Overview of the State Budget »

During the regular session, the Legislature passed two key pieces of appropriations legislation, Senate Bill 1, the General Appropriations Act (GAA), and House Bill 10, the Supplemental Appropriations Bill.

Senate Bill 1

SB1 appropriated $65.6 billion in General Revenue Funds (GR), which was $5.9 billion over the 2004-05 biennium, a 9.8 percent increase. The All Funds appropriation totaled $139.4 billion for 2006-07, a $12.8 billion increase over the 2004-05 biennium, a 10.1 percent increase.

Highlights of SB 1

Health and Human Services

  1. An increase of $4.9 billion in All Funds and $2.3 billion in General Revenue and General Revenue–Dedicated Funds for Medicaid programs.
  2. Funding increases for the Children’s Health Insurance Program, including additional funding to cover caseload increases and restoration of benefits, and funding increases for reform of Child Protective Services.


  1. Changes in public education in Senate Bill 1 were vetoed by the Governor. So changes are discussed below under HB1, 1st Called Session.
  2. A decrease of $0.2 billion for TRS-Care, the healthcare system for retired school employees, primarily due to a large 2005 reserve, and implementation of federal Medicare legislation.
  3. Enrollment growth is funded for institutions of higher education. General Revenue formula funding for institutions of higher education is enhanced. The recommendations also reflect projected growth of $0.1 billion in General Revenue–Dedicated Funds, primarily in tuition and fees.

Criminal Justice

  1. an increase of $0.1 billion in General Revenue Funds to address projected population increases and rising healthcare and utility costs, replace one-time land sales receipts and partially replace lost federal funds.

Employee Benefits

  1. $0.6 billion All Funds increase for a state employee pay raise (including related benefits).
  2. $3.0 billion in All Funds for state employee healthcare costs. This reflects an increase of $0.4 billion in General Revenue Funds for increased medical and drug costs.

Bond Debt Service

  1. An increase of $0.3 billion in General Revenue Funds to cover principal and interest needs for existing general obligation and tuition revenue bonds and to account for the fact that 2004–05 biennial appropriations covered interest-only payments on commercial paper and certain TRBs.


  1. A $1.2 billion increase in Federal Funds and a $1.7 billion increase in Other Funds over the 2004–05 base level, which are due primarily to additional finance tools made available to the Department of Transportation.

The following table summarizes the actions in Senate Bill 1 only.

Overview of the State Budget
General Revenue Funds, in millions
Senate Bill 1 Appropriations for 2006-07
Compared to 2004-05 Expended/Budgeted Level
Function Expended/
SB 1
Biennial Change Percent
Article I - General Government $1,480.3 $1674.3 $194.0 13.1 %
Article II - Health and Human Services 15,508.6 17.862.0 2,353.4 15.2 %
Article III - Agencies of Education 34,383.5 36,859.4 2,475.9 7.2 %
Public Education 24,233.8 25,877.4 1,643.6 6.8 %
Higher Education 10,149.7 10,892.0 832.3 8.2 %
Article IV - The Judiciary 318.0 334.7 16.7 5.3 %
Article V – Public Safety/Corrections 6,569.9 6,998.5 428.6 6.5 %
Article VI – Natural Resources 485.3 437.1 (48.2) (9.9 %)
Article VII – Bus./Eco. Development 256.0 252.9 (3.1) (1.2 %)
Article VIII – Regulatory 377.0 404.1 27.1 7.2 %
Article IX – General Provisions 439.0 439.0 NA
Article X – The Legislature 321.4 313.7 (7.7) (2.4 %)
Grand Total $ 59,700.0 $ 65,575.7 $ 5,875.7 9.8 %

*Includes anticipated supplemental spending needs as of December 2004 (excludes House Bill 10).
**Does NOT adjust for appropriations made by, or transferred to House Bill 10 and does NOT adjust for the Governor’s Veto Proclamation and HB1, 1st Called Session, 79th Legislature.
NOTE: Biennial change and percentage change have been calculated on actual amounts before rounding. Therefore, table and figure amounts may not add because of rounding. Amounts shown for each article include an allocation of certain statewide appropriations for retirement, social security an debt service. These numbers will not reconcile with the higher education table.

Source: Legislative Budget Board, Summary of the Conference Committee Report for Senate Bill 1

House Bill 10, Supplemental Appropriations

House Bill 10 provided for supplemental appropriations to cover shortfalls in funding for the 2004-05 biennium and served as a vehicle bill to fund some programs for the 2006-07 biennium. The bill appropriated $2.9 billion in All Funds, including $553 million from the General Revenue Fund and $1.16 billion from the Economic Stabilization Fund, for a broad array of programs. Health and Human Services received the majority of the funds: $1.8 billion in All Funds, including over $800 million for Medicaid, $235 for CHIPS, and $258 million for Child Protective Services.

In addition, HB10 provided $200 million in funding for the Emerging Technology Fund that was created by House Bill 1765. HB 1765 established the Texas Emerging Technology Fund to cultivate economic and technological opportunities that will allow Texas to remain competitive in both national and global markets. For additional information, see the explanation below in the Appropriations-Related Legislation section.

Veto Proclamation and Special Sessions

The Governor’s Veto Proclamation totaled $23.4 billion in General Revenue and $35.3 billion in All Funds. This included a veto of the appropriations to the Texas Education Agency because the Legislature did not pass legislation for public school finance reform. The vetoes excluding the Texas Education Agency amounted to $576.6 million in General Revenue and $1.7 billion in All Funds. Included in the vetoes was the $108 million that had been appropriated for debt service in anticipation of passage of HB 2329, the tuition revenue bond authorization bill that did not pass.

The veto of the Texas Education Agency and public education funding resulted in the Governor’s calling the Legislature back into special session in June 2005, primarily to address public school finance, although other issues including tuition revenue bonds were added to the call. While the Legislature passed an appropriations bill during the special session (House Bill 1, 79th Legislature, 1st Called Session) that restored in part the vetoed funding for public education, it did not pass public education finance reform legislation in the 1st or 2nd Called Sessions. The legislature also did not pass a tuition revenue bond bill. The amount appropriated to public education in HB1, 1CS was $625.7 million less than the amount included in SB1.

The Governor called the Legislature back for a second special session, which also ended in gridlock on public education finance reform.