Supplemental Budget Would Cost $433 Million, House Members Learn

House budget writers intend to add $433 million to the current two-year budget with a supplemental bill laid out Thursday, though a plan to repurpose millions in leftover funds from various health care programs drew sharp questions from Democrats.

Since the Texas Legislature meets every two years, lawmakers usually have to pass a supplemental budget bill to pay for unexpected costs and IOUs for the current budget. The Legislature is now crafting the 2016-17 budget, and the supplemental budget bill would augment the 2014-15 budget lawmakers approved two years ago.

At Thursday's House Appropriations Committee hearing, Chairman John Otto, R-Dayton, and members of the Legislative Budget Board explained details of House Bill 2 for the first time. The supplemental budget bill includes $254.7 million in general revenue, the portion of the budget lawmakers have the most control over, and $177 million in federal funds. Otto is the bill's author.

Budget board officials explained to House members that the bill will cover more than $1 billion in state needs, with much of the costs covered by transferring leftover money from other parts of the budget. For instance, the bill adds $768 million into TRS-Care, the health insurance program for retired teachers that faces insolvency, largely by taking advantage of savings in public school funding “due to higher than anticipated property value growth and lower-than-anticipated student enrollment,” explained Marva Scallion with the budget board. The board analyzes fiscal issues for the Legislature.

HB 2 also includes $20.6 million for the Texas Facilities Commission to address part of a long list of pressing maintenance issues in state buildings. The money will include $10.9 million for the Texas School for the Deaf, where some buildings don't have working fire alarms and others have had rodent infestations.

Several members of the House Appropriations Committee expressed concerns about how House Bill 2 plans to cover a $338.4 million shortfall in Medicaid, largely by transferring $278.2 million from other health and human services programs, including money originally allocated for mental health and women’s health services.

“It’s one thing if the needs are met, that’s fine," said state Rep. Sylvester Turner, D-Houston. "But I know there are still needs in mental health."

State Rep. Helen Giddings, D-DeSoto, said she was especially troubled that there were funds unspent in the Children's Health Insurance Program.

“It’s extremely hard for me to go back to district 109 and try to justify why children have health problems that are not being met,” Giddings said.

Officials with the Legislative Budget Board told the committee that the leftover funds are due to programs that couldn’t spend all of their funding in time. In some cases, it’s because the state received more federal funding than expected. In other cases, the timing of certain programs made it impossible for certain agencies to spend all the money they were budgeted in the current two-year budget cycle, which ends in August.

Lawmakers asked the budget board to provide more specifics about the leftover funds in the different health programs. Otto said committee members would have all of the information they need before the bill is voted out of the committee.

State Rep. Greg Bonnen, R-Angleton, warned lawmakers to be careful that their concerns don't create a “perverse incentive” where agency officials will fear facing criticism if they do not spend every dollar they’re appropriated.

“While we definitely want the services to be provided and the needs to be met, that needs to be done efficiently and wisely,” Bonnen said.

This year’s supplemental bill is starting out far smaller than the one approved in 2013. That bill cost $875 million when the House approved it, but it grew more than six times larger in the Senate to $5.4 billion. Senators added several items to it, including $2 billion for the state water plan, as part of a broader budget deal.