Speaker Straus Wants to End the Practice of Fund Consolidation

After intense negotiations in the last hours of the session, both the House and Senate adopted the recommendations of the budget conferees for SB 1, which appropriates $197 billion for the 2014-15 biennium (beginning Sept. 1, 2013).

July 19, 2012
By Paul K. Emerson, TAC State Financial Analyst
Legislative News

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Earlier this July, Texas House Speaker Joe Straus made a rare appearance before a House Subcommittee on Appropriations and spoke against the longstanding practice of diverting dedicated accounts and not properly using the money for its intended purpose.
This unique accounting practice is known as funds consolidation and has been used over the past 20 years to balance the state budget. By law, the state comptroller must certify that the state budget is balanced. Last legislative session, $4.9 billion in funds consolidation was used in certifying the budget. These dedicated funds (more than 200) have accumulated huge balances over time.
Even though Straus acknowledged the difficulty of eliminating the fund consolidation practice, especially when the state is facing another possible shortfall next session, he asked the following questions and made the following recommendations to the committee:
Whether the Legislature should continue the practice of having dedicated funds;
What to do with all the excess money when the fees hit their revenue targets;
Set a time frame on moving to a more transparent and honest system that distributes these fees for their intended purpose.

Straus also noted that during his first term as speaker, the Telecommunications Infrastructure Fund (TIF) was eliminated, since this particular dedicated fund out-lived its usefulness. TIF imposed a .50 cent collection on every land line and cell phone bill.
Below is a list of the top 10 General Revenue-Dedicated accounts for Fiscal Year 2012-13 certification. The second chart shows how the General Revenue-Dedicated accounts have grown over the past 20 years.

To see a complete list of dedicated accounts used last session, visit http://www.window.state.tx.us/finances/pubs/use_of_gr_ded.
The TAC County Information Project has also prepared a 12 page document listing various General Revenue-Dedicated funds that monetarily impact counties.
For more information, contact Paul Emerson, TAC state financial analyst, at (800) 456-5974.