore last session’s cuts. Budget conferees agreed to $3.2 billion for the Foundation School Program, the main account the state uses to fund public education. Another $200 million is expected to be added to the Foundation School Program in HB 1025.

As part of the $4 billion education package, negotiators also agreed on a $330 million infusion into the Teacher Retirement System's pension fund.

This additional $200 million into the Foundation School Program was the subject of a tense exchange between Williams and state Rep. Sylvester Turner, D-Houston, the lead negotiator for the House Democrats. Turner asked why the money is being put in HB 1025 instead of in the budget. Williams said the budget has to move forward. When Turner asked again, Williams said, “Because I said so.”

“It’s going to be in House Bill 1025 like I told you last night,” Williams added later. Turner noted that he hadn’t talked to Williams last night. Williams corrected himself, explaining that he spoke to one of Turner’s colleagues.

“I told you,” Williams said. “Because I said so.” He then asked if Turner was questioning Williams’ “veracity” and implying that Williams couldn’t be trusted to put the money in the supplemental budget bill. Turner denied this. The two argued a little longer.

“If you are saying you are putting $200 million more into [Foundation School Program], I take you at your word,” Turner said.

The tension between Turner and Williams was rooted in part over budget negotiations involving a refund of the Systems Benefit Fund. The fund is fed by a fee collected on most electric bills around the state. It's meant to be used to help low-income residents with utility bills, but lawmakers have allowed it to amass hundreds of millions of dollars without spending it. Turner was adamantly opposed to a proposal to refund most of the fund's balance to ratepayers, arguing that the money should be used to help poor Texans. As part of the budget deal, the Legislature will approve a bill allowing for $631 million of the fund to be refunded, Williams said.

Asked if the House will support that much of a refund from the System Benefit Fund, House Appropriations Chairman Jim Pitts, R-Waxahachie, said, "I can never predict what the House will do."

The budget conferees also agreed to partly end a diversion of gas tax money that has normally gone to the Department of Public Safety. Under the budget deal, only $200 million of gas tax revenue would go to DPS, instead of the $600 million that is normally allocated. DPS will receive the other $400 million from the state’s broader general revenue account. The Texas Department of Transportation will receive the extra $400 million of gas tax revenue for road construction.

The budget also includes a 3 percent raise for state employees over the next biennium.

The negotiations grew passionate and, at times, convoluted Friday as budget proposals from the House and Senate spread confusion in regards to what was on the table.

Budget leaders had been hopeful that agreement could be reached on Friday as, under normal session rules, lawmakers need every day remaining in the session to allow enough time for the Legislative Budget Board to print and prepare the final document and have it publicly available for several days.

“We turn into a pumpkin sometime tomorrow if we don’t have an agreement on the budget,” Dewhurst said Thursday evening.

Lawmakers had said there were ways to sidestep those rules if the negotiations dragged on but had hoped to avoid that scenario.