To provide increased transparency to the Texas budget so ordinary Texans can understand how their tax dollars are spent, we published The Real Texas Budget. This report provides an accurate accounting of historical appropriations and spending since fiscal year 2004.
We use two different metrics to provide budget transparency and appropriately calculate budget changes:
- Session Appropriations: Shows that the all funds amount—includes state and federal funds—appropriated by the 2013 Legislature increased by roughly 26 percent over the amount appropriated by the 2011 Legislature.
- Biennium Spending: Shows that the all funds amount that is likely to be spent during the 2014-15 biennium will increase by 9 percent over actual 2012-13 biennium spending. This provides an apples-to-apples budget comparison.
- This metric is similar to the one used by the Legislative Budget Board (LBB) that shows a 5.1 percent increase in the budget. However, their calculated increase is not “spending” per se but an increase in 2014-15 appropriations over actual 2012-13 spending. This is an apples-to-oranges budget comparison making this confusing for Texans, which is a reason we publishedThe Real Texas Budget.
The LBB estimates that legislators passed a $200.4 billion budget for the 2014-15 biennium. They compare this with actual spending during the 2012-13 biennium of $190.8 billion, giving the 5.1 percent increase. Two issues arise when calculating biennium spending:
- While it is a common practice for the Legislature to underfund Medicaid during the appropriations process because of the uncertainty of its cost, this amount will ultimately be included in biennium spending. Considering an increase in caseloads and the associated costs, our estimate for the current biennium’s underfunded amount is about $1.5 billion, bringing 2014-15 biennium spending to $201.9 billion.
- Last session legislators moved the line item of $6.1 billion for patient income to higher education-related facilities off-budget, reducing the 2014-15 budget by that amount. While this is not a new practice, comparing the current biennium with the previous biennium that includes $5.5 billion in patient income leads to an inaccurate lower percent increase. Removing this amount from previous biennia results in 2012-13 biennium spending of $185.3 billion.
After accounting for these corrections, we calculate the 9 percent increase in 2014-15 biennium spending. This is a consistent measure of biennium spending and is one that more accurately explains to Texans how much their legislators will likely spend this biennium than the LBB’s 5.1 percent figure.
Adjusting spending for reasonable metrics like population growth and inflation since fiscal year 2004, we find that spending this biennium will likely be $16.3 billion, or 8.8 percent, higher than if spending had been held to the growth rate of these two key metrics. This excess spending should demand caution by legislators when discussing increasing next session’s budget.
If the Texas model of low taxes and limited government is to be sustained over the long term, legislators should do more to make the budget more transparent by converting to a program-based budget format and providing budget information online throughout the legislative process.