The Texas House has knocked out the deficit in this year's budget and now turns to the next two years.
House lawmakers are set to take up the budget for 2012-13 on Friday. The proposal is $23 billion less than was spent in the current biennium in state and federal funds.
With almost 400 amendments to slog through, the debate is expected to last well into the weekend before a vote is taken.
The state is facing a multi-billion dollar revenue shortfall and Republican leaders have vowed to balance the budget with a cuts-only approach, without raising taxes.
For the House plan, that means public schools will be short about $8 billion and Medicaid is underfunded by more than $4 billion.
The plan cuts full-day pre-kindergarten, teacher incentive pay, college financial aid and numerous other programs.
The proposal cuts Medicaid reimbursement rates by 10 percent. That's on top of 3 percent rate reduction that state leaders requested this year. The federal-state Medicaid health care program serves 3.1 million Texans -- mostly children, pregnant women and adults with disabilities.
For nursing homes, the cuts could come closer to 33 percent because of recent changes in the federal-state funding formula. The state's share has increased, but budget proposals are not paying for that increase. Experts say that could jeopardize 45,000 residents in the state's 550 nursing homes that depend on Medicaid.
The plan also reinstates funding to four community colleges that had been set to have their funding cut off. Those cuts would instead be evenly distributed among all community colleges in Texas.
The Senate is working on its own version of the budget and plans to spend more billions more on education. That sets up a budgetary battle that will likely stretch into the final days of the biennial legislative session -- or force a special session this summer.