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By W. Gardner Selby September 11, 2015

Abbott call to bar use of dedicated accounts to balance state budgets goes unheeded

As a candidate, Greg Abbott said the Texas Constitution needed toughening to keep lawmakers from balancing the budget yet still spending more money by tying up dollars supposedly dedicated to particular needs and desires.

He was referring to the decades-old practice of lawmakers writing budgets certified as balanced by the state comptroller in part because of legislators leaving untapped millions of dollars raised for dedicated purposes — freeing up money for other priorities. As a result, Abbott noted, large balances had built up in general-revenue dedicated accounts "and state spending is much higher than it would be" if lawmakers weren't taking this tack.

To stem the budgetary practice, Abbott said lawmakers should send voters a proposed constitutional amendment barring the use of statutorily-dedicated accounts for budget certification by the comptroller, starting in the 2023-24 biennium, a date intended to ease phase-in pain, he said.

Abbott said in his campaign's compendium of promises: "This would improve transparency of the state budget and ensure that statutorily-dedicated accounts are used only for their intended purpose."

Yet Gov. Abbott didn't mention his desire for the constitutional change in his February 2015 State of the State address to legislators. And in the end, the 2015 Legislature didn't agree on such a change, though a House-advanced proposal was ballyhooed by House Speaker Joe Straus, R-San Antonio.

Straus, in an April 2015 opinion column, pointed out that as recently as 2011, lawmakers had relied on (and tied up) nearly $5 billion in dedicated fees to get the budget declared as balanced.

Still, Straus wrote, legislative moves in 2013 and 2015 reduced the balances of various dedicated funds that could otherwise be tied up to balance the budget. By email, an aide to the lead author of  the 2015 proposal, Rep. Drew Darby, R-San Angelo, sent us a May 2015 analysis of House Bill 7, which Abbott signed into law in June 2015. The law closes out or revamps dedicated accounts containing nearly $307 million, with some balances shifting to the state's general revenue kitty, the summary says.

In his commentary, Straus touted the House recently sending the Senate a proposed constitutional amendment, House Joint Resolution 111, authored by Darby which, to our eyes, was in keeping with Abbott's promise.

Straus wrote:

"This proposed amendment to the Texas Constitution says that money sitting in GR-Dedicated accounts cannot be counted as available revenue when the Comptroller issues the Biennial Revenue Estimate. Without those accounts in the equation, we would be having an entirely different conversation – a more honest conversation – about how much money is available to spend on programs, on tax cuts and on everything else we're talking about doing."

On May 1, 2015, we marked this an Abbott promise In the Works.

In the end, Straus crowed too soon.

Legislative records show the Senate Finance Committee, chaired by Sen. Jane Nelson, R-Flower Mound, gave HJR 111 a late-in-the-session hearing, but members didn't vote on it.

So, why did it die? To our inquiry, Nelson, who sponsored Darby's proposal when it came from the House, said in a statement her office sent us by email: "This bill was heard at our last (committee) hearing. Members raised concerns about its impact, and the committee was not ready to vote it out in the final days of session."

At that May 22, 2015, hearing, Senate video shows, Nelson offered her version of the proposal stating that as of September 2023, the constitution would bar lawmakers from using dedicated general revenue account balances to balance the state budget.

Next, Sen. Kirk Watson, D-Austin, whose similar proposed constitutional amendment, Senate Joint Resolution 33, hadn't drawn a hearing, asked a few questions.

Then another committee member, Sen. Larry Taylor, R-Friendswood, expressed qualms, saying that while he favored "truth in taxation," he didn't want to keep future legislators from employing the budget-balancing strategy in tight circumstances.

Taylor, a legislator since 2003, noted he'd helped write budgets in two downturns. Each time, he said, the dedicated-account "cushion" was preferable to raising taxes. "I'm a little concerned about this being absolute," Taylor said, the risk being that members would be "tying the hands of a future Legislature. And you will, in fact, impose a tax increase on the citizens of Texas just because you have an economic downturn."

After a pause, Nelson said she'd leave the proposal pending. The session ended 10 days later.

Abbott's office didn't respond to our questions about this promise, which we now rate a Promise Broken.

Promise Broken – The promise has not been fulfilled. This could occur because of inaction by the executive or lack of support from the legislative branch or other group that was critical for the promise to be fulfilled. A Promise Broken rating does not necessarily mean that the executive failed to advocate for the policy.

We wrote May 1, 2015:

While running for governor, Greg Abbott brought up a spending practice others (notably state Sen. Kirk Watson, D-Austin) have long criticized. That is, the state can count spending dedicated in the Texas Constitution in a way that enables other expenditures.

To stem this budgetary practice, candidate Abbott called for lawmakers to send voters a proposed constitutional amendment barring the use of statutorily-dedicated accounts for budget certification, starting in the 2023-24 biennium. All constitutional changes require voter approval.

Such a proposal has been offered in the 2015 Legislature and was making progress as of April 2015, the Center for Public Policy Priorities pointed out when we sought help checking on progress on Abbott's campaign promises.

Indeed, by April 27, 2015, House Joint Resolution 111 by Rep. Drew Darby, R-San Angelo, had cleared the House and awaited Senate consideration.

The proposal envisions voters acting in November 2015 on several proposed constitutional amendments.

Per the measure's fiscal note:

--One proposed amendment, which would take effect in 2023, would direct the state comptroller not to consider any portion of revenue received by the state, or any account or fund balance that by law is dedicated to a particular purpose or entity, as part of the revenue available for certification of the budget as balanced. It also would prohibit lawmakers from taking unspent money accumulated for a dedicated purpose and spending it on something else;

--The second proposed amendment, taking effect in 2016, would bar the comptroller from considering any portion of any revenue received by the state or any account of fund balance that is dedicated by law for a particular purpose while projecting future state general revenues;

--The third proposed amendment, effective Sept. 1, 2023, would prohibit lawmakers from taking revenue intended for a dedicated purpose and diverting it to other purposes. If approved by the voters.

A Senate companion, authored by Watson, awaited consideration by a Senate committee.

We're upgrading this Promise from Unrated to In the Works.

Our Sources

Document, "Bicentennial Blueprint, Greg Abbott's Working Texans Plan," Oct. 28, 2013

Prepared text of Gov. Greg Abbott's State of the State address, Office of the Governor, Feb. 17, 2015

Opinion column, House Speaker Joe Straus, "The Texas House Puts a New Limit on Budget Growth," April 2015

Document, fiscal summary of House Bill 7 (enrolled version), Jason Modglin, chief of staff, Rep. Drew Darby, May 29, 2015 (received by email from Kate Raetz, legislative director, Rep. Darby's office, Aug. 28, 2015)

Email, Dave Nelson, chief of staff, Sen. Jane Nelson, Sept. 3, 2015

Video, hearing of Senate Finance Committee, Texas Legislative Council, May 22, 2015 (accessed Sept. 9, 2015)

Truth-O-Meter article, "Kirk Watson says more than $3.5 billion intended for special purposes being diverted to make state's books look balanced," PolitiFact Texas, Dec. 4, 2010

Document, "Bicentennial Blueprint, Greg Abbott's Working Texans Plan," Oct. 28, 2013

Email, Oliver Bernstein, communications director, Center for Public Policy Priorities, April 13, 2015

Truth-O-Meter article, "Kirk Watson says more than $3.5 billion intended for special purposes being diverted to make state's books look balanced," PolitiFact Texas, Dec. 4, 2010

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