Overview of the State Budget »

During the regular session, the Legislature passed three key pieces of appropriations legislation, House Bill 1, the General Appropriations Act (GAA), House Bill 2, the property tax relief bill, and House Bill 15, the Supplemental Appropriations Bill. 

House Bill 1

House Bill 1 appropriates $73.9 billion in General Revenue Funds (GR), which is $8.3 billion over the 2006-07 biennium, a 12.6 percent increase.  When the $6.1 billion in property tax relief for the 2008-09 biennium is included, the total appropriated by the Legislature is $80 billion, a $12.2 billion increase or 17.9 percent over the 2006-07 biennium. 

Highlights of HB 1

Health and Human Services

  • An increase of $2.3 billion in General Revenue and General Revenue–Dedicated Funds for Medicaid services.  Included in these amounts are $706.7 million in General Revenue Funds appropriated in House Bill 15, Eightieth Legislature, 2007, to fund settlement of the Frew v. Hawkins lawsuit.
  • An increase of $213.2 million in General Revenue Funds for the Children’s Health Insurance.
  • An increase of $591.3 million in General Revenue Funds at the Department of Family and Protective Services (DFPS) to replace Other Funds from the Economic Stabilization Fund for Foster Care Payments, Adoption Subsidy Payments, and Child Protective Services (CPS) Reform.
  • An increase of $183.5 million in General Revenue Funds at Child Protective Service and Adult Protective Services reforms.
  • An increase of $82.0 million in General Revenue Funds to increase the availability of mental health crisis services.

Public Education

  • $24.7 billion in All Funds for the Foundation School Program. This amount does not include $14.2 billion in All Funds necessary to fund the cost of the tax relief provisions contained in House Bill 1, Seventy-ninth Legislature, Third Called Session, 2006. The All Funds amount is sufficient to provide for the current law provisions of the school finance system, including $1.6 billion in state cost for equalized local enrichment tax effort (a $1.1 billion increase from the 2006–07 biennial level), and $1.6 billion in facilities funding.
  • $342.8 million in General Revenue Funds for the teacher incentive programs and $280.0 million in General Revenue Funds intended for educator salary increases.

Higher Education

  • Debt service for tuition revenue bonds increases by $313.0 million in General Revenue Funds to fully fund new authorizations adopted by the Seventy-ninth Legislature in 2006.
  • Funding for the Higher Education Fund increases by $175.0 million to reflect legislation enacted in the 79th Legislative Session.
  • Student financial aid increases by $145.5 million.
  • Formula funding at the general academic and health-related Institutions increases by $2316 million in General Revenue to fund enrollment growth and formula enrichment. Another $49.0 million in General Revenue is included to fund the Texas Tech El Paso Medical School and the Health Science Center Irma Rangel Pharmacy School on the campus of A&M- Kingsville.
  • An increase of $100.0 million in General Revenue Funds was added and other items combined to provide for Governor Perry’s Higher Education Performance Incentive Initiative in the Special Provisions Relating only to State Agencies of Higher Education.

Criminal Justice

  • An increase of $369.4 million in General Revenue and General Revenue–Dedicated Funds, primarily caused by projected correctional population increases, increased funding for rehabilitation programs, and increased operating costs.
  • An increase of $108.1 million in All Funds for border security operations.

Transportation

  • An increase of $1.0 billion in All Funds, which includes an increase of $0.3 billion in Federal Funds and an increase of $0.7 billion in Other Funds from the 2006–07 biennium, primarily due to increased Texas Mobility Fund and State Highway Fund Revenue Bond proceeds.

Retirement Benefits

  • The Teacher Retirement System and Optional Retirement Program state contribution rates are both increased from 6.0 percent to 6.58 percent, which results in an All Funds increase of $635.7 million and $47.2 million over 2006–07, respectively.
  • Contributions for retirement for state employees will increase by $50.9 million in All Funds.
Overview of the State Budget

General Revenue Funds, in millions

House Bill 1 Appropriations for 2008-09 Compared to 2006-07 Expended/Budgeted Level

Function

Expended/
Budgeted
2006-07*

 House Bill 1
2008-09**

 Biennial Change

Percent
Change

Article I - General Government

$     1,852.7

$     1,967.3

$    114.7

  6.2 %

Article II - Health and Human Services

17,099.9

20,017.1

2,917.2

17.1%    

Article III - Agencies of Education

37.631.7

41,407.3

3,775.7

10.0%

    Public Education 

26,534.6

28,770.5

2,235.8

8.4%

    Higher Education  

11.097.0

12636.9

1,539.8

13.9%

Article IV - The Judiciary

375.4

402.5

27.1

7.2%

Article V – Public Safety/Corrections

7,215.7

7,892.5

676.8

9.4%

Article VI – Natural Resources

498.8

633.5

134.7

27.0%

Article VII – Bus./Eco. Development

276.3

316.2

39.9

14.4%

Article VIII – Regulatory

289.0

324.2

35.2

12.1%

Article IX – General Provisions

0.0

565.7

565.7

NA

Article X – The Legislature

334.7

326.0

(8.7)

(2.6)%

Total

$  65.574.0

$  73,852.4

$ 8,278.3

  12.6%

Property Tax Relief Funding

2,230.4

6,113.1

3,882.7

174.1%

GRAND TOTAL

$  67,804.4

$  79,965.5

$ 12,161.0

17.9%

Source:  Legislative Budget Board summary of Conference Committee Report for House Bill 1.
*Includes certain anticipated supplemental spending needs.
** Does NOT adjust for the Governor’s Veto Proclamation.
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 and debt service.  These numbers will not reconcile with the higher education table.

House Bill 15

House Bill 15 provides for supplemental appropriations to cover shortfalls in funding for the 2006-07 biennium and serves as a vehicle bill to fund some programs for the 2008-09 biennium.  The net cost of the bill through the end of the 2008-09 biennium is $456 million.  Specifically, House Bill 15 provides for $580.6 million in appropriations reductions in General Revenue Fund and appropriates $282.1 million for FY2007; and for the 2008-09 biennium, HB15 provides for an additional $46.8 million in GR savings and appropriates $801.4 million for the 2008-09 biennium.  One of the most significant funding items in the supplemental bill is $706.7 million in General Revenue to cover the compliance costs associated with the Frew. v. Hawkins lawsuit settlement agreement.  The bill also repeals certain deferrals of August 2007 payments that were authorized by the 79th Legislature.

Key funding issues for higher education include:

  • Texas Forest Service:  $44,730,767 to fund reimbursements for costs related to wildfire;
  • Prairie View A&M University:  $10,000,000 fund the Academic Development Initiative (the other $15 million is included in HB1);
  • Texas Southern University:
    • $25 million to fund the Academic Development Initiative, contingent the development of a suitable plan or reorganization or the placement of the university under conservatorship;
    • $13.6 million for deferred maintenance and other expenses, also contingent on the conditions above.
Governor's Vetoes

The Governor’s line-item vetoes for HB1 and HB15 total $639.5 million in general revenue and $646.5 million in all funding sources, including $562.9 million in general revenue and $570.0 million in all funding sources from House Bill 1 and $76.6 million in general revenue and all funding sources from House Bill 15.  Vetoes for higher education include:

  • Higher Education Group Insurance Contributions for the Community Colleges for FY 2009: $153,979,799
  • Higher Education Coordinating Board, New Community College Campuses: $3,283,507
  • Article III Section 54:  $35.8 million in various items that are detailed in the following under each segment of higher education
  • Texas Forest Service:  Art. 9, Sec.19.93. Contingent Appropriation for House Bill 2868:  $10 million from the Volunteer Fire Department Assistance Account for the Texas Wildfire Protection Plan.
Constitutional Spending Limits

Texas has four constitutional limits on spending.  The 2008-09 biennial appropriations are within these spending limits. 

  • Article III, Section 49a, “Pay-as -you-go” Limit.  It requires that bills making appropriations be sent to the Comptroller for certification that the appropriations are within available general revenue. Recommended appropriations from the General Revenue Fund for the 2008–09 biennium total $73.9 billion, which is within the “pay-as-you-go” limit.
  • Article VIII, §22, Limit on the Growth of Certain Appropriations.  This provision limits the rate of growth of appropriations from state tax revenue not dedicated by this Constitution to not exceed the estimated rate of growth of the state’s economy.  The Legislative Budget Board met on January 11, 2007, and adopted the constitutional spending limit.   The 2008-09 level of appropriations is within the Article VIII limit.
  • Article III, §51-a, Welfare Spending Limit.  This provision limits the amount that may be paid out of state funds for assistance grants to or on behalf of needy dependent children and their caretakers to no more than 1 percent of the state budget in any biennium. The biennial amount included in the Conference Committee’s recommendations that is subject to the limit on state dollars paid out in Temporary Assistance for Needy Families grants is $134.2 million. This amount is $1,390.4 million less than the 1 percent limit.
  • Article III, §49 (j), Debt Limit.  The Legislature may not authorize additional state debt if in any fiscal year the resulting maximum annual debt service payable from the General Revenue Fund, excluding revenues constitutionally dedicated for purposes other than payment of state debt, exceeds 5 percent of the average annual unrestricted general revenue for the previous three years.  The maximum debt service on authorized non-self-supporting bonds payable from the General Revenue Fund is estimated at 1.9 percent of unrestricted general revenue, or 3.1 percent below the constitutional limit.
Economic Stabilization Fund (Rainy Day Fund)

The Economic Stabilization Fund, frequently referred to as the Rainy Day Fund, had a balance of $1,702.1 million as of January 1, 2007. The Comptroller forecasts that by the end of fiscal year 2009, the balance in the Economic Stabilization Fund will be $4.3 billion.