State of Texas Budget Process

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This coming legislative session, lawmakers will set a budget for the upcoming fiscal years 2018 and 2019. The Texas Legislature creates a spending plan every two years and that process starts well before the beginning of the legislative session. In fact, current legislators and statewide officials have already begun drafting the budget for the 85th session. The budget process is kicked off with the delivery of the budget instructions, which have been agreed upon by the Governor, House Speaker and Lieutenant Governor. This biennium, the budget instructions requested each agency to cut four percent from their overall budget in anticipation of a budget shortfall due to lower than expected oil and gas revenues.

Each state agency is now in the process of preparing detailed legislative appropriations requests (LAR) under the guidelines of the budget instructions. The LARs itemize the funding each agency feels it needs to pursue its goals. The LARs also include performance measures designed to ensure the money is spent efficiently and effectively. The Legislative Budget Board (LBB) then uses these LARs to draft the state’s general appropriations bill, which provides funding for all state institutions and programs over the next two years.

Once the LARs are submitted by the agencies, the LBB and the Governor’s Office of Budget, Planning and Policy hold public hearings to review and analyze each agency’s request. After each LAR has been fully reviewed and approved by the LBB and the Governor’s office, the LBB prepares a draft of the state’s general appropriations bill. This bill is typically one of the first to be presented to the House and Senate at the beginning of each legislative session and is the only bill that the legislature is constitutionally required to pass.

After the bill has been presented to both the House and Senate, the Comptroller’s office issues its biennial revenue estimate (BRE), a careful estimate of the funds likely to be available from taxes and other revenue sources over the next two years. The BRE is extremely important as lawmakers and agencies attempt to slim down their budgets by four percent. Every dollar the state comptroller can find in revenue means fewer cuts going forward. The BRE sets the tone for session and the budget.

After the BRE is officially released to the legislature, the House Appropriations Committee and the Senate Committee on Finance hold hearings and make changes to the appropriations bill, reflecting the BRE’s limits and their funding priorities. This is the part of the process where the majority of changes are made to the bill. When both committees complete their version of the bill, it is then sent to the full House and Senate for approval.

After the bill has been approved in both chambers, it is sent to a conference committee, made up of members from both the House and Senate. The conference committee resolves any differences between the House version of the bill and the Senate version, producing a single bill that reflects the wishes of both chambers. Both houses then vote on the final version of the bill and when approved, it is sent to the Comptroller’s office for certification that the bill spends no more than the amounts reflected in the BRE. After the appropriations bill has been officially certified by the Comptroller, the bill faces one final hurdle, the Governor’s signature. Once signed, the bill becomes law and the state’s budget is set for two more years, finally completing the budget cycle.