Texas' two-year budget takes roughly twice that amount of time to prepare, produce and administer. The budget is developed and prepared in the first year, discussed and approved by the Legislature in the second year, and is implemented over the next two years. Below is a guide to the Texas budget process.
Legislative Appropriation Requests
- In the year preceding the legislative session, the Legislative Budget Board (LBB) requests from each state agency a Legislative Appropriations Request (LAR), which details the funding agencies are seeking from the legislature.
- Following their submission, hearings are held on each agency's LAR to discuss their requests.
- The LARs help inform legislators decisions in preparing the base budget.
Constitutional Spending Limits
The Texas Constitution includes four limitations on state spending:
- Debt limit: limits the authorization of additional state debt to ensure the debt service does not exceed five percent of general revenue funds for the previous three years.
- Welfare spending limit: state funds for assistance grants for needy children and their caretakers cannot exceed more than one percent of the state budget.
- Pay-as-You-Go limit: requires that general revenue appropriations are within the available revenue to the state as estimated by the Comptroller's Biennial Revenue Estimate.
- Spending limit: limits the rate of growth from one biennium to the next.
The Base Budget
- The general appropriations bill is filed in both the Texas House of Representatives and the Texas Senate by the Chairs of the Senate Committee on Finance and the House Committee on Appropriations.
- After it is filed, the bill is sent to the Senate Committee on Finance and the House Committee on Appropriations.
- The committees hold hearings and receive testimony from state agencies regarding their appropriations requests .
- Citizens are also entitled to appear before the committees to offer testimony on a proposed appropriation.
Markup and Committee Reports
- Following the hearings, the committees begin "markup" to make changes to the budget.
- After the changes have been made, the committees issue an altered bill as their committee report.
- These reports are discussed, voted upon and eventually passed in each chamber of the Legislature.
- However, because there are almost always differences between the Senate-passed and House-passed versions of the budget, a conference committee must be convened to resolve the differences.
Conference Committee and Final Approval
- Following the passage of the committee reports in each house, the Lieutenant Governor and Speaker of the House appoint members to serve on a conference committee to resolve differences between the two budgets.
- The conference committee meets and works out a general appropriations bill acceptable to all members, and then adopts a conference committee report.
- The conference committee report is sent back to both houses for approval.
- After the conference committee report has been approved by both houses, it is sent to the Texas Comptroller, who certifies that the budget is within the spending limit.
- Once the Comptroller has certified the budget, it is sent to the Governor for signature.