Budget Deal Remains in Flux After Hearings Canceled

Updated, 8:15 p.m.:

The cancellation of two key committee hearings Thursday put into clear focus that budget negotiations, believed to be nearly done just two days earlier, remained ongoing.

A hearing of the budget conference committee — the five House members and five senators appointed to take the lead on budget talks — was originally scheduled for 2 p.m. At that point, it was pushed back an hour and then “postponed until further notice,” according to Rick DeLeon, the Senate sergeant-at-arms, who made the surprise announcement to a packed committee room.

It was a similar story for a hearing of the House Appropriations Committee that was scheduled to take up Senate Joint Resolution 1, a measure that the committee’s chairman, state Rep. Jim Pitts, R-Waxahachie, had identified earlier in the week as a key part of an emerging budget deal. The meeting was expected to begin around 6 p.m. but was canceled and rescheduled for 8 a.m. Friday.

At a bill signing earlier in the day, Gov. Rick Perry reiterated his earlier position that the Legislature will avoid a special session if lawmakers send him a balanced budget that includes $1.8 billion for tax relief and addresses water issues and “highway transportation infrastructure.”

“I think we're really close to getting all those things done,” Perry said.

Much of the drama of the day focused on the House, where Democrats agreed to remain united on their push for more funding for public education. Republicans have warned that derailing the budget process will lead to a special session that will bring about a budget that Democrats will like even less than the one currently proposed to them.

State Sen. Jane Nelson, R-Flower Mound, a budget conferee, had only one comment as she left a meeting with Lt. Gov. David Dewhurst and Senate Finance Chairman Tommy Williams, R-The Woodlands, late Thursday.

“They’re waiting on the House,” Nelson said.

Brandi Grissom contributed to this report.

Updated, 1:15 p.m.:

The House Democrats’ representative on budget negotiations accused Republicans on Thursday morning of reneging on a deal to include $3.9 billion toward reversing last session’s budget cuts, and he said Gov. Rick Perry is privately pushing Republican members to adopt a budget with less education spending.

“Our position has never changed,” said state Rep. Sylvester Turner, D-Houston. “I’ll stake my 24 years in this House on the agreement that we reached. It has never changed.”

Turner said Democrats wanted a final two-year budget that included $2.5 billion toward education in general revenue — the portion of the budget lawmakers have the most control over — plus an additional $1.4 billion. That money came from property values coming in higher than expected, leading to more local revenue for schools and the state with $1.4 billion it no longer was required to pay to school districts. Lawmakers have previously discussed putting all that money toward education anyway. Turner said Republicans now only want to put $700 million of that funding toward schools.

“They’re not even allowing school districts to hold on to their own enhanced property value,” Turner said.

Turner described how “the House leadership” told him that “the governor said we spend too much on education.” The deal put forth by Republicans is $3.2 billion for schools plus some additional money to shore up the Teacher Retirement System’s pension fund, he said.

Perry's office denied the claim. "The governor has not told members not to vote for the budget," Perry spokesman Josh Havens said. "There are a lot of ongoing conversations about the budget at this point in the session, and the governor expects lawmakers to send him a balanced budget that limits spending, includes tax relief for Texans and funds water and transportation infrastructure projects."

In recent weeks, Turner said Democrats have repeatedly agreed to budget deals only to hear soon after that Democrats had to accept less on education funding. Turner said Republicans have threatened to bring up for a vote bills that Democrats despise on issues such as abortion, if they didn’t fold on the budget.

Requests for comment from House Speaker Joe Straus were not immediately returned.

Original story:

The budget conference committee scheduled a meeting Thursday afternoon to solidify final details of the state's two-year budget, though negotiations on key issues, particularly education funding, remained in flux just hours beforehand.

The Legislature’s top budget writers, Senate Finance Chairman Tommy Williams, R-The Woodlands, and House Appropriations Chairman Jim Pitts, R-Waxahachie, announced a meeting at 2 p.m. of the budget conference committee to approve the remaining portions of the budget, including education. How much money should be spent restoring last session’s cuts to public schools remains a central issue in the negotiations, say those with knowledge of the discussions.

House leaders are working to find a compromise that will draw the votes of 100 House members that are needed to tap the state's Rainy Day Fund. That requires a plan that will satisfy most or all of the chamber's 55 Democrats, who are focused on increased education funding in particular, without turning off too many of the 95 Republicans. House Democrats were planning to meet Thursday morning to discuss strategy.

“The holdup right now is that Democrats cannot stop making demands,” a Republican aide said. “There is a very good deal for everyone on the table right now, and [House] leadership feels like it has given enough.”

Democrats have been focused on reversing $5.4 billion in education cuts from the 2011 session, particularly $4 billion that was removed from the formula funding doled out to school districts.

“Education is kind of the key sticking point right now,” said state Sen. Wendy Davis, D-Fort Worth. “We’ve had this goal all session to restore the $4 billion in cuts.”

A central part of the latest proposal, according to people with knowledge of the discussions, involves spending more than $3 billion from the Rainy Day Fund, including $2 billion on water infrastructure projects. Another $500 million would go to repair rural roads in so-called shale counties in South and West Texas that have been destroyed by truck activity from a gas drilling boom. An additional amount, perhaps $300 million, would go toward shoring up the Teacher Retirement System’s pension fund.

Also at issue is $500 million in education funding that the Senate unanimously approved as part of a $5.7 billion plan to tap the Rainy Day Fund, which would have also included money for transportation and water projects. Pitts had said earlier in the week he would hold a hearing on that measure, Senate Joint Resolution 1, by Thursday. As of Thursday morning, a hearing had yet to be scheduled. 

State Rep. John Zerwas, R-Richmond and one of the members of the budget conference committee, said Thursday morning that a deal "is together," though no one is fully satisfied. A controversial rider addressing how Texas might negotiate with the federal government about Medicaid expansion may come out of the budget plan, he said.

Some Republicans remain wary of the amount of money budget negotiators are planning to put toward education, particularly when the Texas Department of Transportation has said it is billions of dollars short of what it needs to maintain current roads. There are also concerns among some Republicans that too much will be spent from the Rainy Day Fund, which is projected to grow to $11.8 billion by 2015.

“I’ll be very disappointed if we don’t properly fund water and find a funding solution for transportation,” said state Rep. Phil King, R-Weatherford. “I think everything is still really up in the air. I won’t be surprised if we’re back in a special session.”

State Sen. Glenn Hegar, R-Katy, said the roads damaged by drilling need to be funded because they have become a safety concern in parts of the state and a potential threat to the oil and gas industry, which is critical to the state’s economy.

“Hopefully we’ll have the ability to have some relief for the roads in the shale areas,” Hegar said. “I think that is one of the most critical things.”

Emily Ramshaw contributed to this report.