State Agencies Directed to Cut Budgets 5%

Gov. Greg Abbott, Lt. Gov. Dan Patrick and House Speaker Dennis Bonnen today sent a letter directing state agencies and institutions of higher education to submit plans to reduce spending by 5% for the next two-year budget cycle. 

In the letter, the leaders also urge cost-saving strategies that will not affect the state’s response to COVID-19, such as deferring capital expenditures, avoiding travel, cutting any administrative expenses that are not considered mission critical, and not filling vacancies that are not essential to Texas’ COVID-19 response.

“As Texans recover from this pandemic, it is incumbent that state government continues to maintain mission critical services without placing a greater burden on taxpayers,” reads the letter. “We are confident that Texas will get back to work and continue leading the nation in job growth, economic innovation, and business creation. However, it will take months until we know the true extent of the economic ramifications of COVID-19, and how combating this virus will impact state finances. To prepare for this economic shock, we must take action today to ensure that the state can continue providing the essential government services that Texans expect.”

In a tweet in which he shared the letter, Bonnen said, “While the full economic ramifications of COVID-19 & their effect on the state budget are still unknown, we will be better prepared to combat budget shortfalls of the future by asking state agencies to implement cost-saving strategies now.”

Numerous areas are excluded from the 5% cuts, including the Texas Division of Emergency Management, the Texas Department of State Health Services, the Texas Workforce Commission, the Texas Military Department, the Texas Department of Public Safety, the Texas Department of Criminal Justice, Child Protective Services and behavioral health service programs. Also exempt are funding for the state’s debt payments as well as contributions to the Teacher Retirement System and Employee Retirement Systems, Medicaid programs, the Children’s Health Insurance Program, foster care, health-related institutions and community colleges. 

Texas reported its steepest decline in sales tax revenues since 2010 last month. State Comptroller Glen Hegar has predicted an even steeper decline when the numbers are available at the end of May. 

Sales tax is the largest source of state funding for the state budget, accounting for 57% of all tax collections.

As Reform Austin reported previously, Hegar is expected to release revised revenue predictions for the state’s next biennium during the summer. He has said to expect a downward revision of several billion dollars.