On the Money

As the Eighty-third Legislature gears up at the Capitol this month, will lawmakers be penny-wise and pound-foolish? Or just plain foolish?

A visitor to the Capitol in January of an odd-numbered year finds the venerable building in a state of feverish activity. More visitors are walking the halls, more lobbyists are toting briefcases, and more staffers are filling the cafeteria. These are the unmistakable signs that the Legislature is back in town—for better or worse. Before long, the inevitable jokes will make the rounds: the story of the judge who said, “No man’s life, liberty, or property is safe while the Legislature is in session,” or the remark that the state constitution calls for lawmakers to assemble every two years for 140 days, but maybe the framers intended to say every 140 years for two days. Unfortunately, it’s no laughing matter.

Any discussion of the issues facing the Eighty-third Legislature, which convenes on January 8, must begin with the state budget. The now-departed and unlamented Eighty-second Legislature came to town riding the momentum of the tea party sweep of the 2010 elections, a wave so strong that it produced a GOP supermajority in the House of Representatives. Lawmakers began that session facing a $27 billion shortfall, so they sharpened their axes. They were on a mission to cut spending, and that’s exactly what they did. What didn’t they do? They didn’t fund education, they didn’t fund health care, and they didn’t pass a redistricting bill that could withstand judicial scrutiny. It was a sorry record.

The Eighty-third Legislature should enjoy a much smoother ride because the budget outlook is far better. Thanks to a now robust economy and a mammoth oil and gas boom, lawmakers should have an $8 billion surplus, with $10 billion or so in the Rainy Day Fund. It’s enough to restore many of the cuts that were imposed two years ago. But the political issue remains: Will the state’s leaders allow lawmakers to spend the money? Or will they ratchet down spending on the heels of draconian budget cuts?

Medicaid is the costliest state program, but because it deals primarily with the poor, including those in nursing homes, it has the least public support. The previous budget allocated $4.7 billion for Medicaid, but that was a phantom number; the money didn’t exist. Figuratively speaking, budget writers put the funding for Medicaid on the state’s credit card and resolved to address it later, hoping that the economy would recover. Shortly after lawmakers convene, they will have to pass a supplemental appropriations bill to pay for the program. This will be the first showdown vote of the session and the first test of whether the Eighty-third Legislature is more inclined to fund state services than the Eighty-second.

However, one potential source of funding will not be available. To no one’s surprise, Governor Rick Perry, in his continuing war with the Obama administration, has declined to accept an expansion of Medicaid. That will cause the state to forgo federal funds that could be made available to the state’s hospitals and the uninsured. Similarly, Perry has refused to establish health exchanges, which could help the uninsured acquire health insurance. There is little chance Perry will change his mind.

The Eighty-second Legislature was no more inclined to fund education than it was to fund Medicaid. It cut $2 billion a year in formula funding for school districts and deferred an additional $2.3 billion. So it should come as no shock that education is going to be the policy area that gets the most attention this session. Dan Patrick, the chair of the Senate Education Committee, wants to establish a voucher system that would allow state funds to flow to students who attend private schools. This proposal, a longtime goal of San Antonio businessman and Perry ally James Leininger, divides urban Republicans, who typically support it, and rural Republicans, who depend on their public schools to keep their communities alive. Previous proposals for vouchers have failed to pass the House.

Another hot-button issue in education is the state’s accountability system and its reliance on standardized testing. The Texas Association of Business, led by Bill Hammond, strongly backs testing and has threatened to drop its support for public schools if the accountability system is weakened. But TAB and other business groups must reckon with parents who are in revolt against the testing regime. This will challenge the political skill of Jimmie Don Aycock, who is presumed to be the next chairman of the House Public Education Committee.

In the meantime, the Legislature has to defend itself in court against the charge that its method of financing public schools fails to meet the constitutional imprimatur of an “efficient” system. The lack of funding from the previous session gives the school districts that have filed suit some strong arguments that the system is not efficient. This refrain should be familiar to anyone who has followed the history of school finance litigation, which dates back to the eighties. The Texas Supreme Court has generally (though not generously) sided with the plaintiffs; the ruling in the current case could affect any decisions on funding made by lawmakers.

While the Legislature grapples with those issues, it must also focus on water, which is the state’s most serious long-term problem. The state has an ambitious water plan that includes conservation, desalination, reservoirs, and moving water from one river basin to the next; the plan is projected to cost $53 billion through 2060. Texas has a lot of water, but much of it is located in sparsely populated regions, far from the cities and agricultural interests that need it.

Perry talks a good game when it comes to water: “I firmly believe that the Eighty-second Legislature must finally execute our state’s water plan,” he told the West Texas Legislative Summit in 2010. But he has never put the state’s money where his mouth is and provided a dependable, recurring source of revenue dedicated to water projects. Raising revenue is a subject that Texas politicians, especially Perry, don’t like to talk about. Several ways to finance the plan are on the table—taxing

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