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State Budget Overview for the 2005 Legislative Session


State vs. Federal Funds, Current Budget ... The Big Unknown: GR Growth for 2006-07 (to be announced Jan. 2005) 1.0 $597 million ... – PowerPoint PPT presentation

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Title: State Budget Overview for the 2005 Legislative Session

State Budget Overview for the 2005 Legislative
900 Lydia Street - Austin, Texas 78702 Phone
(512) 320-0222 fax (512) 320-0227 -
  • January 5, 2005
  • Eva De Luna Castro, Budget Analyst
  • (

  • What happened last time?
  • Current state budget picture
  • Budget needs for 2006-07
  • Revenue system current sources options for

The Balancing of the 2004-05 State Budget
Cuts to 2003 Budget 1.4 billion Cost shifting
1.0 billion Smoke and mirrors 1.2
billion Rainy Day Fund 1.3 billion Federal
Fiscal Relief 1.4 billion Revenue Measures
1.8 billion Cuts to 2004-05 Budget 7.5
Estimated General Revenue shortfall of 15.6
billion for 2004-05
Where Budget Cuts Were Made
  • Health Care (not just Medicaid and CHIP, but also
    teachers and state employees health coverage)
  • K-12 textbook funding grant programs such as
    kindergarten and pre-K expansion grants
    Tele-communications Infrastr. Fund (now funds
    Technology Allotment)
  • Layoffs of state employees
  • More details available in CPPPs July 2004
    report, at http//

State vs. Federal Funds, Current Budget
Source Texas Legislative Budget Board, Fiscal
Size Up 2004-05.
State Budget Isnt Alone on 2005 Agenda
  • General Appropriations Act has to be passed by
    legislators to keep state services going in
    2006-2007 (budget starts September 1, 2005)
  • School Finance equity and adequacy issues
    legislators may wait for results of appeal (of
    State District Judge Dietzs ruling) before
    acting. Or they may try to cut local property
    taxes by enacting or expanding state taxes
    (franchise tax, new business activity tax,
    tobacco tax, sales taxes)
  • Higher Ed Texas Grants and other financial aid
    Top 10 Law
  • Workers Comp reform increasing return-to-work
    rates, creating physicial networks, controlling
    costs, limiting use of workers comp
  • Other insurance (homeowners and health) utility
    regulation Texas Enterprise Fund asbestos
    lawsuits capital punishment incarceration
    policies same-sex marriage and abortion issues
    water policy tollways
  • See House Research Organization Report, Topics
    for 79th Legislature, http//www.capitol.state.tx.

Source Texas Legislative Budget Board, Fiscal
Size Up 2004-05.
Where 80 Percent of General Revenue Goes
Source Legislative Budget Board, Fiscal Size Up
2004-05, and budget requests for 2006-07.
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What Texas State Government Pays For
Source U.S. Bureau of the Census, State
Government Finances series. Data for 2002 for
Texas, total expenditures (including trust) of
70.3 billion.
What Texas Local Government Pays For
Source U.S. Bureau of the Census, Government
Finances series. Data for 2002 for Texas, total
expenditures (including trust) of 77.1 billion.
50-State Ranking 13th 46th 26th 39th 15th 13th 35
th 41st 23rd 36th 33rd 43rd
Source U.S. Bureau of the Census, State Local
Government Finances, Fiscal 2002.
Indicators of Texas Need for Public Social
Source U.S. Bureau of the Census, March CPS and
American Community Survey
Need Indicators for Tarrant County
Sources U.S. Bureau of the Census, American
Community Survey Texas Dept. of Human Services,
Annual Report for 2003.
2006-07 Another Tough Budget to Write
2006-07 Another Tough Budget to Write
K-12 (TEA) Major Exceptional Items
  • Textbooks 387 million
  • Guaranteed Yield Increase 301 million Existing
    Debt Allotment 180 million Instructional
    Facilities Allotment 150 million
  • Student Success Initiative (to prevent social
    promotion) 251 million
  • Restorations of programs cut in 2003, such as
    Pre-K/ Kindergarten Grants (7 million), High
    School Completion (3.5 million), Texas Advanced
    Placement (1.4 million), Technology Allotment
    (12 million)
  • GR match needed for Adult Ed/Literacy 13.6

HHSC Major Exceptional Items
  • Maintaining Medicaid Caseload Growth 1.3
    billion in GR
  • Maintaining Medicaid Cost Trends 1.2 billion
  • Decline in match rates for Medicaid and CHIP
    111 million
  • Restoring Medicaid rates 177 million
  • Restoring 5 cuts to GR 26 million
  • Maintaining CHIP caseload growth 65 million
    Cost trends and rate restorations 20 million
    benefit restorations 53 million
  • Restoring Medicaid services for adults, Graduate
    Medical Ed 102 million
  • Partially restoring services for Medically Needy
    35 million
  • Keeping HHS waiting lists from growing 47
    million reducing waiting lists over next decade
    255 million
  • Rate increases for Medicaid and CHIP providers
    264 million

DADS Major Exceptional Items
  • Restoring entitlement growth in long-term care
    programs 154 million in GR
  • Restore 5 GR cuts 20 million
  • Decline in Medicaid match rate 17 million
  • Guardianship program (being transferred from
    Family Protective Services) 12 million
  • Restore long-term care rates to fiscal 2003
    levels 54 million
  • Long-Term Care Provider Rate increases 531
  • Rate increase for direct care staff (nurses in
    State Schools, community care attendants direct
    care aides) 240 million
  • Entitlement caseload growth staffing 24 million

Family Protective Services Major Exceptional
  • 12 million in GR to restore foster care/adoption
    rates to fiscal 2005 levels 39 million for
    foster care/adoption caseload growth
  • Restoring 5 cuts to GR 9 million (prevention
  • 28 million to restore lost Medicaid funding
    (Targeted Case Management)
  • Adult Protective Services reform 9 million
  • Keeping CPS caseloads from worsening 26 million
  • Restore prevention program cuts 19 million
  • Further restoration/adjustments to foster care
    rates 28 million
  • Enhanced permanency for children 28 million
  • HHSC report on CPS reform, including recommended
    funding changes, was due by December 31, 2004
    revised budget likely to be submitted based on
    these recommendations

State Health Services Major Exceptional Items
  • 107 million in GR to restore 5 cuts to GR
    major programs include child immunizations
    HIV/Sexually Transmitted Disease Hepatitis C
    Prevention TB, Hansens, Refugee Health
    Kidney Health Children with Special Health Care
    Needs Mental Health Services for Adults
    Children Northstar Behavioral Health Women
    Childrens Health Programs Family Planning
    Substance Abuse Prevention, Intervention,
    Treatment County Indigent Health Care State
    Hospitals Radiation Control Food (Meat) Drug
  • Medicaid match rates and loss of one-time
    funding 8 million
  • Texas HIV Medication program 5.7 million
  • General Revenue restoration for Substance Abuse
    programs 10 million
  • State facilities/infrastructure 29 million
  • Salary upgrades for nurses/LVNs 10.5 million

Other Pricetags
Outcome Depends on Available Revenue
  • Comptroller will give legislators the official
    revenue estimate no later than January 2005
  • Good news revenues for 2004 show
    higher-than-expected annual growth, at 6.4, much
    better than fiscal 2003. Rainy Day Fund balance
    is back up to 878 million (Sept. 2004).
  • Bad news health care costsone-third of state
    budgetexpected to continue rising at
    double-digit rates
  • Long-term structural inadequacies of state/local
    tax system are putting too much pressure on
    property taxes
  • Heavy reliance on sales taxes also makes Texas
    tax system very regressive (taking more from
    families with the lowest incomes)

State/Local Taxes Lower than a Decade Ago
Tax Effort Would be Even Lower if Not For Local
Decisions to Fund Basic Services
From a Taxpayers Point of View
Source Comptroller of Public Accounts, Annual
Property Tax Report Cash Report.
From the States Point of View All Revenue
From the States Point of View Taxes Only
Revenue Options Likely to be Considered
  • Cigarette tax 1/pack increase raises 1.7
    billion biennially
  • Video Lottery Terminals 1.1 billion biennially.
    Crack cocaine of gambling.
  • Business activity tax broader base than
    franchise tax (only applies to corporations)
  • Sales tax rate increase but this is extremely
    regressive, and TX already has one of the highest
  • Sales tax base expansion (to services not covered

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