Inside the State Budget, a Shell Game to Avoid Choosing Taxes or Cuts

Some people will do anything to stay away from tax bills and budget cuts.

Look at the Texas Legislature, which diverts nearly $5 billion raised for specific programs to accounts where it balances spending in the general budget. Legislators tell voters they are collecting taxes and fees to pay for pleasant-sounding programs, like criminal justice planning, fugitive apprehension, clean air, artificial reefs, 911 emergency services and trauma care, to name a few. Then they leave some or all of the money collected for those programs in account balances that, for accounting purposes, can be counted against general spending to balance the budget.

Most taxes go from your pocket into general accounts that can be used for anything in the state budget. The dedicated funds are supposed to be used only for their intended purpose, if they are used at all. That last phrase — if they are used at all — is the part where the budget magicians do their work.

Money that is not used — unspent balances in state accounts — offsets overspending in other accounts. It doesn’t matter to the counters whether the unspent money is dedicated to something or not.

There is a perfectly understandable reason for the diversions: they have closed gaps in the state budget that would otherwise have to be closed with new money or less spending, with tax increases or budget cuts.

People hate that stuff and have not exactly stormed the Capitol to stop diversions and budget tricks and the sorts of things many of us have used, from time to time, to make our checkbooks balance.

Some people mind. State Sen. Kirk Watson, D-Austin (where he is also the former mayor) minds. And after several years of talking about it, he has company on both sides of the aisle. It turns out that transparency is popular with Republicans and Democrats.

“We’ve got to get some more transparency,” Watson said. “Everybody recognizes this is not an honest way to budget. If you’re going to collect a tax and not use it for that purpose, quit collecting the tax.”

It looks especially dishonest if the programs that are supposed to be supported by dedicated income go wanting. The state has been starving state parks for years, all the while collecting money specifically to keep those parks flourishing. The state comptroller expects the fiscal year to end with $39.8 million sitting unused in one parks account, and $37.7 million in another.

“The folks in the 911 area would tell you the same thing,” Watson said. “Or the emission reductions program — we fixed that? We can divert the money?”

One aspect of the comptroller’s report on dedicated revenue is how well the various funds are named. Who would be against a fund for coastal protection, or oil field cleanup, or breath alcohol testing, or college tuition loans?

The names, and the size of the overall diversions, could be the keys to reform. It is a lot of money, rising from $4 billion at the beginning of the current two-year budget to a forecasted $4.9 billion at the end. And those programs — each with a constituency that probably helped get the money dedicated in the first place — have advocates who would like to see the original purpose served.

The economy is better, too, and might bring the state enough new income to wean itself off of the diversions now in place. Some lawmakers want to limit diversions in the future. Watson wants to cut them out altogether, but even he would leave an exception, allowing the Legislature to divert funds from programs, one by one, in recorded votes.

Watson called diversions a “grossly political” way out of a budget pinch. “Nobody wants to be for raising taxes, but everybody wants to be for giving the public whatever they want,” he said.

Others have picked up on this. One piece of legislation would allow diversions up to what is now in place, but no more. Another would order a study by the Legislative Budget Board.

“I don’t think people ought to be let up just because they’re saying the right things,” Watson said. “I really worry that we’re not going to be candid about how big a problem this is.”

Thanks to the comptroller’s report, we know exactly how big it is: $4,949,031,180.00.