Provision Allows Texas Lawmakers to Tap Into Unspent Budget Money

By: ROBERT T. GARRETT and KELLEY SHANNON / The Dallas Morning News
By: ROBERT T. GARRETT and KELLEY SHANNON / The Dallas Morning News

AUSTIN – The House and Senate, poised to make heavy cuts at state agencies, enjoy a little-known budget privilege that can soften their financial pain.

Lawmakers have for years used a widely overlooked provision that lets them carry over unspent funds from one budget cycle to another, even though almost all other departments must return unused money to the state.

It means they have millions of leftover dollars that don't always appear in the new appropriations bill passed each session, rankling advocates of state programs that have been squeezed because of mandatory spending cuts.

The Dallas Morning News found that the Legislature has granted the special budget provision to only three others: the governor, the comptroller and agriculture commissioner – offices all held by elected Republicans, though the practice has been around for decades.

The four areas carried over at least $88 million, with no strings attached, when the cycle began on Sept. 1, 2009, according to The News' analysis of figures from the comptroller and governor.

In economic downturns, the favored four have a cushion to deal with calls for cuts that other agencies don't have.

Legislative managers defended their reliance on the carry-over money, saying they have to be ready for special sessions or unexpected assignments.

Gov. Rick Perry's office said that it has not tried to hide its use of leftover funds and that Perry has led by example by reducing his office expenses by percentage more than others.

Spokesmen for Comptroller Susan Combs and Agriculture Commissioner Todd Staples said they've used the money to help cover unfunded duties as a result of legislative directives or changing economic conditions.

Critics said that kind of bookkeeping reeks of insider privilege and should be stopped. They said Texas' top politicians, facing a multibillion-dollar shortfall, look as if they're trying to protect their flanks while making others suffer more.

"They aren't on the same chopping block as everyone else," said Eva DeLuna Castro, senior budget analyst for the Center for Public Policy Priorities, which favors more spending on education and social services. A follower of Texas finances for 20 years, DeLuna Castro said she had never heard of the carry-over allowance.

"Why wouldn't that money be on the table for cuts, if it's part of what they have now?" she said.

Keith Elkins, executive director of the Freedom of Information Foundation of Texas, which advocates for public access to government, said not listing all the money in the appropriations bill creates a "huge loophole in financial transparency."

"To have a real good idea of legislative staff and executive offices, the public should have an idea of what was carried over," he said.

The two-year appropriations measure – more than $182 billion in the current two-year cycle – is the only must-pass bill in a regular legislative session.

Last week, when The News asked him about it, Sen. Kevin Eltife, R-Tyler, chairman of the Senate Administration Committee, said the practice should be reconsidered.

"If we're operating differently from other state agencies, that should change," he said.

Lawmakers are confronting a deficit conservatively pegged at $15 billion, and Eltife said all money should be on the table.

"We're going to need every penny so I bet that doesn't happen going forward," he said of the practice.

Republican leaders have vowed to resolve the deficit without raising taxes, and many lawmakers have acknowledged widespread program cuts are in the offing. They've already chopped internally: 5 percent by senators to their monthly staff and travel allotments, and 10 percent by House members to their office accounts.

Lower per diems

"Just as we have asked state agencies and universities to identify ways to trim spending ... the Texas Legislature should also do its part," Lt. Gov. David Dewhurst and Speaker Joe Straus, R-San Antonio , said in a joint letter late last year that asked the Ethics Commission to lower lawmakers' per diems to $150, from $168. That would save nearly $500,000.

Still, the carry-over money – which budget wonks call "UB," for unexpended balances – allows the GOP-led Legislature and the three other offices to submit a smaller amount of possible cuts if that's what they decide.

A year ago, when all state departments had to suggest 5 percent cuts, those with carry-over privileges excluded the carried-over $88 million from proposed trims.

Three-quarters of that belonged to the legislative branch, which includes a large staff of bill drafters and budget analysts and the state auditor's office. Its latest two-year budget is $272 million but it also had a rollover of $64.5 million that wasn't listed in the appropriations bill.

Perry spokeswoman Lucy Nashed said the governor carried over $19.3 million from the last budget cycle that wasn't counted in the number he used as his starting point for his 5 percent reductions last spring.

That reduced the amount he was obligated to cut by about $1 million, but he wound up taking out much more than was asked of other agencies – 10.8 percent of his two-year budget of $320 million, she said.

Unexpected mandates

For the Legislature, governor and comptroller, the ability to cling to "unexpended balances" apparently goes back decades, records show.

Staples, the agriculture commissioner, was added in the last legislative session, and like Combs' office said the money goes to unexpected or unfunded mandates.

Staples spokesman Bryan Black said the commissioner "is charged with several responsibilities that require different and unpredictable resources throughout a two-year cycle, such as job-creation duties that change with the rapidly changing economic conditions."

Some of the Legislature's business managers also defended the practice, although it is rarely discussed and not widely understood.

Senate Secretary Patsy Spaw, who helps manage its business matters, and Jesse Ancira, Straus' general counsel and senior tax adviser in the House, said appropriations to the two chambers have not increased much, but work has increased, so the carry-over money is needed.

"We almost have to have it to make it," Spaw said.

Rep. Charlie Geren, R-Fort Worth, chairman of the House Administration Committee, agreed that the carry-over funds help.

He said the House tries to keep about $4.2 million of unspent money at all times so it can cover costs of any special sessions called by the governor.

"We sure don't know when we'll be called back," he said. "We have got to have it or we won't have any" funds.

Lawmakers, though, already have authority to shift state funds as needed to meet unexpected needs when they're not in session – provided the governor consents.

HOW UNSPENT MONEY PROVISION WORKS Texas lawmakers and three statewide elected officials enjoy a budget-writing allowance that can soften their financial pain. How it works:

•Every two years, the Legislature writes a budget. It's approved as a two-year appropriations bill.

•Almost all agencies must return unused money to the state. Lawmakers decide how to distribute the unspent funds in the bill for the next cycle.

•The Legislature, governor, comptroller and agriculture commissioner get to keep their unspent money and carry it over to the next cycle. They're free to spend it, though the "unexpended balance" isn't always included in what the appropriations bill shows they get.

•In bad times, state leaders ask agencies for lists of possible cuts. They typically start by using a straight, across-the-board percentage. But those with the budget allowance can calculate their percentage amount using their most recent appropriations, not counting the carry-over money.

•Bottom line: They don't have to offer as many possible cuts.

SOURCE: Dallas Morning News research

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