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Texas House Appropriations Subcommittee discusses Funds Consolidation

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The Texas House Appropriations Subcommittee on Articles VI, VII, and VIII met Monday morning to discuss the history and practice of “funds consolidation,” a practice where the Legislature fails to appropriate revenue dedicated for a specific purpose in order use the unexpended funds to balance the budget.

The Comptroller’s office must certify that the State has sufficient revenues to cover its expenditures each biennia. Each Session, the Legislature passes a bill allowing unexpended dedicated funds to be counted as general revenue to cover general expenses. Since 1991, the amount of unexpended dedicated revenues used to certify the budget has grown nearly ten-fold, from $540 million to $4.95 billion. The ten largest unexpended dedicated funds currently account for nearly $2.9 billion. The total amount of dedicated revenue used to certify the budget instead of being appropriated towards their specified purposes has increased ten of the last eleven biennia.

The process has oft been criticized as dishonest towards taxpayers and state agencies. Governor Rick Perry singled out the process in his “Texas Budget Compact”

“Another important part of truth in budgeting is reducing the use of fees and dedicated accounts for anything other than the purpose for which the fees were collected. If people are paying into a specific fund for a specific purpose, they have every expectation that we’ll use it for that purpose. If we’re not, it’s likely time we stopped collecting them.”

Speaker of the House Joe Straus addressed the Subcommittee stressing the importance of transparent budgeting and offered his support for the Subcommittee’s efforts. Rob Coleman, the Assistant Director of the Fiscal Management Division of the Comptroller’s Office, was the only witness to testify. He outline the basic political and legal history of the funds consolidation practice.

Further Subcommittee meetings have not yet been scheduled.