Building a state budget, block by block
Originally Published in Statewise Feb/March 2005
by Juliet Dickason
How is the General Appropriations Act (GAA) put together? Who decides which needs get prioritized? And who decides who gets what?
The Legislature decides, of course — surrounded by a crowd of state analysts, agency representatives and Texans at large.
But there’s more. By the time both chambers enroll the Appropriations Bill, senators and representatives have pored over mountains of information. They’ve balanced strong arguments, met constitutional limits and fulfilled federal requirements. They’ve studied the estimate of anticipated revenues. And, finally, they’ve negotiated their own differences.
According to the House Research Organization, about 17 percent of the general revenue-related funds appropriated for the last biennium reflected totally discretionary spending by the Legislature. The Texas Constitution, state statute or federal funding agencies had earmarked the rest. Occasionally, appropriations are also required to fulfill court ordered mandates.
The Texas Constitution sets several limits on how much money legislators can appropriate overall, including:
- No deficits. Appropriations must fit within the revenue the Texas Comptroller of Public Accounts estimates will be available. (Art. 3, sec. 49a)
- Budget growth. Appropriations from state tax revenue not dedicated by the Texas Constitution cannot grow faster than state economic growth estimated by the Legislative Budget Board (LBB). (Art. 8, sec. 22)
- Indebtedness. Payments required for debt can't exceed five percent of the previous three-year average of non-dedicated revenue. (Art. 3, sec. 49j)
All hands on deck
All over the state, enormous efforts precede each GAA. Agencies develop strategic plans and associated legislative appropriations requests (LARs). They present the LBB and the Governor’s Office of Budget and Planning with their requests and performance measures. The LBB and the Governor's Office hold public hearings on the LARs.
By early January, the LBB has presented its budget recommendations. The Governor’s Office has also prepared recommendations for an appropriations budget. The Comptroller has estimated the expected revenue for the biennium.
The session starts. Appropriations bills are filed in both chambers. The House Appropriations and Senate Finance Committees work on their versions of the bills, keeping an eye on other major legislative initiatives, particularly those that could affect available revenues.
In the Capitol complex, doors open for House Appropriations and Senate Finance Committee hearings. The committee chairs may set up subcommittees to study certain parts of the budget. Agency representatives appear and testify to justify their budget. They answer questions about their programs and about their problems. Often they are asked to address performance targets. Citizens may also speak.
Contrary to usual practice, this session the Appropriations and Finance Committees will not be working simultaneously. Senate Finance began agency budget hearings last September.
Each committee marks up the bill and votes it out of committee. The House and the Senate historically have taken turns on whose bill is passed first to go to the other house for consideration. However, the other chamber usually substitutes its own version of the bill.
On the floor and out the door
The appropriations bill is still fluid when it is sent to each chamber for a vote. During floor debate, members may consider changes before they approve it, although the House Calendars Committee usually adopts a rule limiting floor amendments to those that are fiscally neutral.
Once the bill has initially passed both chambers, a conference committee works out differences in the two versions. The conference committee usually includes the chairs of the House Appropriations and Senate Finance Committees and four other members from each committee. The rules allow conferees only to reconcile points on which the House and Senate bills differ. However, the conference committee can ask permission from the House and Senate to make other revisions.
Then the conference committee report on the Appropriations Bill goes back to each chamber for a vote. With approval by both chambers, it goes to the Comptroller for certification that the bill is within available revenue. If it is, then it goes to the governor. If it isn't, it goes back to the Legislature.
When the dust settles
The Texas Constitution gives the governor line-item veto power and the Legislature power to overrule a veto with a two-thirds vote in each house. In the end, the Appropriations Bill becomes the General Appropriations Act. It is law, and agencies are bound by it.
If the need arises while the Legislature is not in session, statute provides for a process called budget execution. This process allows the LBB or the governor to propose transferring funds between agencies and programs. Both have to agree to any change.