The Legislative Budget Board
Fiscal Size-Up 2012-2013
GOVT 2306
The purpose of this set of slides is
to get you familiar with a very
useful document prepared every
two years by the Legislative Budget
Board.
The LBB Fiscal Size-Up
Note: I can’t find a direct link to the
document on line, but you can open
up the PDF file by going to the
Legislative Budget Board’s website and
scrolling over “Budget” on the task bar
and clicking on Fiscal Size Up, then
2012-13 Size Up on the drop down
menu.
Try opening it up now.
When you open it up, you’ll see
that its huge.
668 pages
But you won’t have to read all of it.
I just want you to get familiar with the information it contains.
It provides a thorough look at the
scope of Texas government, so
looking through it may be the best
way to understand its design, costs
and the range of issues associated
with it.
Here’s how it describes itself:
Fiscal Size-up is a report produced biennially by the
staff of the Legislative Budget Board. Production of
this report involves thousands of staff hours. The 2012–
13 edition, like previous editions, contains a wealth
of information about the structure and operation of
Texas state government. Through its comprehensive
descriptions of state programs and services, including
more than 360 figures, the 2012–13 Fiscal Size-up
provides Texas taxpayers with a more complete
understanding of how their tax dollars are being used.
The first three chapters of Fiscal Size-up include an
overview of the 2012–13 state budget (including
a summary of the fiscal challenge the Eighty-second
Legislature addressed), a description of the major
state revenue sources and funds, the economic outlook
for Texas and the U.S., and detailed information
on population, income, taxes, governmental
expenditures, and employment for Texas and other
states. The remaining chapters of Fiscal Size-up provide
an in-depth examination of the major functions of state
government and discuss the significant budget issues,
programs, and activities of the agencies and institutions
that support each function.
Then by simply walking through the Table of
Contents, you can get an idea of the scope of
functions and agencies in the state.
Notice that it is divided into a number of
sections that correspond to the major functions
of Texas Government. We will touch on each of
these below.
A quick note:
This report covers the budget
created by the 82nd Texas
Legislature which met in the spring
of 2011. The budget produced by
rd
the 83 session of the legislature
will not be written up in a fiscal
size-up until January of 2014.
1. STATE BUDGET OVERVIEW
This section provides graphs and numbers
associated with the Texas Budget, both on the
revenue and spending side as faced by the 82nd
Legislature, which met from January o May
2011. It also discusses recent controversies
regarding the budget including the
consequences of the financial crash of 2008-9.
It breaks down the source of the various funds
in the state. The next slide contains the all funds
budgets for the 2010-2011 and 2012-2103 fiscal
years.
Here’s a quick look at the
breakdown of spending.
Note where most money is spent
in the state.
Note the use of the phrase “All
Funds.”
Funds in the state come from a
variety of sources. Not every item
in the state budget is funded in the
same way.
Some are part of the operational
budget, some have unique funding
sources, and some are funded
primarily by the federal
government, through the state of
Texas.
Here’s a bit from the document:
“The 2012–13 biennial budget for Texas state
government includes appropriations for state
operations that total $173.5 billion in All Funds.
The 2012–13 All Funds budget includes
estimated appropriations of $81.3 billion from
General Revenue Funds, $6.4 billion from
General Revenue–Dedicated Funds, $54.7
billion from Federal Funds, and $31.2 billion
from Other Funds.”
Notice the different types of funds.
Let’s walk through them
There are two basic types: The
General Revenue Fund and Federal
Funds.
The General Revenue Fund is
divided in two categories:
Dedicated and Non-Dedicated
Funds
General Revenue Funds
General Revenue Funds
All revenues coming into the state
treasury that are not allocated by
law to a specific fund or purpose
are deposited into the General
Revenue Fund.
“The fund that receives state tax
revenues and fees considered
available for general spending
purposes and certified as such by
the comptroller of public
accounts.”
Here’s a graph of the general
revenue funds:
From Budget 101: “The non-dedicated
portion of the General Revenue Fund
serves as the state's primary operating
fund. Most state tax revenues, many state
fees, and various other revenues are
deposited as non-dedicated
general revenue. . . . The non-dedicated
portion of the General Revenue Fund
provides legislators the most discretion in
spending.”
A fuller definition of the General Revenue
Funds Budget can be found on Page 7 of
the Fiscal Size-Up.
For definition purposes, . . . “General Revenue Funds”
as used in Fiscal Size-up includes the non-dedicated
portion of the General Revenue Fund, as well as three
education funds: the Available School Fund, the State
Textbook Fund, and the Foundation School Fund.
This is the closest the state comes
to an operational budget. And it’s
the one legislators have the most
control over.
Here’s a bit more on the three
education funds (from Budget 101)
mentioned in the previous slide.
Some of these funds are drawn
from the Permanent School Fund,
which is “a perpetual endowment
to support Texas’ public schools. Its
original wealth was in land and
money, but virtually all of the
principal assets are now in
securities.”
The Available School Fund (ASF)
receives interest and dividend
income from the Permanent
School Fund and one-quarter of
motor fuel taxes.
A portion of the
Available School Fund revenue is
transferred to the State Textbook
Fund and used to provide
textbooks to children attending
public schools. After the textbook
allocation, remaining revenue in
the ASF is allocated to school
districts.
One-quarter of occupation taxes, which
include, among others, the oil production
tax, the natural gas production tax, and the
gas, water, and electric utility tax, are
constitutionally dedicated to public
education. The revenue from these taxes is
initially deposited to the General Revenue
Fund, and then transferred to the
Foundation School Account (FSA).
General Revenue
– Dedicated Funds
General Revenue–Dedicated Funds
“These accounts receive revenue
dedicated for a particular
purpose.”
“Accounts that can be counted as
General Revenue but must be used
for the purposes identified in
general law to the extent such
money is appropriated in the
General Appropriations Act.”
Legislators have less control over
these funds because they are
dedicated to a specific purpose.
[It’s similar to the distinction
between discretionary and nondiscretionary spending on the
national level]
Notice that this is a far smaller part
of the budget that the general
fund.
“There are approximately 200 dedicated
accounts maintained in the General Revenue
Fund, including for example, the State Parks
Account, college operating accounts (which
receive tuition revenue), and the Department of
Insurance Operating Account. Revenue that is
dedicated for a particular purpose is deposited
to these dedicated accounts, and in most cases,
the Texas Legislature may appropriate revenue
from these accounts only for the purpose to
which the revenue is dedicated by law.”
Here’s an example of a dedicated
fund:
“The major revenue sources deposited directly
to the State Highway Fund include motor
vehicle registration fees, federal highway funds,
and the sales tax on motor lubricants. Motor
fuel tax revenue is deposited to the General
Revenue Fund and a portion is allocated to the
State Highway Fund. Revenue in the State
Highway Fund is used for highway construction
and maintenance, acquisition of rights-of way,
and law enforcement on public roads.”
– Budget 101
And now the Federal Funds Budget
Federal Funds Budget
Federal Funds include grants,
allocations, payments, or
reimbursements received from the
federal government by state agencies
and institutions named in the General
Appropriations Act (GAA).
“Funds received from the United
States government by state
agencies and institutions that are
appropriated to those agencies for
the purposes for which the federal
grant, allocation, payment, or
reimbursement was made.”
When we covered federalism early in this class
we discussed co-operative federalism, a
relationship between the national and state
governments where the national government
enticed state governments to provide policies
that met national objectives by providing funds
to the states to do so.
This section shows how those funds fit into the
Texas budget. The following graph gives us an
idea of where the influence of the national
government is greatest in the state.
rd
1/3
About
of the Texas budget
comes from the national
government.
This gives you a clearer idea of
where federal funds are spent in
the state.
Top 100 Federal Funding Sources in
the Texas State Budget.
As discussed in a previous section, these funds
can be used by the national government to
entice the states to provide certain services, and
to create certain standards for those services.
Example: in the 1980s, the national government
forced all states to raise their drinking ages to 21
by threatening to stop highway funding to those
states that refused to do so. Funding provides
leverage.
Other Funds
“Other Funds consist of any funds not
included in the other methods of
financing. Other Funds include the
Texas Mobility Fund, trust funds, bond
proceeds, interagency contracts,
certain revenue held in higher
education “local” accounts, and
constitutional funds.”
This section concludes by outlining
the four constitutional spending
limits placed on the budget.
“Texas has four constitutional limits on
spending: the “pay-as you- go,” or
balanced budget limit; the limit on the rate
of growth of appropriations from certain
state taxes; the limit on welfare spending;
and the limit on debt service. The 2012–13
biennial budget is within all of these
limits.”
Pay-As-You-Go
“Article III, Section 49a, of the Texas
Constitution sets out the “pay-as-you-go”
limit. It requires that bills making
appropriations be sent to the Comptroller
of Public Accounts (CPA) for certification
that appropriations are within
available revenue.”
Limitation on the growth of certain
appropriations
“Article VIII, Section 22, of the
Texas Constitution limits the
biennial rate of growth of
appropriations from state tax
revenue not dedicated by the
Constitution to the estimated
rate of growth of the state’s
economy.”
Welfare Spending Limit
“Article III, Section 51-a, of the Texas
Constitution provides that the amount that
may be paid out of state funds for
assistance grants to or on behalf of needy
dependent children and their caretakers
(i.e., Temporary Assistance for Needy
Families [TANF]) shall not exceed 1 percent
of the state budget in any biennium.”
Debt Limit
“Article III, Section 49(j) of the Texas
Constitution limits the authorization of
additional state debt if in any fiscal year the
resulting annual debt service payable from the
unrestricted General Revenue Fund—which
excludes revenues constitutionally dedicated for
purposes other than payment of state debt—
exceeds 5 percent of the average annual
unrestricted General Revenue Funds for the
previous three years.”
The section also discusses a variety
of trends in spending, notably
trends in spending on health care,
and state workers.
A few highlights:
State Indebtedness
Even though Texas is restricted in
its ability to get into debt,
constitutional exceptions have
been made in order to provide
funds for dedicated items.
“Texas continues to have a low state debt
burden compared with other states, ranking last
among the 10 most-populous states in state
debt per capita in 2009, according to the U. S.
Census Bureau. The U.S. Census Bureau further
indicates Texas’ per capita debt burden was
$1,228 in 2009 while the U.S. average was
$3,404.
Texas had approximately $36.2 billion in state
bonds outstanding as of August 31, 2011.”
Figure 35 shows that debt service expenditures for the
2012–13 biennium are expected to exceed the 2000–01
biennial spending level by $2,328.4 million in All Funds,
or 248.5 percent. This increase is primarily related to
debt service requirements for debt issuances related to
highway improvements and water projects. Debt
service costs included in the state budget for the 2012–
13 biennium total $3,265.5 million, or 1.9 percent of
total appropriations.
2. REVENUE SOURCES AND
ECONOMIC OUTLOOK
This section digs deeply into where the
revenue for the state comes from.
It provides a comprehensive list of the
types of taxes and other funding
sources that exist in the state and how
much money is projected to be earned
from them.
The content of this section is
covered in the separate set of
slides on taxes in Texas.
But just so you have some idea of
where these funds come from,
here’s a graph that outlines it:
3. TEXAS AMONG THE STATES
This section runs through various
indicators of how Texas compares
with other states – including the 15
most populous states - and the
nation as a whole.
This material is also covered
elsewhere, but here are a few
things to chew on:
4. GENERAL GOVERNMENT
This section details how much it
costs the executive agencies in the
state to run. This does not include
those agencies which are covered
in separate sections, such as
education, health and human
services and criminal justice.
From the Fiscal Size-Up:
“General Government agencies provide a wide
array of public and state administrative support
services. Included in the General Government
functional area are executive branch
offices established by the Texas Constitution
such as the Governor, Comptroller of Public
Accounts, and the Attorney General . . . .
In addition to the executive offices, other General
Government agencies are responsible for oversight and
management of state debt; administration of employee
healthcare and retirement benefits; oversight of state
and federal election laws; preservation of the state’s
cultural and historic resources; claims administration
for veterans federal benefits and veterans’ education
and job training programs; management of information
technology and telecommunications services; oversight
of building construction and maintenance programs; as
well as administration of cancer prevention and
research programs.”
The section continues to describe
funding issues within each of the
agencies in the chart above.
5. HEALTH AND HUMAN SERVICES
This is the second largest area of
state government and includes the
Texas Medicaid program. 56% of
the funding for this section comes
from Federal funds.
The 2012-13 budget was $55.6 billion.
Health and Human Services is
covered more thoroughly in a
separate section.
6. EDUCATION
This is where most spending in the
state occurs. The 2012-13 budget
was $72.8 billion.
The Texas Education Agency falls
under this section.
Education policy is also covered in
a different section.
No need to go further here.
7. JUDICIARY
This section details all the funding
received by the judicial
department.
And its not much.
Only $643 million was spent on the
judiciary in the state.
Notice that the bulk of the funding
comes from General Revenue
Funds, and about 1/4th comes from
Other Funds.
The other funds are “comprised
mainly of criminal court costs
and civil filing fees.”
Most of the spending is on:
Judiciary Section, Comptroller’s
Department
Office of Court Administration,
Texas Judicial Council
Supreme Court of Texas
Court of Criminal Appeals
8. PUBLIC SAFETY AND CRIMINAL
JUSTICE
Much of the content of this section
is covered in the section on
criminal justice policy.
This outlines and describes the
agencies involved public safety and
criminal justice and their funding
sources.
From the document: “Eight state agencies and
commissions provide public safety and criminal
justice services: the Adjutant General’s
Department, the Texas Alcoholic Beverage
Commission, the Texas Department of Criminal
Justice, the Texas Commission on Fire
Protection, the Texas Commission on Jail
Standards, the Texas Juvenile Justice
Department, the Texas Commission on Law
Enforcement Officer Standards and Education,
and the Department of Public Safety.”
This is the third largest area of
spending in the state. The bulk of
the spending comes from general
revenue funds.
$11.5 billion
Here are links to the largest
agencies:
Department of Criminal Justice
Department of Public Safety
9. NATURAL RESOURCES
A significant amount of the wealth
generated in the state of Texas
came from, and continues to come
from, the natural resources found
within it.
This section details the agencies
that have been established to help
develop those resources.
2012-13 budget: $3.8 billion
“Natural Resource agencies play a major role in the state’s
economy and in maintaining a healthy environment for
Texans. State agencies in Texas charged with the responsibility
of influencing the management and development of these
resources do so through scientific research, education,
preservation, regulation, and remediation. The largest agency
in this function of state government is the Texas Department
of Agriculture, which works to make Texas the nation’s leader
in agriculture, fortify the economy, empower rural
communities, promote healthy lifestyles, and cultivate
winning strategies for rural, suburban and urban Texas. The
second largest agency in this function of government is the
Texas Commission on Environmental Quality, which
protects the state’s human and natural resources in a manner
consistent with economic development through the goals of
clean air, clean water, and the safe management of waste.”
The largest agency listed here is
the Texas Department of
Agriculture.
The second largest is the Texas
Commission on Environmental
Quality.
Notice the sharp drop in funding
for the Commission on
Environmental Quality.
This section also contains:
General Land Office
Veterans’ Land Board
Parks and Wildlife Department
Railroad Commission
Water Development Board
10. BUSINESS AND ECONOMIC
DEVELOPMENT
These agencies are held to provide
the basic services that allow for
business and economic
development in the state. Most
importantly it includes agencies
related to transportation, as well
as developing the workforce.
2012-13 Budget: $23.6 billion
This makes it the third largest
spending area in the state, which
can be taken as evidence of the
importance of business
development in the state.
From the document:
“Five state agencies provide services supporting
the Texas economy through business
development, transportation, and community
infrastructure. These agencies include the
Department of Housing and Community Affairs
(TDHCA), the Texas Lottery Commission (TLC),
the Department of Motor Vehicles (DMV), the
Texas Department of Transportation (TxDOT),
and the Texas Workforce Commission (TWC).”
Notice that they are primarily
funded by “Other Funds” and
Federal Funds.
Very little General Revenue Funds
are used for these agencies.
Read through the document for detail on
these programs. You notice that each tends
to have its own independent funding
source, or exists principally – as is the case
with the Department of Housing and
Community Affairs and the Texas
Workforce Commission – because of
incentives created by the national
government.
For a good look at what these
“other funds” look like, here’s a
description of the source of funds
for the Texas Department of
Transportation.
Note the amount of funding that
comes from State Highway Funds.
The next slide contains detail about
where its funding comes from.
Click here for a primer on funding
Texas highways from the LBB:
Peruse through the rest of the
material on your own.
But I’d appreciate input on why
The Texas Lottery Commission is
listed here. How does the lottery
help business and economic
development?
11. REGULATORY
This describes the funding
necessary to run the various
regulatory agencies in the state.
It also provides a good overview of
those agencies.
2012-13 budget: $677.8 million
“A wide range of industries and occupations are regulated
by the 24 regulatory agencies included in Article VIII of the
2012–13 General Appropriations Act (GAA). Regulated
industries include insurance, worker’s compensation, health
related occupations, non-health-related occupations,
telecommunications, electric utilities, securities, and parimutuel racing.
The appropriations and indirect costs for 20 of the
regulatory agencies are supported by fees generated from
the industries and occupations they regulate. These
agencies are subject to a special provision expressing
legislative requirements that agency revenues cover the
cost of agency appropriations as well as an amount equal to
other direct and indirect costs appropriated elsewhere in
the 2012–13 GAA.”
Notice that these are funded mostly by
dedicated funds. These are drawn from the
regulated industries.
It also creates the potential for regulatory
capture. This occurs when the interest
being regulated is able to capture the
agency that is to regulate it, which allows
the interest to regulate itself – which is a
very sweet thing.
The previous graph provides a
good overview of the regulatory
agencies in the state.
The document walks through each
of these agencies, so it gives you a
good looks at what they are and
do.
12. THE LEGISLATURE
2012-13 budget: $339.9 million
Almost all the funding come from
general funds. This is the smallest
area of spending in Texas
government.
This details how much each of the parts of
the legislative branch cost to run – or at
least how much the state chooses to fund
it.
This might lend support to the idea that
the state deliberately minimizes the
amount of money the state has to spend
on law making in order to retrain it.
And it provides a good additional
walk through the legislature.
That’s it.
Peruse the document on your own
if you want to get additional detail
about whatever aspect of Texas
government that might strike your
interest.