Texas House Speaker calls for truth in budgeting

July 9, 2012 2:34:28 PM PDT
Texas lawmakers should stop using an accounting practice that allows them to use balances in funds specially dedicated for other programs to balance the state's general revenue budget, Texas House Speaker Joe Straus said Monday.

The practice, known as funds consolidation, allows lawmakers to stockpile funds intended for programs such as improving hospital trauma care or helping poor people pay their utility bills and then using that money to balance the state budget. By law, the State Comptroller must certify that the budget is balanced every two years and lawmakers use a variety of accounting methods to achieve certification.

Straus spoke as a House Appropriations Subcommittee met to work on making the budget more transparent and to study transportation spending.

Straus said the current budget was balanced on $4.9 billion of dedicated funds. As a result lawmakers, did not appropriate those special funds for their dedicated uses.

"The state collects millions of dollars each year through surcharges to repeat traffic offenders and drunk drivers. That money is supposed to go for hospital trauma care, but much of it sits unspent so that is can be counted for budget certification," Straus told the committee. "We should make the budget more transparent by spending these fees toward their intended purposes or by not collecting them at all."

Last year, lawmakers used spending cuts and a variety of accounting tricks to balance the state budget. They cut more than $4 billion in public education spending, pushed $2 billion in education spending into next year's budget and underfunded Medicaid, the health care program for the poor and disabled, by $4.8 billion.

Straus acknowledged that lawmakers will face growing public school and Medicaid costs in another difficult budget when they meet again next year, but he urged the subcommittee to develop a plan for the Legislature to wean itself off the funds consolidation accounting trick.

"In the end, Texans will have a budget that is fairer, simpler and more straightforward," Straus said. "The goal ... is to be more honest with the taxpayers and fee-payers in the state."

Rep. John Otto, a Republican vice chairman of the House Ways and Means Committee, said he expected the Legislature would need to reduce the 20-year-old practice over time.

"We didn't get here overnight and we're not going to fix it overnight," Otto said. "I would at least hope that the House and the Senate will put a cap on it until we can get where we want to be."

Democratic Sen. Kirk Watson of Austin welcomed Straus' call to end the practice.

"Budget honesty and transparency are among the most important issues facing Texas today," Watson said. "Ending the diversion of dedicated money has ranked among my highest priorities since I was elected to the Senate, and I have repeatedly filed bills and amendments to end this practice."

In a second hearing later Monday, the subcommittee met with the Transportation Committee to address the shrinking budget for the state's highways and bridges. A large percentage of the transportation budget comes from fuel taxes, which have remained stagnant for the last 20 years

James Bass, chief financial officer at the Texas Department of Transportation, said that an aging transportation system, shrinking fuel tax revenues and inflation is hurting funding for the state's bridges and highways.

"We're in the era of uncertainty in 2015," Bass said.

The fuels tax could be indexed to inflation or to vehicle fuel inefficiency to make sure highway funding would remain stable, he said. Another option could also tax vehicles on how many miles they travel rather than the amount of fuel they purchase.

Bill Hammond, president of the Texas Association Business, said the state's growing population and business community needs better infrastructure, and that means raising more revenue.

"We've come today to support raising the vehicle registration fee by $50 a vehicle," Hammond said. "We need to make a much stronger investment in our infrastructure needs."

Bass said that a committee asked to research the annual needs to the agency estimated Texas should be spending more than $14 billion a year, while the Legislature only appropriates roughly $10 billion for routine needs.

Rep. Joe Pickett pointed out that much of the Department of Transportation's budget is from government bonds, which require the agency to pay interest on the debt. Lawmakers have authorized the agency to take on $17.3 billion in debt, which will cost $31.1 billion to repay.

Since the agency is reaching its debt limit, Picket asked at what point will the present bond funding for highway projects run out. Bass said most contracts will be awarded by the end of 2013 and there will be a major drop off in new projects after that.

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