Hegar Increases Revenue Estimate, Giving Texas Lawmakers More to Spend on Schools, Retired Teachers

AUSTIN -- Comptroller Glenn Hegar on Tuesday increased his revenue forecast, providing a possible fiscal lubricant to ease education-spending frictions between the House and Senate as Gov. Greg Abbott's special legislative session neared an end.The Republican tax collector's addition of nearly $196 million of new money for the upcoming budget cycle, on top of the almost $42 million he said last month would be available, was especially welcome news for House GOP leaders.They have tentatively acceded to a Senate demand that lawmakers pay for giving more money to school districts and the health care plan for retired teachers through the Senate's preferred accounting gimmick. It is less than half the size of one favored by the House.House education-spending negotiators are expected to argue that the bump in Hegar's revenue estimate is large enough for lawmakers to pay for a $212 million softening of financial hits to retired teachers with cash - and without resort to a Senate-favored delay in Medicaid payment to insurers.That would increase pressure on Senate leaders and education-bill negotiators to increase the amount they're willing to give public schools immediately. The vehicle would be two bills tweaking school-finance formulas that are going to conference committee Tuesday.A narrowing gapThe House wanted $1.8 billion more for districts in the two-year budget cycle that begins next month. Late Monday and early Tuesday, the Senate approved $351 million more. The "deferral" of state payments to Medicaid managed-care organizations would allow as much as $800 million in additional school spending.The House will demand it all be tapped, though it's unclear if the Senate will go along.Using both pots of money would increase spending by about $1 billion. That may draw push-back from fiscal hawks and tea party adherents, who have a sympathetic audience in Lt. Gov. Dan Patrick and key GOP senators. Also, conservative education activists are demanding a thorough review of school-funding formulas before big new money is plowed into public schools. School defenders and educator groups, though, say the state is steadily reneging on funding its share of public schools. Lawmakers haven't yet made up for 2011 spending cuts, they say.However it's resolved, the special session must end by midnight Wednesday.Highway fund diversionsHegar attributed his rosier revenue estimate to better news about the economy and tax receipts."I now estimate a total of $237.2 million available for general-purpose spending in the 2018-19 biennium," he wrote Abbott, Patrick, Speaker Joe Straus and the other 180 lawmakers.Hegar cautioned that the past two months of robust increases in sales-tax collections won't ease a tight budget for general-purpose spending in the 2018-2019 cycle that starts Sept. 1.The improvements simply helped him hit his sales-tax target for the cycle just ending, Hegar said.Besides, because of lawmakers' and voters' decision to shift billions in sales tax from the general budget to roads, better sales-tax revenues for now will just go to the highway fund, he noted.It would lessen the hit from a Senate-backed accounting ploy on the timing of fund shifts approved in this year's regular session, though. That slightly would improve budget writers' predicament in the 2019 session.In a statement to reporters, Hegar cited first-quarter gains in the national economy, new signs of strength in labor markets and improved collections of several state taxes, especially the business-franchise tax.noted.All three "were contributing factors to an improved economic forecast," he said. "Recent improvements to the economic outlook warrant upward revisions to some revenue streams for fiscal 2018 and fiscal 2019."  Continue reading...