The Texas Senate Committee on Finance (SCF) opened its first hearing of the 2023 legislative session on Monday. The committee heard testimony from various state agencies and commissions on funding requests and recommendations related to Senate Bill 1, the state’s biennial budget.
Stay one step ahead. Join our email list for the latest news.Subscribe
Many of the SCF members throughout the hearing echoed calls for being fiscally conservative this session, despite the state having a record budget surplus.
“I want to thank the lieutenant governor for [appointing me] to Senate Finance,” said committee member Sen. Lois Kolkhorst (R – Brenham), who also chairs the Senate Health and Human Services Committee. “[SCF] certainly does set the pace for our policy, and it is historic and, I echo what my colleagues have said, is [for] wise investments and [to] make sure, as Senator Campbell says, that the feast can’t turn into a famine very quickly.
So thank you so much. I look forward to working not just with the members here, but with your talented staff as we craft this budget and work with our House colleagues to set a path forward. As Sen. Hancock said, quite a stark difference in [what] we see [for] a state like California with $22 billion of a deficit, and we sit on this historic surplus.”
There is a $32.7 billion budget surplus this cycle and both the House and Senate have proposed base budgets of $289 billion, $130.1 billion of which would come from general funds. Lawmakers have outlined $15 billion for property tax relief.
The Texas Legislative Budget Board (TLBB) outlined its recommendations for the 2024-2025 budget with a general revenue appropriation of nearly $41 billion for health and human services, a 9.3% increase from the previous session’s budget allocation.
This despite budgeting for health and human services losing some $12 billion related to the expiration of supplemental funding from the Public Health Emergency and one-time COVID relief.
TLBB recommended increasing appropriations for behavioral health and Medicaid/CHIP services as well as foster care rates at the Department of Family and Protective Services by $1 billion, $1.8 billion, and $100 million, respectively.
According to testimony from Texas Comptroller Glen Hegar, the state will have an estimated $188 billion in revenue for general-purpose spending, an “astonishing” 26.3% more than the current biennium, and $342.3 billion in total revenue for the 2024-2025 biennium.
Hegar attributed higher general revenues (GR) to inflation on taxable items and higher oil and natural gas prices.
The “unprecedented” amount of general revenue available along with constitutional spending and savings limits pose budgeting challenges for lawmakers this session that are different than in years past.
Because the State Constitution requires a transfer of one-half of any unencumbered GR balance to the state’s economic stabilization fund (ESF), Hegar projects the savings fund to reach more than $27 billion in FY 2025 and exceed its constitutional limit.
Hegar noted that alleviating taxes would lower those projections but that an economic downturn could affect revenues as well.
“I need to note that the unencumbered balance transfer is merely an estimate and any actual transfer will depend on your budgeting decisions this session, such as in regard to any supplemental budget, potential swapping of any federal COVID relief dollars in lieu of state GR expenditures, and a whole host of other possibilities that could alter the actual amount of unencumbered balance transfers to the ESF,” Hegar told committee members.
With the number of health-related bills this session, it remains to be seen which ones lawmakers will prioritize. When Hegar alluded to the possibility of raising the constitutional spending limit this session, Senate Committee on Finance Chair Sen. Joan Huffman (R – Houston) interjected with a firm, “No”.