Honorable Jane Nelson, Chair, Senate Committee on Finance
FROM:
Ursula Parks, Director, Legislative Budget Board
IN RE:
SB9 by Hancock (Relating to the constitutional limit on the rate of growth of appropriations.), As Introduced
No fiscal implication to the State is anticipated in the upcoming biennium.
The fiscal impact of expanding the application of the limit to all state appropriations would depend on the composition of state revenue in those biennia and future appropriation decisions by the Legislature.
The bill would amend the Government Code with regard to the constitutional limit on the rate of growth of certain appropriations.
The bill, in conjunction with a proposed constitutional amendment, would limit the biennial growth of appropriations subject to certification by the comptroller of public accounts under Section 49a(b), Article III, of this constitution, to the sum of 1) the rate of change in this state's population during the preceding state fiscal biennium, and 2) the estimated rate of inflation or deflation during the preceding state fiscal biennium.
Currently, Article VIII, Section 22 of the Texas Constitution limits 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. Section 316.002 of the Government Code, instructs the Legislative Budget Board to determine the growth of the state's economy by estimating the growth in Texas personal income.
The change from a limit applying the growth of personal income to one applying the sum of the estimated rate of change in the state's population in the preceding biennium and the estimated rate of inflation or deflation during that preceding biennium would likely reduce the allowable growth rate in appropriations for subsequent biennia.
For the purpose of illustration, the estimated rate of growth of personal income used to set the 2016-17 spending limit was 11.68 percent. The 2016-17 growth rate proposed by the resolution, based on population growth plus inflation growth during 2014-15, would be 4.86 percent based on population and inflation estimates in the Comptroller's Fall 2014 Economic Forecast.
The proposed amendment only would apply to appropriations made for the 2018-19 biennium and subsequent biennia.
The proposed constitutional amendment would be submitted to the voters at an election to be held November 3, 2015.
The bill would take effect on the date on which the constitutional amendment proposed by the 84th Legislature concerning the limitation on the rate of growth in appropriations takes effect. If the amendment is not approved by the voters, this bill has no effect.
Local Government Impact
No fiscal implication to units of local government is anticipated.