Senate Panel Approves $176.5 Billion Budget

A $176.5 billion budget for the 2012-13 biennium — 5.9 percent smaller than the current budget but almost $12 billion larger than the version passed earlier by the House — won approval from the Senate Finance Committee Thursday morning and will come to a full Senate vote after the Easter break.

And, unlike the House version, the Senate would use up to $3.1 billion from the Rainy Day Fund.

The vote was 11-4, with Sens. Eddie Lucio Jr. of Brownsville, Dan Patrick of Houston, John Whitmire of Houston and Judith Zaffirini of Laredo voting against it. All but Patrick are Democrats. Two Democrats — Juan "Chuy" Hinojosa of McAllen and Royce West of Dallas — voted for the bill.

The chairman of the committee, Sen. Steve Ogden, R-Bryan, said the Senate version spends more money on nursing homes, on public education and on Medicaid. "It doesn't generously meet the needs of Texans, but I think it's adequate," Ogden said. He said he wasn't spending more to set up a compromise in coming negotiations with the House. "I'm going to fight for this bill," he said.

And even with the higher numbers, winning Senate approval isn't certain. It takes two-thirds of the Senators to bring the budget up for consideration next week, and the panel had to put enough spending in the plan to bring along some Democrats. Even with two of his committee's Democrats on board, Ogden sees opposition ahead. "We're not gonna suspend, 31 to nothing," he said.

Hinojosa, the committee's vice chairman, compared the various proposals to a famous western. "HB 1 is Ugly. The Senate bill is Bad, but sometimes we have to make hard choices." He never got to Good, but said the Senate bill is an improvement over the House version. "The pain is bearable, as opposed to HB 1, where the pain is unbearable."

The House version would spend a total of $164.5 billion. Senate Finance's version totals $176.5 billion. The current budget totals $187.5 billion. Spending from state sources — general revenue — comes to $80.7 billion in the Senate plan, as against $77.6 billion in the House plan and $82.1 billion in the current budget.

The Senate's biggest cuts, compared with current spending, come in health and human services, which would get $7.8 billion less. Ogden said the budget leaves Medicaid spending about $3 billion short of what current law requires. But with changes afoot in Washington on health care and Medicaid, he said current law could change before the money is needed. If it doesn't, the state will have the money. "That's why we need to leave some money in the Rainy Day Fund," he said. 

According to an analysis prepared by the Senate, the upper chamber's version makes smaller cuts in Medicaid reimbursement rates than the House, provides $200 million more for mental health services, and restores proposed cuts to foster care programs. It puts $4.3 billion more into public schools, $400 million more for textbooks and makes smaller cuts to teacher retirement and health plans than the House. Almost $200 million more would go to TEXAS Grants. The Department of Public Safety would get $249 million more than in the House version, and prisons would get $358 million more — enough, according to the analysis, to maintain current probation and capacity needs in prisons.

Ogden put off a vote on legislation that would fill a $4.3 billion deficit in the current budget, saying the numbers could be adjusted in the next few weeks and that it's prudent to wait. Also ahead: a vote on a constitutional amendment that would allow the state to tax business income without triggering a prohibition against personal income taxes. Members of partnerships — law firms are an example — could be taxed as other businesses are taxes. His idea is to get rid of the current business tax and return to the tax it replaced.

Ogden said most businesses would prefer the old tax to the new one, and said the state needs to find new revenue. The current business margins tax produces $2 billion less per year than its authors hoped for, he said. It was meant to cover the cost of lowering local school property taxes and of almost $6 billion in other school spending approved in 2006, and, in Ogden's words, "We either have to address that or let property taxes rise that much."