Constitutional or not? Paxton asked to weigh in on $2.5 billion Senate budget trick

Two weeks after the Texas Senate unanimously approved its budget proposal, the chamber’s chief budget writer is asking Texas Attorney General Ken Paxton whether a $2.5 billion accounting trick it depends upon is constitutional.

In a letter Wednesday, Sen. Jane Nelson, a Republican who chairs the Senate’s Finance Committee, asked Paxton's office to weigh in on the chamber’s plan to balance its books by delaying — just by a day or two — a required $2.5 billion transfer of general revenue to the state highway fund.

Paxton’s answer to that question could shake up budget negotiations in the final weeks of the legislative session.

“I respectfully request an expedited response,” Nelson wrote in her opinion request.

By delaying the $2.5 billion diversion from August 2019 to September 2019, lawmakers could, in theory, push the liability into the next budget cycle, freeing up the money for health care, schools and other needs more immediately.

Nelson has said the maneuver has “solved a lot of our problems” in crafting the chamber's $218 billion budget and wouldn’t hinder highway projects. But House Speaker Joe Straus has derided the proposal as “gimmickry” that amounts to “cooking the books.”

Texas Comptroller Glenn Hegar, the state’s chief financial officer, has a different take: It might violate the state Constitution.

That’s because a provision of the 141-year-old document — Article 8, section 7-c, to be precise — says the state comptroller must move money from general revenue to the state highway fund during the same fiscal year when that revenue is collected.

Hegar highlighted the constitutional conflict in a letter to Nelson on Wednesday, and a Texas Tribune story flagged the issue last month.

By fielding Nelson’s opinion request, Paxton will be wading into a matter that has fueled tensions between the legislative chambers.

In criticizing Nelson’s maneuver last month, Straus invoked the name Enron, the Houston energy company that collapsed because of accounting fraud. In response, Nelson called the move “smart money management that allows us to responsibly meet our needs without raiding the Rainy Day Fund” — jabbing at the House for planning to tap into the $10.2 billion state saving account available for tough economic times.

In a statement Wednesday, Nelson's office said it "believes [its] approach complies with the Constitution and addresses our transportation needs." 

"It also helps us balance the budget -- just as the House employs deferrals and other accounting measures to make its budget work," the statement said. "But this is a $2.5 billion question that needs to be answered." 

Read more:

• The Texas Senate passed budget that would shift $1.8 billion in public education costs to local taxpayers.
• By delaying a diversion of sales tax money for transportation projects, Texas Senate leaders said they had an additional $2.5 billion to spend on needs such as health care and schools.
• After 15 and a half hours of debate on hundreds of amendments to the Texas House budget, lawmakers in the lower chamber passed the two-year, $218 billion document, with 131 votes in favor and 16 votes against.