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A Make-or-Break Day for the Texas State Budget

The 2012-13 budget has been approved by both the House and the Senate, and now, with less than two days left in the legislative session, lawmakers have to pay for it by passing one more piece of legislation that raises $3.5 billion in "non-tax revenue" and revises school finance law to allow the state to reduce aid to public schools by $4 billion.

Without that legislation — SB 1811 — the budget doesn't balance and lawmakers will be forced to come back in a special session to deal with the issue. They're likely coming back anyway, since the House and the Senate and Gov. Rick Perry couldn't reconcile their differences over reforms to the Texas Windstorm Insurance Association. The governor doesn't have to call them back for that, but he has said he will.

Whether they do it now or in a special session, lawmakers have to pass the last fiscal bill to make the next budget work. It contains plenty to argue over. The legislation includes a hybrid school finance plan that spells out how local school districts will fare when the state cuts $4 billion from what it had planned to send them over the next two school years. Lawmakers got those printouts yesterday (we've got them available online in sortable form in our updated school finance app), and have been poring over them to see how their own local districts come out; those results will help them decide whether to support or oppose the plan.

And it contains $3.5 billion in "non-tax revenue" — deferred payments, accelerated tax collections and accounting tricks — that allows lawmakers to cover spending without tapping the Rainy Day Fund or raising taxes. A proposed speedup of state franchise tax collections — that's the main tax paid by Texas businesses — was taken out of the bill after lawmakers raised objections.

The school formulas cut state funding for districts by like amounts in the first year — its called proration and was the House proposal — and in the second year reduces the allotments that were granted to districts in past school finance remedies to keep the districts from losing money. Now that money is short, lawmakers have decided they can't afford those so-called "hold harmless" deals.

Until Saturday, this was considered the make-or-break legislation of the session. With it passed, lawmakers could go home until the next regular session in 2013. Without it, they'd have to have a special session this summer. But now that the TWIA deal has unraveled, Perry has promised a special session anyway. And he could easily add congressional redistricting to that mix — he's already said he'd call lawmakers back to Austin if there's enough agreement on congressional maps to make a special session short and sweet.

Those are optional; Perry's under no legal obligation to call lawmakers back on either issue.

In the case of the budget, he won't have a choice. If SB 1811 doesn't pass and the budget doesn't balance, lawmakers have to fix it before September 1, when the current budget ends and the new one is supposed to take effect. The budget, approved on Saturday along mostly partisan lines in both the House and the Senate, is $15.2 billion smaller than the current budget, doesn't require major new taxes and doesn't immediately require the state to use its Rainy Day Fund. Budget writers left $4.8 billion in Medicaid spending out of the budget in the hope that economic and program changes will make it unnecessary, but left money in the Rainy Day Fund to cover that spending if needed in 2013.

Without SB 1811, it doesn't balance.

This article originally appeared in The Texas Tribune at

Ross Ramsey is managing editor of The Texas Tribune and continues as editor of Texas Weekly, the premier newsletter on government and politics in the Lone Star State, a role he's had since September 1998. Texas Weekly was a print-only journal when he took the reins in 1998; he switched it to a subscription-based, internet-only journal by the end of 2004 without a significant loss in subscribers. As Texas Weekly's primary writer for 11 years, he turned out roughly 2 million words in more than 500 editions, added an online library of resources and documents and items of interest to insiders, and a daily news clipping service that links to stories from papers across Texas. Before joining Texas Weekly in September 1998, Ramsey was associate deputy comptroller for policy with the Texas Comptroller of Public Accounts, also working as the agency's director of communications. Prior to that 28-month stint in government, Ramsey spent 17 years in journalism, reporting for the Houston Chronicle from its Austin bureau and for the Dallas Times Herald, first on the business desk in Dallas and later as the paper's Austin bureau chief. Prior to that, as a Dallas-based freelance business writer, he wrote for regional and national magazines and newspapers. Ramsey got his start in journalism in broadcasting, working for almost seven years covering news for radio stations in Denton and Dallas.