House Appropriations Addresses Diversion Of Dedicated Funds

by, Paul K. Emerson                                                                                                       TAC State Financial Analyst

The House Appropriations Committee (HAC), chaired by Rep. John Otto (R-Dayton), met on May 18 to hear testimony from the Legislative Budget Board (LBB) on two of its 19 interim charges — reducing the reliance on general revenue dedicated (GR-D) balances and examining the constitutional spending limits.

According to current data and testimony presented by the LBB, there are more than 200 GR-D accounts which were enacted for a particular legislative purpose, but over the past 20 years these accounts have been held and used for certifying and balancing the state’s budget. This legislative action is permissible under section 403.095 of the Texas Government Code. 129 of these GR-D accounts were used to certify the current state budget in fiscal years 2016-17.

In January 2015, there was an estimated $11.5 billion in GR-D accounts available for appropriation. Only $7.8 billion was actually appropriated during the 84th Legislative Session for fiscal years 2016-17, while $3.4 billion was used for certification purposes. This amount is slightly less than the $4.6 billion used to certify the state budget during the previous biennium (FY 2014-15). This reduction was primarily due to the passage of HB 7 during the 83rd Legislature, Regular Session in 2013 which established an ongoing process to reduce reliance on GR-D account balances.

GR-D is appropriated in nearly all articles of the state budget, with 70 percent of GR-D being appropriated in health and human services, education and natural resources.

LBB also noted that there are four primary methods available to the Legislature that can be used to reduce reliance of

GR-D balances:

• Reducing the state of revenue collection, or capping the total collected amount;
• Increasing appropriations from GR-D accounts;
• Changing the allowable use of the account; and
• Exempting the available balance in the account from counting toward certification.

It is also worth noting that only 17 percent of the state budget is available for discretionary spending.

The committee also heard testimony on another interim charge relating to the state constitutional spending limits.

In general and without getting too technical, the Texas Constitution includes four limitations on state spending. There is the debt limit, the welfare spending limit, the pay-as-you go limit and the limit on the growth of certain appropriations. The current budget for 2016-17 is within all of these limits.

See additional information on the constitutional limitations on spending. The next full House Appropriations Committee hearing is tentatively scheduled for July 19.

This article was originally published by Texas Association of Counties.