DALLAS — After a year of record revenue, the Texas Legislature is planning to increase spending on education, mental health and transportation, according to top state officials.
"Our commitment to fiscal responsibility is paying major dividends, affording us an opportunity to secure the Texas miracle for generations to come,” said state Sen. Jane Nelson, R-Flower Mound, who chairs the Senate Finance Committee. “This budget makes targeted investments in education, including a well-deserved pay raise for Texas teachers, and continues our work on transportation, mental health and other key priorities."
The $120 billion in available general revenue certified by Comptroller Glenn Hegar is up 14% from a little less than $105 billion two years ago, Nelson said. The budget filed earlier this month is an increase of $8.4 billion over last biennium, for a total of $112 billion in general, non-dedicated revenue for state services in 2020 and 2021.
Meeting only in odd-numbered years, the Texas Legislature approves two-year budgets in its regular sessions. The 86th session of the legislature opened Jan. 8.
Gov. Greg Abbott must sign a budget before lawmakers leave on May 27. By then, the House and Senate will have negotiated the final spending plan. Abbott is a Republican and the GOP controls both houses.
In 2017, the Senate proposed spending $103 billion that January, but the final budget signed by the governor totaled almost $108 billion. This year, the House-filed budget would spend $115 billion, about $3 billion more than the Senate.
Both chambers historically pass their appropriations bill by late March or early April in order to give House and Senate negotiators enough time to reconcile the two versions of the state budget for the next two years.
The Senate's budget includes more funding for public education, including $3.7 billion for a $5,000 across-the-board teacher pay raise and $2.4 billion to fund enrollment growth of about 65,000 new students.
It also includes $2.3 billion to reduce reliance on property taxes and recapture, known more commonly as the "Robin Hood" system of public school finance. It would also earmark $230 million to maintain current premiums and benefits for retired teachers.
In the House, State Rep. Brooks Landgraf, R-Odessa, has filed House Bill 712 to repeal the "Robin Hood" public school finance scheme.
The state’s school finance law, which has withstood challenges in court, transfers local property taxes between districts to balance funding for property rich and property poor districts.
"Over the years, the Robin Hood system has placed a disproportionately large burden on taxpayers in the oil patch to fund public schools in other parts of Texas," Landgraf said. “But our students and teachers here in the Permian Basin also pay a high price for this scheme.”
Strong growth in oil and gas production has led to many school districts in the Permian Basin to be deemed "property wealthy" and are under what Landgraf calls the “undue burden” of the Robin Hood law.
Most Permian Basin school districts are currently experiencing some of the highest population growth rates in the nation, leading to large classroom sizes and widespread teacher shortages, Landgraf said. The result is that West Texas schools have money forced out of their budgets at a time when it's needed most for their teachers and students.
"This new downside of recapture only adds to the argument that the state must repeal Robin Hood and replace it with a better plan to provide adequate funding for Texas public schools," Landgraf said. "An increase in funding for each student in Texas is something that our state must do in order to prepare our students for the next generation of high-paying jobs that will allow Texas to remain prosperous."
In 2016, the Texas Supreme Court ruled that the state's public education finance system was troublesome but constitutional, ending a 30-year legal battle.
The rapid rise in Texas’ property values has pushed local tax collections sharply upward, putting a financial strain on many homeowners and bringing calls for tax relief, Hegar said in a recent report. Yet any limitation on property tax collections inevitably will create a need for more state funding to compensate, Hegar said, and the state’s finances are always tight.
Hegar says the state should cover 40% of the cost of public education and the costs of inflation, as well. However, the state covers only 36% of the cost of public education, while local school districts pay the remaining 64% through their own local property taxes.
“The historical average of 40 percent state funding and 60 percent local funding seems reasonably attainable and may provide a useful starting point for these discussions,” Hegar’s report said.
The report notes that the school funding formulas don’t have automatic adjustments for inflation.
“While both state and local per-student funding rose greatly between fiscal 2000 and 2018, for instance, after adjustment for inflation, state funding actually fell,” the report said.
The comptroller’s office is taking issue with the way the Legislative Budget Board and the Texas Education Agency measure state and local taxpayers’ contributions to public education costs. The budget board’s formula doesn’t include all local taxes raised for bond issues in its calculations, leaving out those that aren’t required under state programs for school facilities.
“We believe an accurate depiction of the revenues that support the (school funding program) requires the inclusion of all local tax collections, regardless of whether or not they affect the state budget,” Hegar’s report says. “Furthermore, recaptured property taxes are raised from a local tax and accordingly are best characterized as a local contribution.”
For health and human services, the Senate budget would spend a total of $7.5 billion across 21 state agencies to improve access to mental health care and reduce waitlists. It would fund women's health programs at a record level of $285 million and would include funding to maintain current caseloads at Child Protective Services.
The Texas Department of Transportation would get nearly a half-billion-dollar increase, raising the total appropriation for the agency that oversees planning and construction of state transportation infrastructure to $31.2 billion.
State parks and historical sites would get more money under the Senate plan, with all sporting goods sales tax collections going to the Texas Department of Parks and Wildlife and the Texas Historical Commission.
The Senate budget includes $1 billion for Hurricane Harvey disaster recovery, $2.1 billion for a Medicaid shortfall and $600 million to address pension shortfalls for teachers and state employees. It would draw $2.5 billion out of the state's Economic Stabilization Fund, or “Rainy Day Fund,” to help pay for those and other expenses.
