STATE’S BUDGET RELIES ON DIVERSION

By Peggy Fikac – San Antonio Express-News

AUSTIN — Nearly $3.7 billion in levies collected for everything from fighting air pollution to helping low-income people with their electric bills to funding trauma care instead will help balance the state's upcoming two-year budget.

The money is largely collected through fees and fines that by law are dedicated to a particular purpose. If lawmakers do not spend the money on those purposes, however, the balances become available to spend on other programs.

“It's kind of like having your (household) budget laid out and spending part of your food money on entertainment, or vice versa,” said Dale Craymer, chief economist for the Texas Taxpayers and Research Association. “It's a backdoor way to undedicate the money.” If the money remains committed to its intended purpose, he said, “something else in the budget has to give.”

In some cases, unspent balances in dedicated accounts over years have grown to hundreds of millions of dollars.

“We're generating funds for a good purpose. We're diverting the funds — without telling people — for general purposes. And then we say we're not taxing. Well, government is lying,” said Rep. Sylvester Turner, D-Houston, who said such levies amount to “a tax by misrepresentation.”

The biggest unspent balance that will be used to help certify the $182 billion state budget for the two-year period that starts Sept. 1 is $670.7 million accruing in the System Benefit Fund. The program, championed by Turner, imposes a fee on electricity customers in competitive retail markets including Houston, Dallas-Fort Worth and most of the Rio Grande Valley to provide a May-September discount for low-income customers. The state will spend $258.9 million from the fund over the next two years.

“It's just a sinister way of keeping money intended for the poor in the budget to certify the budget. It is a tax on the poor,” Turner said.

Among other big balances, $331.3 million will be unspent from the main account that reimburses hospitals for uncompensated trauma care.

A total of $150 million will be allocated from this fund over the next two years, although hospitals reported about $225 million in uncompensated trauma care in fiscal 2009 alone.

Seeing the funds allocated as intended by the law is “one of our highest priorities,” said Leni Kirkman of University Hospital in San Antonio. “You have an expectation that if you are involved in a serious car crash, that you are going to get immediately flown to the trauma center, and there's going to be a doctor and a nurse and a bed and all the technology and everything waiting for you or your child. And if we continue to shortchange reimbursements for uncompensated trauma care, that can't continue indefinitely.”

An even larger balance, $515.3 million, will be held in the Texas Emissions Reduction Plan account after $271.7 million is spent on the program over the next two years to address polluting heavy vehicles and equipment.

Senate Finance Committee Chairman Steve Ogden, R-Bryan, said he understands the critics' argument against redirecting money, but “if you are going to criticize that, then go tell me what other parts of the budget I'm supposed to cut.”

The alternatives to cutting elsewhere, Ogden said, are raising general taxes or dipping into the state savings account known as the rainy day fund, which budget-writers expect to need in the future.

“The long and short of it is we have to do this in order to balance the budget,” Ogden said.

He added, however, that the situation points up a major public policy point: “Our tax and revenue system is pretty messed up, and a case can certainly be made for a major overhaul of our tax structure.”

Rep. Warren Chisum, R-Pampa and a former House Appropriations Committee chairman, described the unspent accounts as “kind of a safety net” to ensure the state comptroller can certify the budget as balanced.

“It is a shell game,” he conceded, “but you know, life's a shell game.”

(Note: This article has been reprinted with the permission of the San Antonio Express-News.)

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