AUSTIN, Texas — Texas lawmakers have been calling this legislative session "the session of public education." And now, they're backing up that talk with money.
This week, budget documents were filed showing just how much lawmakers want to put into public education.
In Texas This Week, Ashley Goudeau sat down with Dale Craymer, President of the Texas Taxpayers and Research Association (TTARA), to talk about the numbers.
Goudeau: We want to begin by being very transparent with our viewers. Tell them exactly what the Texas Taxpayer And Research Association is and how you're funded.
Dale Craymer: "Yeah, we're basically a nonprofit, membership association. Most of our members have a strong interest in state fiscal policy and will include some of the state's larger businesses, typically businesses that operate in a number of different states and individuals and tax consultants. Basically, I'm a professional tax nerd, but we focus on tax policy and fiscal policy issues before the legislature. Generally, a conservative bent, but our members also realize that they demand a lot in services from the government and have an obligation to pay for them as well."
Goudeau: Passing a balanced budget is the one thing that the Texas Legislature is constitutionally required to do. And so when we talk about passing a budget, what does that really mean for people at home so they can kind-of get an understanding of the process?
Craymer: "Well, the budget process is both a political one and a technical one. Obviously, politically, you have to balance the needs and desires of what your constituents want but, technically, you have to make the numbers work. And you have to work also in the framework of federal law as well because there are a lot of federal constraints on the budget too."
Goudeau: And this is a time-consuming process, right? This is not something that happens very quickly.
Craymer: "No, it is not, which is actually one of the reasons we started a little early. I mean, here we are a week into the legislative session and we already have the comptroller's revenue estimate, the House and Senate budget bills. It's going to take five months, all 140 days of this legislative session, to get all the numbers pulled together. Especially when you've got other issues that are contingent on the budget like a lot of what we were talking about earlier with public education. Both the House and the Senate have made a big push to increase funding for public education, but a lot of those I's have yet to dotted and T's have yet to be crossed."
Goudeau: Let's talk about the biennial revenue estimate. There was some good news: the Comptroller said don't get too excited, but we've got more money to work with for the next two years than we previously did.
Craymer: "We do. And Texas is a little different from most other states. We actually have a budget referee, Comptroller Hegar. The Constitution basically vests in him the responsibility to be the state's chief revenue estimator. He tells the legislature how much money they have to spend. And before the governor even gets to see the budget, it has to go to the comptroller so that he signs and certifies that it is balanced with available revenues. Now, Controller Hegar did start the legislative session with some good news. He put more money on the table than I think a lot of legislators were expecting. If you pick up the paper, you hear all these stories about the trade wars are bogging down the economy, the stock market is weak, oil prices are weak, and there's all these risks out there, but he's got to filter out that noise and identify exactly what the factors the state's likely to face over the next two years. And the truth of the matter is the foundation of our current economy is pretty strong. And though he has growth moderating, he has put a healthy revenue estimate before the legislature."
Goudeau: Now, before we get too excited about the extra money that's in the budget, during the last legislative session, it's important to note that legislators didn't fully fund certain programs. So, the first thing they've got to do is go back and fund them right?
Craymer: "Well, and no matter how much money is available, it's never enough. But yes, the legislature does have some overhang to deal with from the past budget. Medicaid, which is an entitlement program, was not fully funded. So, they've got to pass a supplemental appropriations bill to make that program whole. In addition, we still have a lot of Hurricane Harvey mitigation where state agencies have spent money forward and need to be reimbursed for that. So, there is a substantial amount of work to be done just to close the books on our current budget."
Goudeau: We constantly hear that this will be the session of public education, this will be the session of funding our schools, fixing the school finance system. But there are some financial challenges with doing that.
Craymer: "There are. Funding public schools in Texas is a shared responsibility between the state and local school districts. And over the last several years, there's been a lot of give and take as to where one's responsibility ends and where another's begins. So, public education is everybody's top priority in this budget. But, technically, you've got to make the numbers work within a formula system that has largely been dictated by the courts."
Goudeau: The other big priority we're hearing is property tax reform and this movement to reduce the rollback rate. So, when we talk about the rollback rate, I first want you to explain for people what the rollback rate is.
Craymer: "The rollback rate is basically a percentage limit on how much a local jurisdiction can increase their property tax revenues. Currently, it's eight percent. That rate was set when inflation was 12 percent. So, if I'm a jurisdiction, and I want to raise new revenue, I can go up to eight percent new growth on my property taxes. If I go above that, there's really no penalty, but above eight percent, voters can petition for an election to rollback the tax rate. But they roll it back to an eight percent increase. So, it's still -- we call it rollback, but it's still a pretty sizable increase."
Goudeau: And the reality is, especially for people in Austin, the city kind-of goes up right to that rate right.
Craymer: "Historically, they have. They didn't this year, but it was an election year. But, yes, Austin is seeing faster growth in property taxes than most jurisdictions."
Goudeau: And so, last session, we had this split between the House and the Senate to what we were going to reduce the rollback rate to. The House passed reducing it to six percent. The Senate, four percent. And now, you have the governor coming out this session and saying he wants it to be 2.5 percent. How in the world are we going to get to that number?
Craymer: "Well, you know, that's a very good question because last session there were two numbers on the table, four and six. And they couldn't find a number in between. So, it becomes an even more complicated issue this legislative session. But this is also an issue local governments feel very strongly about, and they're an active lobby force at the Capitol as well. So, this is probably going to be the thorniest issue the legislature deals with this session."
Goudeau: And while we think about budgets as being kind-of complicated -- some people find this boring -- these are really important things that people want to pay attention to this session.
Craymer: "Well, it's a daunting document. I mean, the budget is a bill just like any other bill. It's just it's a thousand-page bill that spends, you know, $240 billion. And there are a lot of details in it. Yeah, the bills were introduced a couple of days ago and I'm still, you know, have very few dog-eared pages on my copy because I'm still working my way through it."
Goudeau: Any final thoughts for our viewers on this upcoming session when it comes to the budget?
Craymer: "I think the most important part of the budget this session is going to be what happens with public education. The Senate has introduced their starting point. They have put $6 billion more into public education, including within that $6 billion, $3.7 billion for a $5,000 teacher pay raise. The House has upped the Senate. They put $9 billion of new money in public education. But, they're still working out the details on their priorities between teacher pay, between an increased funding in classroom, between property tax relief. So, it is going to be the single most important issue this legislative session: how we finance public schools and how we pay for them."
The Senate Finance Committee plans to start working on the Senate version of the budget Tuesday.