All About the Money: The State Budget

1. 900 Lydia Street - Austin, Texas 78702 Phone (512) 320-0222 – fax (512) 320-0227 - www.cppp.org All About the Money:The State Budget One Voice: A Collaborative for Health and Human Services September 30, 2004 Eva De Luna Castro, Budget Analyst (deluna.castro@cppp.org)

2. PRESENTATION OUTLINE: • What happened in 2003? • Why it matters • What lies ahead

3. The “Balancing” of the 2004-05 State Budget Cuts to 2003 Budget: $1.4 billion Cost shifting: $1.0 billion “Smoke and mirrors”: $1.2 billion Rainy Day Fund: $1.3 billion Federal Fiscal Relief: $1.4 billion State Revenue Measures: $1.8 billion Cuts to 2004-05 Budget: $7.5 billion Estimated General Revenue shortfall of $15.6 billion for 2004-05

4. Where Budget Cuts Were Made • Health Care (not just Medicaid and CHIP, but also teachers’ and state employees’ health coverage) • K-12 textbook funding; grant programs such as kindergarten and pre-K expansion grants; Telecommunications Infrastructure Fund (now used for Technology Allotment) • Layoffs of state employees • More details available in CPPP’s July 2004 report, at http://www.cppp.org/products/reports/budget-impact04/index.html

5. Source: Texas Legislative Budget Board, Fiscal Size Up 2004-05.

6. Where 80 Percent of General Revenue Goes Source: Legislative Budget Board, Fiscal Size Up 2004-05, and budget requests for 2006-07.

8. What Texas State Government Spending Pays For Source: U.S. Bureau of the Census, StateGovernment Finances series. Data for 2002 for Texas, total expenditures (including trust) of $70.3 billion.

9. What Texas Local Government Spending Pays For Source: U.S. Bureau of the Census, Government Finances series. Data for 2002 for Texas, total expenditures (including trust) of $77.1 billion.

10. 50-State Ranking: 13th 46th 26th 39th 15th 13th 35th 41st 23rd 36th 33rd 43rd Source: U.S. Bureau of the Census, State & Local Government Finances, Fiscal 2002.

11. Indicators of Texas’ Need for Public Social Services Source: U.S. Bureau of the Census, March CPS and American Community Survey

12. How Houston Compares to Other Large Cities Source: U.S. Bureau of the Census, American Community Survey

13. State Spending Per Harris County Resident, 2003 $560 for Aid to Local K-12 School Districts $398 for Medicaid Acute Care and CHIP $204 for Workforce Commission Programs (Unemployment Insurance, Employment Services and Job Training, Subsidized Child Care, etc.) $162 for Highway Construction and Maintenance and other TXDoT spending; $141 for State Prisons, Probation, Parole; $103 for Teacher Retirement System Mental Health & Mental Retardation programs ($64); Department of Health programs ($59); University of Houston [main campus only] ($53) Employees Retirement System ($40); Public Community and Junior Colleges ($39); Payments to Nursing Homes ($37); M.D. Anderson Cancer Center ($34); Protective & Regulatory Services ($32); University of Texas Health Science Center at Houston ($32) DHS Community Care programs ($18); Cash Assistance [TANF] ($10); Alcohol and Drug Abuse Commission ($7): Department on Aging ($3)

14. 2006-07: Another Tough Budget to Write

15. Other Potential Budget Items

16. Outcome Depends on Available Revenue • Comptroller will give legislators the official revenue estimate no later than January 2005 • Good news: revenues for 2004 show higher-than-expected annual growth, at 6.4%, much better than fiscal 2003 • Bad news: health care costs—one-third of state budget—expected to continue rising at double-digit rates • Long-term structural inadequacies of state/local tax system are putting too much pressure on property taxes • Heavy reliance on sales taxes also makes Texas tax system very regressive (taking more from families with the lowest incomes)

18. Source: Comptroller of Public Accounts, Annual Property Tax Report; Cash Report.