Leaders Call for Budget Cuts

Leaders Call for Budget Cuts

Gov. Greg Abbott, Lt. Gov. Dan Patrick, and House Speaker Joe Straus asked state agencies in a letter last week to cut their budget requests by four percent. “Overall, the letter makes a plea for holding back the growth of state government as Texas continues to deal with a downturn in the oil and gas industry,” as reported in the Texas Tribune by Madeline Conway and John Reynolds

Here is the letter from the governor's website. The leaders told agency heads to trim four percent from their "baseline budget" requests, a term used to describe money needed to continue providing current services, accounting for inflation and population growth.

The final amount for each agency will be determined by the Legislature in the next Regular Session, which convenes in January 2017. The letter represents only a preliminary step, but is disturbing nonetheless to leaders of public entities that depend upon state revenue, including community and technical colleges. 

The Tribune article also points to prospective hard times for local school districts that rely upon property tax revenue from the oil and gas industry. This observation by definition must also apply to two-year schools in the oil patch. It might be added that college enrollment tends to go up in difficult times, so we can expect additional budgetary pressure in future months. 

Regarding health and retirement benefits, this important category of spending is listed with several other stipulated exceptions to budget cut recommendations, but the language is troublesome:

•  maintain funding at fiscal year 2017 budgeted levels plus amounts necessary to cover the impact of payroll growth for state pension systems and employee group benefits (not including payroll contributions made by state agencies and institutions of higher education for retirement and group health insurance), though group benefit modifications may be considered;

It is clear that health and retirement programs will be examined carefully during the Regular Session. Interim committee hearings have already commenced.