LiveBlog: Budget Writers Weigh Tapping Rainy Day Fund

Hello! Looks like the meeting is going to begin a few minutes late. Lawmaker are just starting to enter the room to take their seats. Standby...

And... the hearing has officially begun. Chairman Pitts just jokingly took away Rep. Giddings' microphone.

Chairman Pitts is discussing HB 4, which pays for supplemental demands AND contains about $1.4 billion in spending cuts. The largest supplemental need is $600 million for the Foundation School Program.

Marva Scallion & fellow Legislative Budget Board staffers are now testifying before the committee. They've given a handout to lawmakers that outlines reductions. Again, the total cuts for all agencies and higher learning institutions is $1.4 billion in general revenue and general revenue dedicated funds.

Early concern from Rep. Sylvester Turner. He says the reductions in HB 4 include a particular item that negatively impacts seniors and low-income people who rely on the state for help paying their utility bills.

LBB confirms the PUC went above and beyond the 7.5% in reductions they were asked to submit to the Lege when they cut those payments.

Rep. Turner on taking away utility discounts from senior citizens and low-income folks: "If it walks like a tax. If it functions like a tax. I don't care if you're a Republican or a Democrat from rural Texas. IT IS A TAX.... We're violating our own principles!"

Rep. Turner on taking away utility discounts from senior citizens and low-income folks: "If it walks like a tax. If it functions like a tax. I don't care if you're a Republican or a Democrat from rural Texas. IT IS A TAX.... We're violating our own principles!"

An unidentified woman just stood up to say she's one of those senior citizens who stands to be affected by the PUC's decision to drop the utility discount from 17% to 10%. "Just want you to know I'm here," she said. Democratic lawmakers asking why PUC went so far. A PUC rep is now speaking and says, "We felt it was appropriate for the commission to make that decision here... rather than later in May." He says they were asked to take a "broad" look at possible savings.

Rep. Turner to PUC official: "What you're doing is a distortion. I'm not going to let you get away with that... you're taking away from low-income citizens... it's an attack on senior citizens.... I'm not gonna sit here and act like it's not going to hurt people on the street."

LBB staffers are stepping down. Gov. Perry's staffers are about to testify before the committee.

Gov. Perry's Director of Legislative Affairs Ken Armbrister says he's here to clarify the guv's agenda: "We come today in a spirit of partnership, not adversarial... We owe you the obligation of telling you where he is on issues that he can support in addition to what you have before you."

Rep. McClendon question to the governor's staff: "What relationship did your office have in the third cut made by the PUC on the backs of the elderly and the disabled and the poor?" Armbrister responds by saying the only direction they gave was "the (7.5) percent cut, not where you gonna do it, how you gonna do it, and those type of things. So we had no influence on the direct areas they cut."

Lawmakers still discussing the PUC discount issue. Rep. Dawnna Dukes to governor's staff: "Now that the governor's office knows there's a rate increase to the elderly, what is he going to do?" Mike Morris: "We want to work with you. It's a challenge to write any budget... it's a discussion. Ken Armbrister: "The whole point of the exercise you're going through... it's really not up to us. It's up to you on the committee which priorities are there."

Rep. Turner to Armbrister: "Are you saying (the people who may lose their utility discount) are irrelevant?!" Armbrister says he's just trying to clarify the committee is focusing on 2% of the state's population and the "total picture includes public education, health care, transportation, justice..." Turner: Be careful when you play these number games, because I will play with you!" Armbrister: "The governor has not drawn a line in the sand.... "

Armbrister to committee: "We just want to get the process. I don't know where it came out that the governor was hardball on anything. He's always said,' Go through the process'... that's all we're saying, and that's all he has said."

Chairman Pitts to governor's staff: "It may be the position of the house and this committee to use the rainy day fund-- and you're not drawing a line concerning that?" Armbrister says that's true. "Our fear is not ideological... the legislature has used the Rainy Day Fund before, but we have some pressing unknowns out there," he said. "This isn't a 'Fed Up' comment. One of the things that we tend to forget is in the early estimates of the national health care plan, the cost of the state of Texas over a 5, 10, 15 year period of time ran as high as $29 billion."

Armbrister just expanded on unknown costs down the line. He says he wants to make sure that "if a couple of those hit, we're not left wishing for every penny back."

Texas Education Agency Commissioner Robert Scott has joined the conversation. Rep. Villarreal: "We'd end pay for performance now to pay for the next fiscal cycle? Scott: "I simply said that because it's a potential option." Villarreal: Wouldn't teachers think twice if we take away their funds now?" Scott: "I'm not proposing this cut. I'm saying it's an option for this committee."

Ooooh.... Chairman Pitts just told the governor's staff the committee is trying to find a solution to the current budget crisis. "When the governor is out telling the members the opposite, it doesn't help to pass the bill," he said.

Rep. Gooden: "Can we expect the governor to help us get to that $4.2 billion without tapping the rainy day fund? Because my constituents are telling me to listen to the governor and not touch it." Perry Senior Adviser Mike Morrissey : "When HB 4 gets to our desk, the governor has to sign it. So we want to help you write a bill that does the best you can to get through 2011. So can we help along the way? Yes. We're committed to that." Regarding a timeline, Chairman Pitts says they have to get this bill ready to go by next Tuesday.

By the way, if you'd like to see the text in HB 4, including the proposed supplemental expenditures and cuts-- go here: http://www.capitol.state.tx.us/BillLookup/Text.aspx?LegSess=82R&Bill=HB4

Governor's staff says two years later, some stimulus dollars have gone unspent. Rep. Myra Crownover's response:"Interesting." Lawmakers now asking whether those balances can be used to cover some of the shortfall. Governor's staff says t's a possibility. Rep. Susan King: "We've been here since January? Why wasn't that info given to us earlier" to prevent the enormous cuts in HB 4?

Rep. Turner just called the franchise tax a "$1 billion leakage" and asked if something should be done to address it. Armbrister's response: "It wouldn't pass this House and the governor wouldn't sign it... because it's a tax increase."

Arbmbrister to Turner: "We know (the franchise tax) is underperforming just like the sales tax and the tobacco tax... that's how we got into this dilemma we find ourselves in. But no, the governor will NOT sign a tax bill this session."

Rep. Turner: "The governor's office doesn't want to correct a flawed tax? I want the governor to stand up for the less fortunate as much as for those who are more capable of fighting for themselves, and I want a governor who will manage the state and take steps to correct mistakes. I'm looking for some leadership. Not grandstanding. Not making rhetorical statements, but some good basic hardcore management right here in the state of Texas." (clapping from audience)

Rep. Otto says he takes issue with Turner's use of the term 'loophole' to describe the franchise tax. Turner says it's a term used by the comptroller's office. "It's something we did not intend. Businesses are doing what they legally can do, but until we address it, the comptroller says it's going to cost us $1 billion every year," he said.

Chairman Pitts to governor's staff: "There's a misunderstanding between what the governor said last week in caucus... there's been press releases criticizing me and this committee that we have not taken cuts and I think the governor's office has pushed those releases along-- that he's willing to cut and we're not. I think if we've gotten anything today, it's that we're pretty much on the same page when it comes to cuts." Rep. Turner just interjected, "Let's not paint us all with the same brush! My hair is falling out."

The committee is now considering HB 275, which would appropriate $4.3 billion from the Rainy Day Fund to cover the deficit in the current biennium. Chairman Pitts is going over the bill's details. "You can vote for House Bill 275 and still tell your constituents the Legislature cut more than $11 billion," he said.

Pitts says HB 1, which addresses the next biennium, will still have major cuts. Staffers from the comptroller's office are now getting ready to testify before the committee.

Rep. Aycock just asked the staffers what happens if the committee doesn't appropriate this money. They say there could be cuts in the next fiscal year starting in September, payments in August would have to be moved into the next fiscal year, or rainy day funds could be used. Or a combination of all those options. One option is to borrow from the Rainy Day funds to pay for bills, but the state constitution says the comptroller would have to pay back that account by Aug. 31-- and they won't be able to do that.

If oil stays at $100+ per barrel, the Rainy Day Fund will stay healthy. Could bring in $100-$200 million per year.

Lawmakers are now discussing payment deferrals. Rep. Villarreal: "If we keep deferring, isn't this just borrowing money? Borrowing from the future to pay our bills today?"

BTW, there's a group of disabled citizens filling one of the aisles in the room. It's the same group that was cited for trespassing last week when they tried to block the governor's entrance. They've been advocating for maintaining funds to keep their home care and community services intact. They also want lawmakers to spend the entire Rainy Day Fund before any cuts are made.

Rep. Otto: "I want members to understand the growth of the RDF and where it's coming from. To me... HB 275 is exactly the use that it was intended for... The choices are grim if you DON'T use this fund for what it was intended for. You pay your bills by using this fund."

Chairman Pitts is proposing the committee meets Monday at 8am to vote on HB 4 and HB 275. There will be no public testimony. That's all, folks! Thanks for following our liveblog!