Analysis: Lawmakers can turn to a bag of tricks to balance state budget

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The Texas legislators writing the next two-year state budget are scrounging for dollars — looking for ways to cover the rising costs of current programs without raising your taxes.

And respecting the fine tradition of political rhetoric, they might soon be pulling the same kinds of tricks Texans use to balance their family budgets when they don’t want to or cannot cut spending: Delaying monthly payments, hitting the savings account or taking money set aside for other uses.

The possibilities range from the familiar to the unexpected and are generally unattractive — except in the face of budget cuts or tax increases.

In the state’s case, that would mean pushing some payments from the last day of one budget cycle to the first day of the next one, an accounting sleight of hand budget-writers have relied upon many times before. In the state’s case, it’s a $3-billion-plus shell game — meaning they can write a budget that’s balanced and that’s $3 billion or more bigger than what they’d be writing without the delayed payments.

When times are flush — oil is booming, the sun is shining, the angels are singing — they pay it back, resetting the spring for the next downturn. Some folks get their noses out of joint about it, but voters have never seemed to mind that much.

It could mean spending some of the state’s fat Rainy Day Fund — a cash-flow mechanism set up in the mid-1980s that has grown into a semi-sacred savings account. Conservatives have been cautious about spending it, particularly for ongoing expenses, but some have warmed to the idea of using some of that money for one-time expenses that are marbled throughout the state budget.

One of the hurdles in the current budget was created by lawmakers themselves. In an effort to set aside money for transportation projects, they asked voters to amend the state Constitution to earmark some sales tax money for that purpose. Voters overwhelmingly went along with that idea, and it means that $4.71 billion in sales tax revenue that would have been available for general state spending in 2018-19 is instead going to roads.

As with so many things, legislators built in an escape hatch — a provision that allows a two-thirds majority of lawmakers to take half of the highway money and use it for general spending. That would be $2.3 billion and would surely raise a fuss from highway contractors, if not voters themselves.

But, with a tight budget and an electorate that is decidedly tax-averse, it’s another kind of budget maneuver that’s under discussion in Austin.

Some tricks are slicker — which makes them more attractive to the state’s budget writers and more often put to use. For instance, property values in Texas have been rising steadily, raising the amount of property tax revenue for a given tax rate.

State legislators might soon be pulling the same kinds of tricks Texans use to balance their family budgets when they don’t want to or cannot cut spending: Delaying monthly payments, hitting the savings account or taking money set aside for other uses.

That’s tempting for a state that spends more money on education than in any other area of the budget (health and human services is close, but remains smaller). And legislators have taken advantage of the invisible tax increase, lowering what the state pays per student by $339 per year over the last decade and leaving local taxpayers to make up the difference and to cover inflation — increasing their load by $990 per student.

That helps balance the state budget in a way that’s evident by looking at the House and Senate proposals for the 2018-19 biennium. According to the Legislative Budget Board, the state’s obligation for education spending will drop $3.6 billion in 2018-19 because of rising property values even as overall spending per student remains the same. That’s the shift in costs due to your increased home value and, by extension, your higher school property taxes.

The House budget would raise state education spending by $1.5 billion, while the Senate wouldn’t raise it at all; both are relying on local property taxes to cover all or part of their share of public education spending and using the windfalls to cover other spending in the state budget.

That’s a little trickier than raiding savings or delaying payments and as recent history has proved, it’s a political twofer: Lawmakers use the local proceeds to balance the state budget, and they get to holler at local school boards for raising those pesky school property taxes at the same time.

More columns from Ross Ramsey:

• It’s a confusing time in school finance — a maelstrom of local and state governments trying to master a byzantine system that is faltering in every way but the most important one: The courts say it's broken, but constitutionally sound.
• Talking — the bully pulpit, as Teddy Roosevelt called it — is one of the biggest powers available to a Texas governor. Greg Abbott is trying to trim the state budget with a speech. 
• The Texas Legislature is having a hard time with the "bathroom bill." The Senate is trying to pull together the votes, and the House is trying to find some motivation. Both are waiting to see what the governor thinks.