Analysis: Legislators start with a $5.3 billion difference of opinion

Texas Tribune

Ross Ramsey

Jan. 18

• In their first-day numbers, the Texas Legislature's two chambers didn’t even agree on the size of the current budget. The House baked in some supplemental expenses that the Senate left that out.  

The Texas Senate and the Texas House have done their big reveal on the state budget — more of a ring-and-run in a Capitol giving most of its work week to a national holiday and a Trump inauguration — and they are billions of dollars apart.

They have 18 weeks to play this out, but the first days of the legislative session offer a decent preview of the battle ahead.

So far, this finance puzzle has three pieces.

• Texas Comptroller Glenn Hegar released a Biennial Revenue Estimate, telling lawmakers they will have $104.9 billion in state funds in 2018-19 — less money to spend than two years ago. He said there would have been $4.7 billion more than that, had lawmakers and voters not dedicated that amount to transportation projects. Hegar said the state’s Rainy Day Fund is on its way to a record-busting $11.9 billion balance. And he said lawmakers have $1.5 billion in surplus funds for the current or the next budget.

• The Senate, which gets to lead on the budget talks this year — it alternates from session to session — opened with a relatively stark offering, which includes general state spending of $103.6 billion and overall spending, which includes federal and other funds, of $213.4 billion.

• The House quickly followed with a $221.3 billion budget that includes $108.9 billion in general state spending. That’s $5.3 billion more than the Senate’s proposal, and it’s also considerably higher than Hegar’s outer limit.

It’s important to remember that the budget has to balance before it’s signed — but it doesn’t have to balance when it’s proposed.

The House and Senate are coming at this from different directions. The Senate approach is to put lots of programs in peril and then figure out which ones need the most help, if any at all. Its budget’s biggest scrimps are in health and human services, where it proposed $2 billion in cuts; in public education, $1.5 billion in cuts; and in higher education, $690 million in cuts. The actual cuts would be bigger in health and human services, where costs are driven in part by population increases. The Senate’s proposed budget doesn’t include any money for that. The Senate does account for population growth in schools, but counts on increasing local property values for much of that funding.

The House’s approach puts the spending needs in front, which would force lawmakers to find the money or cut the programs. They would spend $1.5 billion more than the Senate on public education, contingent on changes in school finance laws, and the House budget accounts for growth in Medicaid caseloads where the Senate's does not. House leaders say they don't have higher taxes in mind, but would balance their budget with a combination of cuts, deferrals (a fancy word for regularly employed government accounting tricks) and the state’s burgeoning Rainy Day Fund.

That fund started as a cash-flow device, designed to grow in good times for use in bad times — the way chipmunks use nuts. It has become a sacred bovine in recent years, with lawmakers saying that money shouldn’t be used for ongoing expenses; they think of it more like a savings account than a cash-flow account. The House appears ready to challenge that.

This was state Rep. Drew Darby, R-San Angelo, speaking to reporters on Tuesday: “This is a time where we could use some money to smooth out those rough edges of a cyclical budget, of trying to plan two years in advance and try to allocate resources two years. [The Rainy Day Fund] was designed to accommodate these times that we're in right now. It has been raided and reduced to near zero three times in the past. ... It's become this scared cow, if you will, that seems to be untouchable, and I think we need to rethink that.”

There’s more to come. For one thing, lawmakers think the current budget is at least $1.5 billion short of what it requires — in other words, that expenses and emergencies have run that much higher than expected when the budget was put together in 2015.

In their first-day numbers, the two chambers didn’t even agree on the size of the current budget. The House baked in some of those supplemental expenses, adding $1.2 billion for Medicaid and the Children’s Health Insurance Program. The Senate left that out.

That’s the setup. Here’s the procedure: The Senate will pass its budget and send it over to the House, which will pass their version and send it back. Each side will appoint negotiators to hammer out the differences, and the result will be the next state budget.

They’re supposed to finish before the end of the regular legislative session, on Memorial Day. They have to finish — to agree, that is — by Aug. 31 — the last day of the current budget year.

How will Texas energy — and environment — fare under Trump?

President-elect Donald Trump may be seen as a boon for fossil fuels and a burden for renewables. But energy experts and clean energy groups say his victory may not be a win for Texas oil and gas — or a totally bad thing for wind and solar.

November 12, 2016

by Kiah Collier, The Texas Tribune

Donald Trump’s upset win this week was generally cheered by the Texas oil and gas industry and lamented by environmentalists who found a major ally in the Obama administration amid long-suffering efforts to protect the state’s air and water and promote renewable energy sources. 

The reactions largely make sense: Trump has vowed to lift restrictions on oil, gas and coal production and greenlight controversial energy infrastructure projects like the Keystone XL pipeline. The man he has selected to lead his Environmental Protection Agency transition team is a climate change skeptic. And he has indicated he will repeal or abandon a slew of environmental regulations President Barack Obama has rolled out during his final term in office, including a state-by-state plan to fight climate change by shifting away from coal power to natural gas and renewables — a policy Texas is challenging in court. 

Trump also has criticized wind power for killing birds and railed against renewable energy subsidies. 

But energy experts and renewable energy groups say Trump’s victory may not be a win for the Texas oil and gas industry — or a totally bad thing for wind and solar. It all remains to be seen, though, they say, given Trump’s lack of detailed policy proposals and penchant for changing his mind. 

“I think anybody that tells you anything specific doesn’t know what they’re talking about,” said Blaine Bull, a spokesman for the Texas Clean Energy Coalition, a group that supports natural gas, solar and wind energy. “There is the paradox that is Donald Trump.” 

While Trump’s policies have been vague for the most part, the places where he has been certain are actually problematic for the Texas oil and gas industry, said Michael Webber, deputy director of the Energy Institute at the University of Texas at Austin. 

For one, Webber said, the main priority of Trump’s energy plan is to help revive the coal industry, whose biggest competitor is natural gas — and Texas is the nation’s top natural gas producer.  

“If Trump does market intervention to protect coal from natural gas, that is bad for natural gas, and natural gas is a major part of Texas industry,” Webber said, noting this is better news for big coal-producing states like West Virginia.  

The natural gas industry is also “a major beneficiary” of rules like Obama’s Clean Power Plan that seek to clean up carbon emissions from the power sector, Webber said, “so by releasing or removing some of those regulations in protecting coal would be bad for natural gas.” 

The Electric Reliability Council of Texas, which says the power plan would lead to higher power prices and threaten electric reliability, would disagree with that, as would most of the state’s Republican leaders, who have painted it as tremendous federal overreach. 

Austin lawyer Michael Nasi, who represents power generators who rely on coal, said such regulations also have increased the cost of power generation for natural gas in some cases and “all warrant serious revisitation.” 

Trump surely will change many of the Obama administration’s new environmental regulations, which were mostly put in place via executive order or Environmental Protection Agency rulemaking, said Bull of the energy coalition. That is clearly bad news for environmentalists.  

Beyond that, though, he said it’s almost impossible to know what to expect because of Trump’s personality and the many mixed messages he espoused on the campaign trail.  

“One week he says 'Drill, baby, drill,' and then the next week he says, 'Well, you know, I think local voters ought to decide whether they want drilling in their communities,'” he said. “So it’s like, 'Alright, where he’s going to be?' He may pleasantly surprise those who are interested in clean energy.”  

And if Trump doesn’t renew subsidies when they expire in a few years, Bull said it may not matter much — at least for wind, which is expected to be fairly profitable by then. 

“There’s money to be made in solar and wind, so perhaps he sees that,” he said. 

That hope was reflected in a statement by The American Wind Energy Association following the election that said it was “ready to work with President-elect Donald Trump and his administration to ensure that wind power continues to be a vibrant part of the U.S. economy.” 

Kathleen Hartnett White, a Trump energy adviser who formerly chaired the Texas Commission on Environmental Quality and is being considered for a position in his administration, said that — like her — the president-elect is focused on the importance of “taking advantage of the vast energy resources we have as a means of stimulating economic growth and job creation and human welfare.” Also, she said, dialing down regulation in collaboration with Congress. 

 But Webber said Texas isn’t going to benefit much from Trump’s proposal to lift restrictions on energy production because that is centered on increasing access to federal lands, which are limited in the state. While production likely would increase in states that have more federal land, that would mean more product on the market and lower prices that would hurt profitability of Texas oil and gas operators. 

"So oil and gas companies in Texas that are active in many states might benefit in those other states, but the Texas oil and gas production might have a disbenefit," he said. 

And then there’s the border wall.  

 Texas sells millions of dollars’ worth of natural gas to Mexico every year, and Mexico is looking to expand its own energy production. If Trump throws up a physical, or figurative, barrier, Texas could lose out, he said. 

“Oil and gas companies have been pushing for open markets for decades,” he said. “The wall is a step in the other direction.” 

    This article originally appeared in The Texas Tribune at https://www.texastribune.org/2016/11/12/how-will-texas-energy-and-environment-fare-under-t/.

Trump win leaves Texas health leaders wondering about Obamacare repeal

Dallas Morning News

November 10, 2016

Written by Sabriya Rice, Business of Healthcare Reporter

Industry groups in Texas are trying to brace for the impact of a potential Obamacare repeal, but say they have few details to go on.

A "full repeal" of the Affordable Care Act has been a cornerstone in the campaign of now president-elect Donald Trump, who has said he may ask Congress to do so within his first 100 days of office.

Urgency to ditch the health care law was reiterated Wednesday by GOP constituents.

It's “high on our agenda," Senate Majority Leader Mitch McConnell, R-Ky., told reporters. “I would be shocked if we didn't move forward and keep our commitment to the American people."

However, like many across the nation, providers  are seeking more details about the nuts and bolts.

“There is considerable uncertainty about what the future of health care looks like,” said Ted Shaw, president and CEO of the Texas Hospital Association.

Trump needs to quickly “put some meat on the bones,” added Joel Allison, president and CEO of Baylor Scott and White Health.

Still, the need for change has been evident, especially given the tumultuous year for both providers and consumers. Texas, which has the highest number of people without health insurance in the country, remained one of a handful of states to not expand Medicaid.

Insurance companies cited major financial losses and reduced their options for individual marketplace plans in Texas or exited altogether. Meanwhile, consumers are facing fewer affordable health insurance options amid soaring premiums, co-pays and other out-of-pocket costs.

“Health care has to transform, no matter who’s in the White House,” said W. Steve Love, president and CEO of the Dallas-Fort Worth Hospital Council. But with early projections pointing to democratic nominee, Hillary Clinton, emphasis had been on improving the health care reform law, not repealing.

A repeal that does not include a replacement plan, which includes the ACA provisions that gained widespread support and reduced the number of uninsured, could be problematic, leaders say.

For example, the elimination of pre-existing condition clauses, the focus on prevention, and allowing parents to keep their children on their health insurance policy until age 26 were generally seen as positive.

The law also provided incentives for providers, that supported price transparency, innovation and encouraged them to move away from the fee-for-service structure that rewarded volume instead of value.

"I wouldn't expect that to stop," said Trevor Fetter, chairman and CEO of Tenet Healthcare.  "But we've also been pursuing those things because that is the direction that health care is going in, and not just because of the Affordable Care Act."

Trump has said he will work with Congress to roll out a series of reforms to broaden health care access, make it affordable and improve the quality of the care.

House Republicans, led by Speaker Paul Ryan,  unveiled a plan earlier this year to replace the law.

A positive is that there’s now an opportunity to go beyond just support or dislike of Obamacare, Shaw said. “Instead, we must fully invest ourselves in what it means to be healthy, what it means to provide health care, and how we want to pay for it.”

Any plan to change the law would also be subject to the legislative process, which requires support of both the House and the Senate.

“So, there’s going to be a lot of dialogue,” Allison said.

But even without a lengthy repeal, executive power could immediately “bring Obamacare to its knees,” warns Seth Chandler, a professor at the University of Houston Law Center.

“Trump has a big stick to wield to get his way with respect to health care,” he said. “And his advisers are going to make him aware of the stick. I’d be surprised if he doesn’t use it in some way.”

In an opinion piece posted Wednesday on Forbes.com, for example, Chandler pointed to “cost-sharing reductions,” or payments given to insurers to help keep deductibles and co-payments low for marketplace plans. 

If Trump decides to withhold that money, insurers could start to drop silver plans sold during the 2017 benefit year.

http://www.dallasnews.com/news/2016-presidential-election/2016/11/09/trump-win-leaves-texas-health-leaders-wondering-obamacare-repeal

Democrats pick up four Texas House seats

      by Edgar Walters, The Texas Tribune

      November 8, 2016

Texas Democrats notched small gains as the minority party in the 150-member Texas House Tuesday, ousting incumbent Republicans in four races, according to unofficial returns. 

Preliminary results showed Republican incumbents Reps. John Lujan, Rick Galindo and Gilbert Peña losing their re-election to Democratic challengers who had previously faced off against them in recent elections. Democrats Tomas Uresti, Philip Cortez and Mary Ann Perez won the three respective seats, knocking off half of the House's six Hispanic Republicans in their closely-watched rematches. 

And incumbent Rep. Kenneth Sheets of Dallas fell to Democratic challenger Victoria Neave by fewer than 900 votes, marking the conclusion of the state’s most expensive House race. 

Incumbent House Republicans elsewhere were able to fend off Democratic challengers in other tight races. Reps. Linda Koop of Dallas, Cindy Burkett of Sunnyvale, Rodney Anderson of Grand Prairie, Wayne Faircloth of Galveston, J.M. Lozano of Kingsville and Sarah Davis of West University Place in Houston each secured enough votes to return to the Legislature's lower chamber for the 2017 session. 

Only about a dozen races in the Texas House were considered competitive this year, mostly in districts clustered in and around Houston, San Antonio and Dallas-Fort Worth. In the weeks leading up to Election Day, Democrats were banking on the prospect that a poor performance by Republican presidential nominee Donald Trump, higher voter turnout for a presidential election and the state's ongoing demographic shift can coalesce into a handful of victories for the underdog party. 

While Democrats appeared likely to gain a handful of seats, it is unlikely to make much of a difference in the overall politics of the Texas Legislature's lower chamber. 

For Republicans in close races, a central challenge of the campaign cycle was to walk the tightrope of running on a conservative political record without aligning too closely with Trump. Trump appeared to be leading Clinton overall late Tuesday, but the Republican presidential nominee secured only a 9-point lead in the Lone Star State, a smaller margin than top-of-the-ticket Republicans have historically enjoyed in Texas. 

The Texas House currently has 99 Republicans, 50 Democrats and one independent. Democrats typically have seen their ranks shift up or down by about half a dozen every two years. After the 2012 election, Democrats sent 55 members to the Texas House. After the 2010 election, 49 Democrats were sworn in to the Legislature's lower chamber. 

    This article originally appeared in The Texas Tribune at https://www.texastribune.org/2016/11/08/texas-house-race-results-election-day-2016/

Analysis: Texas politicians merely echoing the message they’re receiving

      by Ross Ramsey, The Texas Tribune

      November 2, 2016

Everybody in Texas politics seems to be messing with each other. 

Former Gov. Rick Perry encouraged U.S. Rep. Michael McCaul to run against Ted Cruz, according to sources who talked to the Trib’s Abby Livingston and Patrick Svitek. Lt. Gov. Dan Patrick suggested a special session on public school finance, only to be shushed by Gov. Greg Abbott, who said the Legislature has “plenty of time” to address big issues. 

That session starts in January. Sounds like it’s going to be a lot of fun. 

Don’t get too upset with these folks — the political professionals, especially the Republicans, are getting mixed signals from their voters. The noise at the top reflects the noise in the ranks and the complexity of the problems the state is wrestling. 

Patrick’s point, he said later, wasn’t that he wants a special session of the Legislature, but that he thinks it will take one to cook up a solution to the perennial gnarly problem of paying for public education in the state. The Texas Supreme Court ruled this year that the current setup is constitutional, but also said in any number of ways that it’s a real mess. 

State funding per student has dropped over the last decade. Local school property taxes have risen because of that shifting load and because property values in parts of the state have risen rapidly. The state also has to make sure that students have access to decent education no matter what part of the state they’re in and no matter what the local economic situation is. 

Typically, the courts force the Legislature’s hand, forcing it to choose between state tax increases, local property tax increases and cuts in school spending. With a court ruling to strengthen their spines, the politicians have been able to sell voters on a solution — usually a combination of higher state spending, temporarily lower property taxes, and a higher, more balanced level of spending. 

Nothing is forcing their hand now, and some — Patrick among them, apparently — think it would take the focus and pressure of a special session to squeeze a finance plan out of lawmakers. 

Patrick is also stirring on other fronts, telling businesses and others that he intends to push for regulation of which public facilities — restrooms, locker rooms and the like — transgender people can use. That gets mixed reviews from most Texas voters, but the Republicans — Patrick’s base — are clearly on his side, according to the latest University of Texas/Texas Tribune Poll. 

Republican voters have taken sides; Democratic opinions remain too fuzzy to send that party’s lawmakers a clear signal. At the same time, the issue has raised objections from business and sporting interests in other states and could run into opposition when the Texas Legislature takes it up next year. 

That puts some Republicans in a bind, with voters on one side and otherwise friendly businesses on the other. 

The other squabble in the headlines is a pure piece of politics, but it opened an argument that revealed some differences within the conservative ranks. 

Perry and Cruz both ran for president. Perry was out before the voting started. Cruz was the second-to-last competitor to Donald Trump to get out of the race (John Kasich of Ohio was the last one). 

That puts some Republicans in a bind, with voters on one side and otherwise friendly businesses on the other.

Cruz’s final marks on the race were less than spectacular. He spoke at the GOP’s national convention but declined to endorse Trump, angering Republicans who wanted to pull the party together behind a nominee and then move forward to try to beat Hillary Clinton. 

Cruz, having said his position was a matter of conscience and personal honor, reconsidered and finally endorsed Trump last month. But that was right before the salacious recording of Trump and Billy Bush of Access Hollywood was made public — a revelation that shocked some Republicans away from Trump and made Cruz’s change of heart seem ill-considered. 

At the same time, McCaul, an Austin Republican who is the second-wealthiest member of Congress, acknowledged he was being encouraged to take a look at the U.S. Senate, what with Cruz coming up for re-election in 2018. 

When Perry was outed as one of those encouragers, conservatives who view McCaul as a moderate leapt to Cruz’s defense. McCaul didn’t jump into the latest fight, but said last week that the state needs someone in the Senate who doesn’t have his or her eye on their next perch. 

"I think he's spent a lot of time since Day One running for president," McCaul said of Cruz. "I think we deserve somebody in the Senate who is going to be representing the interests of the state of Texas." 

Republicans in the latest UT/TT Poll seem solidly behind Cruz, to a point: They weren’t asked whether they would prefer him or someone else in the next Senate race, but 63 percent said they have a favorable opinion of their junior senator. On the other hand, 81 percent of Democrats have an unfavorable view of Cruz, which explains some of the political stirrings on their end of the woods. 

Wonder why your elected officials seem so confused? Look in the mirror, Texas. 

This article originally appeared in The Texas Tribune at https://www.texastribune.org/2016/11/02/analysis-texas-politicians-merely-echoing-message-/