Pitts: Budget Leaders Close on School and Water Financing

The Texas House and Senate are moving closer to a budget agreement that would include $3.2 billion extra for public education and $2 billion for water funding, House Appropriations Chairman Jim Pitts said Tuesday.

“Hopefully we’ll have an agreement sometime today on public ed, but we’re still working,” Pitts said.

Budget leaders in the House and Senate have been engaged in discussions for weeks on how to address last session’s $5.4 billion in cuts to education and to also put money toward water infrastructure projects. Various lawmakers and groups have floated proposals for tapping the state’s Rainy Day Fund, projected to have $11.8 billion by the end of the next biennium, to address these and other issues.

On education, measures approved by the Senate would put $3.2 billion toward reversing last session’s education cuts, partially through the Rainy Day Fund. The House has offered putting $3 billion in schools without using the Rainy Day Fund.

The plan now being discussed would employ “the method the House came up with and the money the Senate had, $3.2 billion,” Pitts said. He said the public education funding would not come from the Rainy Day Fund. A portion of the new funding became available due to the property values around the state coming in higher than the comptroller had previously anticipated, which has freed up some money that the state would have had to pay to local districts make up the difference.

“We’re trying to make sure that we bring more equity in the system, which we think we have done,” Pitts said.

Last month, the Senate unanimously approved Senate Joint Resolution 1, which would spend $5.7 billion from the Rainy Day Fund on schools, water and transportation. House leaders said the amount was too much and blanched at the way the plan requires voters to approve the spending.

SJR 1 appeared to be dead on arrival in the House until Monday, when Straus referred it to the Appropriations Committee. Pitts said the committee would hold a hearing on SJR 1 on Wednesday or Thursday. He expects the committee will pare down the measure to $2 billion in spending, solely for water projects. The language will also be changed as Pitts said it’s important to House members that the decision on spending not be punted to voters. Instead, voters will just be asked to amend the Texas Constitution to create the fund.

“That’s what we insisted, that we were not going to start doing a referendum-type of government in Texas like they do in California,” Pitts said. “We were elected, 150 members over here, 31 members over there, to make these decisions.”

Pitts said the plan in the works is to put $2 billion from the Rainy Day Fund toward the water fund in House Bill 1025, a supplemental spending bill that recently passed the House and is intended to address needs in the current biennium, which ends in August. Pitts suggested that the money could be put in the bill in such a way to have it be spent later.

“You will see probably when the Senate sends 1025 back to the House, it will include $2 billion in the Rainy Day Fund for water, and we will pass it,” Pitts said. “The $2 billion doesn’t go into the fund unless the fund is created by the voters.”

The complex approach to tapping $2 billion from the Rainy Day Fund for water may be due to the state's spending limit, an arcane provision in the constitution that rarely impacts state spending but has become an issue this session. Republican lawmakers have been looking for a way this session to take advantage of billions in surplus revenue without having to vote to break the cap, which many worry would be used against them in the next election cycle.

Senators proposed having voters approve billions of dollars in spending through constitutional amendments, in part because spending dedicated in the Constitution is not subject to the state’s spending cap. The precise method lawmakers are considering to tap the Rainy Day Fund for water projects may allow them to do so without breaking the spending cap, though Pitts declined to say for sure. Issues related to the spending limit were still being worked out, he said.

While other funding issues remain in flux, including transportation and higher education, Pitts said he did not expect the Legislature will have to return later this year for a special session related to budget issues. 

“I think we’re in good shape,” Pitts said.