Budget Stalls Over Education, Questions About Funding Sources

After a day of stops and starts and private meetings, Texas lawmakers don't have a budget deal yet.

House Appropriations Chairman Jim Pitts postponed debate Wednesday over two fiscal bills, SB 1811 and SB 1581, both of which are critical pieces of the budget puzzle. Both bills are now scheduled for debate on Thursday. Without passage of those bills — SB 1811 in particular — the budget would be short about $2.6 billion in revenue — almost a guarantee lawmakers will be back this summer for a special session.

Here’s the problem: Senate Finance Chairman Steve Ogden wants the House to approve SB 1811 to pay for the budget, known as HB 1. But the House is unwilling to do that until a broad consensus has been reached by the budget conference committee made up of five senators and five representatives. They want a budget deal before the vote on HB 1811. It doesn’t help that lawmakers have filed hundreds of amendments to the three so-called fiscal matters bills (SB 1811, SB 1581 and SB 23). 

Because it's late in the session, those bills are in danger of becoming "Christmas trees" — ornamented with dead or dying legislation in the form of hundreds of far-ranging amendments. Those amendments range from a statewide smoking ban to an effort to make English the official language of Texas. Debate could last for hours or days. 

“Why go through the exercise if it doesn’t mean anything at the end of the day?” said state Rep. Larry Taylor, R-Friendswood, chairman of the GOP caucus. He also said the House remains uncertain over the Senate’s proposal to spend $855 million more in Rainy Day funds and a few billion more on their highest priority: public education. 

“Public education is important to everybody, but the Senate is spending money and they can’t tell us where it’s coming from,” Taylor said. 

What was expected to be a long day of considering nearly 800 pages of amendments to the bills took a twist when Gov. Rick Perry was spotted going into a closed-door meeting in the House speaker’s office. On Tuesday, Perry sent out a press release saying he would not support a state budget for the next two years that resorted to “accounting gimmicks.” Lawmakers interpreted that to mean he did not like SB 1811’s proposal to defer payments until the next biennium. His appearance on the House floor prompted rumors that the fiscal bills did not have the support needed to pass.

All eyes were on Perry as he left the speaker’s office and walked through the chamber flanked by a gaggle of reporters, but he revealed little about the budget process unfolding behind closed doors. “They’re working on it,” he said, before repeating a line he has invoked since his re-election last November. “The [voters] want us to have a balanced budget without raising taxes, getting into the Rainy Day Fund.”

Those who have been involved in meetings with the governor and legislative leaders say Perry is not "micromanaging" the process. They say he does not like payment deferrals, but has indicated he won't veto the practice either. On the other hand, Perry has clearly stated he wants to protect the remaining balance in the Rainy Day Fund. Another priority bill he told leaders he wants to pass before the budget is set is HB 9, which would change funding models in higher education by offering rewards and incentives to help students graduate. The legislation has already passed the House.

Though Pitts said he would bring up SB 1811 and SB 1581 after lunch on Wednesday, the House instead adjourned for two hours. During that break, the GOP caucused and emerged from a 30-minute meeting without any major agreement. Rep. Harvey Hilderbran, R-Kerrville, said the caucus didn’t discuss the passage of any bills. Rather, he said, they agreed that postponing debate on the fiscal matters bills was necessary to allow lawmakers time to pull any amendments that are too far from the legislation’s main purpose.

Lawmakers have agreed to every section of the state budget except education funding. If the fiscal reforms do not pass the House, Ogden says the House and Senate versions of the budget are about $4 billion apart. If they do pass, they will be “a couple billion” apart.

"So, we're stuck," he said, visibly frustrated. "If you don't pass 1811 and you don't pass the school bill (SB 1581), the Senate cannot pass a budget.”

Ogden stressed the budget conference committee needs to see those bills before it can negotiate a final deal. He told reporters that House members did not want to bring up the bills on the floor because of all the amendments filed by lawmakers. 

"It's politics at its worst, is what it is," Ogden said, adding that the impasse could force lawmakers into overtime. "The fact that neither bill is moving means that a special session is a certainty.”

Soon after the House reconvened in the afternoon, Pitts told lawmakers that negotiators have met several times with the governor and other players over the past week and they are "very, very close" to a budget deal. SB 1811 won't come up, he said, until the budget conferees reach an agreement on the basic proposals in the bills.

"If we don't pass Senate Bill 1811, Senate Bill 1581, and Senate Bill 23, we don't have a budget," he told the House floor, echoing Ogden’s sentiment.

Throughout the day, House Speaker Joe Straus also was in and out of closed-door meetings. As members of the media trailed him, the speaker attempted to ease tensions with the Senate over the final budget. "We're close and we've been close, but we're not there,” he said, before nodding his head to acknowledge that disagreement on education funding is the final sticking point.

Straus is unwilling to admit a special session may be in the works. "We're not anticipating anything beyond May 30th. We're going to keep working,” he said.

While Republicans control the agenda in the House, Democrats are left without much power to intervene in the process. At one point, Rep. Mike Villarreal, D-San Antonio, a member of the House Appropriations Committee, told the chamber that 5,000 teachers have been laid off while the Legislature disagrees over the budget.

“I think it’s better to just go into special session,” he told the Tribune afterward. “Because it can’t get any worse than where we’re at now.” Some of the measures in SB 1811 — like delaying funding for the 2013 school year to push it into the following fiscal year — are “certainly accounting tricks,” he says, but “it’s better than cutting the budget further.”

While some speculate the governor may not like deferring payments to finance the budget, Hilderbran said it is a well-known and tested option “that gives us two years for the economy to recover and generate revenue.”

The delay in hearing the bills doesn't reopen the deadlines for filing more amendments; Pitts says no new amendments can be filed. The current stack is several hundred pages deep. Rep. Eddie Lucio III, D-San Benito, requested lawmakers save their packets so that "we don't waste all that paper."