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Texas top leaders are asking state agencies and higher education institutions to identify areas where their budgets can be reduced by 5% for the 2020-21 biennium in order to combat the economic downturn caused by the novel coronavirus’ outbreak.
In a letter Wednesday, Gov. Greg Abbott, Lt. Gov. Dan Patrick and House Speaker Dennis Bonnen said it was necessary to take action now to offset not only current revenue losses, but ensure “the smoothest path toward recovery.”
State leaders requested that state agencies and universities submit plans identifying savings by June 15 to both the Office of the Governor and Legislative Budget Board.
“We are confident that Texas will get back to work and continue leading the nation in job growth, economic innovation, and business creation,” the letter read. “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.”
The letter suggested delaying capital expenses, avoiding travel, keeping open positions that are not essential to responding to the pandemic and forgoing any “administrative expenses that are not mission critical.”
While instructions are being finalized for agencies to request appropriations from the Texas Legislature for the 2022-23 biennium, the letter noted that every agency and institution should expect to submit reduced budget requests and identify strategies to achieve further savings.
“Furthermore, when the state revenue picture becomes clearer in the coming months, it may become necessary to make additional budget adjustments,” the letter read.
A number of state agencies and government functions are exempt from the 5% reductions, including appropriations for the five agencies primarily handling the state’s COVID-19 response, mandated funding for public schools through the Foundation School Program, various healthcare services and more.
Last month, Bonnen had sent a memo to Abbott and Patrick — which was later shared with the House Appropriations Committee — proposing 5% budget cuts to combat anticipated revenue shortfalls.
The novel coronavirus has rocked the economy, and stay-at-home orders and closures have led to record job losses and claims for unemployment insurance. Last month, oil prices dropped below zero amid the pandemic.
Sales tax revenue, which is the largest source of state funding for the state budget, totaled $2.58 billion in April — 9.3% less than in April 2019, and the steepest decline since January 2010, according to a news release from the Comptroller’s Office earlier this month.
Comptroller Glenn Hegar, the state’s chief financial officer, is expected to release a revised revenue estimate for the state budget this summer.
Originally posted by Tessa Weinberg for Fort Worth Star-Telegram.