Budget-Writing Committees Continue Their Work

February 26, 2021

Legislative News

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Following the winter storm's disruption, the Senate Finance Committee continued its hearings on SB 1, and the House Appropriations Committee began its work, holding its first hearings. Highlights of this week's hearings of relevance to counties are summarized below by committee.

House Appropriations Committee

House Appropriations began its deliberations with brief overviews of Comptroller Glenn Hegar’s Biennial Revenue Estimate, the balances available in the Economic Stabilization Fund, the House Budget Recommendations, the state and federal response to COVID-19, and major state budget drivers such as the Foundation School and Medicaid programs, the state’s two pension systems, transportation and behavioral health.

Hegar stated that the updated revenue forecast he will provide the Legislature in May could be sufficient to fund the baseline budgets proposed by each chamber. Both the House and Senate budgets as introduced exceed Hegar’s estimate of available revenue by $7 billion. The pay-as-you-go limit prohibits the General Revenue Fund budget from exceeding the comptroller’s estimate of available revenue.



Hegar stated that the 5% reductions required by state leadership in May 2020, once captured in the supplemental appropriations bill the Legislature typically enacts to close the books on the current budget, would eliminate the deficit in the two-year budget that ends Aug. 31, 2021. Hegar also pointed to the replacement of general revenue funds by federal relief funds for pandemic-related expenses in the current and 2022-23 budgets, and the balance in the Economic Stabilization Fund as additional tools the Legislature could use to bring spending within the pay-as-you-go limit. Finally, Hegar noted he had yet to analyze what the winter storm has done to the state’s economy or revenues and use historical disaster data to estimate how long the recovery may take.

During testimony provided by Sarah Hicks, Gov. Greg Abbott’s budget and planning director, and Chief Nim Kidd from the Texas Division of Emergency Management (TDEM), members asked about the allocation and distribution of Coronavirus Relief Fund (CRF) money to local governments. According to Hicks, the Governor’s Office did outreach to local governments concerning the availability of CRF monies through the Texas Association of Counties and the Texas Municipal League. Members also asked about the documentation required by local governments for reimbursement and how quickly reimbursement was received. Of the $584 million in reimbursements requested by cities and counties below the 500,000 population threshold required to receive CRF payments directly from the U.S. Treasury, $301 million in payments have been disbursed to date.

The House baseline budget includes $8 billion for behavioral health services across multiple state agencies. Not funded in either the House or the Senate baseline budgets is $276.5 million to complete construction of over 500 beds at San Antonio and Austin state hospitals. Increasing the bed capacity at state hospitals may provide relief to local mental health authorities and county jails housing individuals who require mental health care.

On Thursday, Feb. 25, Appropriation’s subcommittees will begin meeting. The subcommittees will hold public hearings at which state agencies, higher education institutions (HEIs) and courts will testify and public testimony will be heard. This differs from the Senate Finance Committee, where the practice has been for the entire committee to hear testimony from all state agencies, HEIs and courts.

Senate Finance Committee

Senate Finance heard testimony from HEIs this week including the Texas Forest Service and TDEM, which are each administratively attached to the Texas A&M University System. The Committee also heard testimony from the Health and Human Services Commission (HHSC), and the Departments of Family and Protective Services and State Health Services on Thursday, Feb. 25.

Funding for the Disaster Recovery Loan Program, which provides short-term loans for recovery projects to eligible jurisdictions, continues at $10 million – the amount appropriated by the 86th Legislature for the 2020-21 biennium. Since none of the funding for the program in the current budget has been expended, the unexpended balance is reappropriated for the same purpose in the House budget recommendations.

According to the Texas Forest Service, volunteer fire departments (VFDs) are the first responders to fires in 76% of the communities in the state. The agency asked the committee to restore funding for the 5% reductions built into the agency’s baseline request and an additional $20 million, including 50 new firefighters, to increase the state’s firefighting capacity. Of note to counties with VFDs, about $2.6 million of the requested funding to restore cuts represents grant funding for VFD firefighter insurance, equipment and training grants.

During the discussion with HHSC, Senators Perry (R-Lubbock), Lucio (D-Brownsville) and Kolkhorst (R-Brenham) voiced support for additional forensic and civil commitment beds at state hospitals. Sen. Perry’s comments focused on rural Texas, directing the agency to prioritize additional mental health resources for rural counties and fully implement Senate Bill 170, 86th Legislature.

SB 170 was supposed to return rural hospitals to cost-based reimbursement whereby they are paid full cost to treat Medicaid patients. According to the Texas Organization of Rural & Community Hospitals, Texas leads the nation in rural hospital closures.

Both Senators Kolkhorst and West (D-Dallas) asked about Medicaid expansion, what it would cost the state and the number of Texans who may be affected. According to HHSC staff, about 900,000 of the 2.9 million Texans HHSC estimates are without health insurance, are Medicaid-eligible. The estimated annual cost, making certain assumptions, would total $7.1 billion in All Funds and $720 million in General Revenue funds in fiscal year 2026. Sen. Nelson warned that any Committee discussion of Medicaid expansion should involve a single set of numbers, rather than various estimates provided by different senators.

For more information on this article, contact Zelma Smith.