The Conservative Texas Budget (CTB) is one where biennial appropriations (General Appropriations Act and supplemental appropriations, when available) of state funds (excludes federal funds) and all funds—the footprint of government—increase by no more than population growth plus inflation. The 2016-17 CTB limits are $142.3 billion in state funds and $215.2 billion in all funds.
This CTB growth rate maximum limit is based on a 6.5 percent increase in population growth plus inflation during fiscal years 2013 and 2014. The CTB limit amounts are a 6.5 percent increase above the 2014-15 appropriations. The 84th Texas Legislature passed 2016-17 initial appropriations of $141.1 billion in state funds and $209.1 billion in all funds, which met the conservative budget criteria.
For the 2016-17 budget to remain conservative, it is essential for legislators to restrain supplemental appropriations or ask agencies to cut spending so that the total amount does not increase by more than $1.2 billion in state funds and $6.1 billion in all funds (see figure below).
Fortunately, Governor Greg Abbott noted in the State of the State speech for cutting government spending in the current 2016-17 biennium to keep appropriations within population growth plus inflation. Specifically, he said, “We must cut spending in our current biennium to ensure we live within our budget. To accomplish that, I am today directing state agencies to impose an immediate hiring freeze through the end of August. This should free up about $200 million in our current budget.” That is a great start to help sustain a 2016-17 conservative budget; legislators should follow through.
However, the Foundation includes in a recent one-pager the figure below that highlights how the starting point in the House and Senate versions of the 2016-17 estimated appropriations are in danger of exceeding these limits.
The Texas Comptroller’s Biennial Revenue Estimate notes that there is an estimated $1.5 billion in a beginning GR fund balance for the 2018-19 budget to fund any supplemental bill to complete the 2016-17 biennium. This amount indicates that there is not a budget shortfall, so there is no need to dip into the rainy day fund because there is revenue available. However, to keep the increase in the 2016-17 budget below population growth plus inflation, less than $1.2 billion in GR should be appropriated for the supplemental.
Following these steps will keep government spending within the means of Texans and help keep taxes lower than otherwise. Doing so will help support a well-functioning, robust economy that provides abundant opportunities for people to prosper.