Friday, December 10, 2010

Texas Legislators Face Budget Deficit

With Texas lawmakers facing a several billion dollar budget deficit in the upcoming legislative session, it seems that the Legislative Budget Board (LLB) has its work cut out for it. Exactly what is the Legislative Budget Board? According to its web site, “The Legislative Budget Board (LLB) is a permanent joint committee of the Texas Legislature that develops budget and policy recommendations for legislative appropriations for all agencies of state government, as well as completes fiscal analyses for proposed legislation. The LBB also conducts evaluations and reviews for the purpose of identifying and recommending changes that improve the efficiency and performance of state and local operations and finances.”

Prior to the creation of the LBB in 1949, individual appropriations bills funded state agencies. In 1973 the LBB’s powers were expanded to include analyses of the performance of state agencies and the creation of fiscal notes to estimate the probable cost of proposed legislation and resolutions. The LBB is made up of the Lieutenant Governor, Speaker of the House, Chair of Senate Finance, Chair of House Ways and Means, Chair of House Appropriations, three appointed Senate members, two appointed House members.

The good news is that there is more than one way to come up with a budget. When Texas Legislators report to Austin in January, they will have three possible methods for creating a budget:
• Baseline budgeting,
• Zero-based budgeting, and
• Performance-based budgeting. Baseline budgeting begins with the existing budget as a starting point; zero-based budgeting starts the process from scratch; and performance-based budgeting begins by identifying the core functions of government, requiring agencies to rank their activities based on priority.

From 1973 to 1991 the LBB practiced zero-based budgeting, a process in which each state agency begins from zero and must justify every dollar budgeted. This method was also used successfully in 2003 during an economic situation similar to today, a multi-billion dollar deficit and recession, allowing legislators to balance the budget without raising taxes. Performance-based budgeting, while the preferable method on paper, requires more time and resources. Governor Perry, Lieutenant Governor Dewhurst, and Speaker Joe Strauss have already requested that state agencies identify a percentage of their current budgets to be cut, following the baseline budgeting method. As demonstrated in 2003, zero-based budgeting is an efficient and effective way to cut the budget.

Contact your legislator and let them know your opinion on the best way to handle the looming budget crisis.

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