Highlights 77th Texas Legislature - Senate

_____________________ A PPROPRIATIONS
PPROPRIATIONS ACT
77 th Texas Legislature
S.B. 1 provides for an increase of 1,049 full-time equivalent (FTE) positions from the 2001 level of 229,313
to 230,093 total FTEs in 2002 and 230,362 total FTEs in 2003. The growth of the number of statewide
FTEs is primarily because of increases in higher education staff and faculty. The budget also includes a
$308.5 million General Revenue Funds increase ($592.8 million in All Funds) for a pay raise (including
longevity) for state employees and non-faculty employees of institutions of higher education. An $800.2
million All Funds increase ($621.7 million in General Revenue Funds) is provided in S.B. 1 to cover the
increased cost of group insurance for state employees.
In accordance with Article IV, Section 14, Texas Constitution, the governor has the right to file objections to
individual items or appropriation thereof and make proclamation of the same, and such item or items of
appropriation objected to shall be of no force or effect. The vetoes total $75.1 million in certified
appropriations and another $480.8 million in appropriations contingent on certification of additional revenue
available at a later time. Governor Perry said he objected to spending every available dollar and other than
the Rainy Day Fund and does not providing care for unforeseen issues or problems, such as the recent
tragic Southeast Texas floods, as well as a some items of appropriation in the proposed bill. He said the
bill also contained provisions intended to obligate expenditure of funds beyond what the Comptroller of
Public Accounts (comptroller) is willing to certify as available, and this could limit the ability of the Seventyeighth
Legislature to address the state’s needs in a fiscally responsible manner in 2004-2005.
The proposed budget stays within the four limits required by the constitution: spending limit; “pay-as-yougo”;
limit on welfare spending; and limit on tax-supported debt.
Spending Limit – Article VIII, Sec. 22(a), Texas Constitution. This constitutional limit restricts the growth
of appropriations from state tax revenue (not dedicated by the constitution) from exceeding the state’s
estimated rate of economic growth adopted by the Legislative Budget Board (LBB).
Previous to each legislative session, LBB adopts the “Items of Information”, which include: the estimated
rate of growth of the Texas economy for the upcoming biennium. The limit on appropriations for the 2002-
2003 biennium was determined by multiplying the 2000–2001 base biennium by the growth of Texas
personal income from the 2000–2001 biennium. The 2002-2003 limit was set at $51.1 billion of
appropriations supported by tax revenue not dedicated by the constitution, and the amount spent by the
77th Legislature was $49.5 billion (excluding contingency appropriations). S.B. 1 recommended $1.6 billion
below the Article VIII limit, excluding contingency appropriations. If all contingency appropriations are
certified, the recommended appropriations will still fall below the Article VIII constitutional limit.
"Pay-As-You-Go” – Article III, Sec. 49a, Texas Constitution. Prohibits the Legislature from appropriating
more revenue than will be collected, unless approved by a four-fifths vote of each house. The Tax Relief
Amendment of 1978 limits the growth of appropriations from state tax revenues, not dedicated by the
constitution, to the estimated growth of the state’s economy. It requires that bills making appropriations be
sent to the comptroller for certification that the appropriations are within available revenue.
The comptroller’s January 2001 estimate of the amount available for spending from the General Revenue
Fund was $60.8 billion. The comptroller later added $143 million to the estimate for tobacco settlement
revenue and reduced the estimate by $18 million for possible losses in the tobacco products tax.
Legislation adopted by the 77 th Legislature and items contained in the General Appropriations Act would
Senate Research Center 3