Honorable Jim Pitts, Chair, House Committee on Appropriations
FROM:
Ursula Parks, Director, Legislative Budget Board
IN RE:
HB652 by Howard (Relating to consideration of certain appropriations in determining the constitutional biennial appropriations limit.), As Introduced
Passage of the bill would have a significant state fiscal implication in that it would exempt appropriations from the Economic Stabilization Fund from the Article VIII spending limit calculation. As potential appropriations from the Economic Stabilization Fund in FY 2014-15 currently count against the spending limit, exempting the ESF appropriations provides increased overall appropriations capacity while remaining within the spending limit.
The bill would amend Section 316.002 of the Government Code to require that appropriations of state tax revenues from the Economic Stabilization Fund (ESF) are appropriations of state tax revenues dedicated by the constitution for the purposes of implementing the restriction on appropriations in Article VIII, Section 22 of the constitution, commonly referred to as the spending limit.
The spending limit restricts the biennial growth of appropriations from state tax revenue not dedicated by the constitution to the estimated rate of growth of the state’s economy. The current spending limit methodology does not classify revenues in the ESF as constitutionally dedicated because revenues in the fund can be appropriated at any time for any purpose with a two-thirds vote under Article III, 49-g subsection (m) of the constitution.
Changing this interpretation would prevent appropriations from the ESF from being restricted by the spending limit. Additionally, during biennia when there are appropriations from the ESF, exempting ESF appropriations from the spending limit calculation would result in freed up capacity under the spending limit for appropriations financed with state tax revenues not dedicated by the constitution.
The bill would take effect on September 1, 2013.
Local Government Impact
No fiscal implication to units of local government is anticipated.