State Budget Processes and Medicaid Policy in Texas

Federal Policy and Appropriations Misalignment

The processes of writing policy and funding policy are essentially distinguished by the authorization of activities to implement policy and the budgetary appropriations that will fund those activities. These two processes are imperfectly aligned. Policymaking is arduous and complex, and it is not unusual for the intentions of lawmakers to conflate with earlier legislative intent. Authorizations that have lapsed may continue to receive funding appropriations. Mandatory or direct spending may continue without being associated with an annual or regular appropriations bill.

Examples of mandatory spending include benefits such as Social Security, Medicare, and Medicaid. The Congressional Budget Office conducts cost estimates of mandatory spending programs, and the spending of these entitlement programs may change in response to structural or eligibility modifications.

State Budget Processes and Phases

A constellation of approaches is available for budgeting by the states, including incremental budgeting, performance budgeting, zero-based budgeting, and modified zero-based budgeting. A program budgeting approach is dominant across the states, followed by incremental budgeting.

Generally, four basic phases occur in budget processes at the state level: preparation, adoption, implementation, and audit. In the fall of each year, budget preparation begins in earnest. Agencies in the states generally submit funding requests to the governor, and the state budget office staff reviews the requests. State-level budget reviews are comprehensive and may include national economic analysis, revenue estimates, program-specific demographic and caseload estimates, and evaluations of program management and performance.

Collaboration between the legislature and the budget office is variable from state to state, but the intention is to establish projections for caseload and revenue. The budget committee holds public hearings with various state agencies to review the requests and establish a revenue forecast, which is the basis for a comprehensive recommendation to the governor. Typically, the Budget Committee and the State Budget Agency formulate a draft of the budget bill, which the governor delivers to the General Assembly.

The second phase of the budget process entails legislative adoption of the budget. The legislative review begins when the Speaker of the House assigns the budget bill to the House Ways and Means Committee. Hearings and deliberations take place, along with second and third readings of the bill. The Senate Appropriations Committee receives the House version of the budget bill. More hearings, deliberations, and readings ensue. The conference committee negotiates the final budget and submits the revised recommendations to each chamber for adoption or rejection. An approved budget is then sent to the governor for signature or veto.

The third phase of the budgetary process is implementation, during which accounts are established and allotments are scheduled. The Budget Committee continues to provide legislative oversight of budgetary implementation. The State Auditor provides accounting oversight and reporting, while the Budget Agency publishes the revenue forecast and annual reports on the use of funds. The Budget Director is authorized to carry out transfers of appropriations as authorized by law. The State Budget Agency may make inter-agency transfers in conjunction with the Governor, the State Board of Finance, the State Auditor, and the State Treasurer. In the final phase of the budgetary process, the State Board of Accounts provides audit reports and issues opinions on fiscal management.

The Texas Medicaid Expansion Debate

Psychologists assert that people are very quick to accommodate to benefits, even when they are preferred and not necessarily needed. But when people truly depend on benefits, reducing them or taking them away completely is devastating. One can imagine the reaction if the federal government had tried to take back benefits from people already receiving them, in accordance with the new retirement age eligibility tiers.

Given the extraordinary corporate tax advantages in this country and the solid evidence that trickle-down theory does not work, recommendations exist for building a budget surplus through increased and new taxation. Additional tax revenue would permit additional funding of entitlement programs. It is important to recognize that not all states offer Medicaid expansion funded programs to citizens; indeed, a number of Republican-led states have not participated in Medicaid expansion as a way of protesting against the Affordable Care Act. While states are eager to attract enterprises through low business taxes, this does not justify passing the burden of business development to those who can least afford to bear it. Indeed, in many states—Texas included—unmarried people who do not have children are not eligible for Medicaid regardless of how low their incomes are. The expansion of Medicaid would have been a substantial effort to harmonize health policies for people living in poverty.

The political climate in the state of Texas is particularly interesting since, historically, the state has produced several politicians who have successfully run for President. Indeed, the political climate today evidences several aspiring candidates for the office of the President of the United States. In addition, Texas is a hotbed of conservative, independent-minded, card-carrying NRA members, the biggest share of whom simultaneously—whether tacitly or overtly—support an extraordinary level of economic inequality (Phillips, 2014).

The business columnist at the Houston Chronicle wrote about the Texas agenda on climate change and new EPA regulations, but the comment is also applicable to receptivity to regulation in the state of Texas in general. To wit: "Many Texas business and political leaders condemned the new rule before it was released: Any change is dangerous, any rule is unacceptable. They'll engage in long-running taxpayer-financed legal battles they'll likely lose, wasting time and money better used innovating" (Phillips, 2014).

While a majority of state governors chose Medicaid expansion under the Affordable Care Act, then Governor Rick Perry repeatedly refused to do so—along with 24 of his state governor peers (Silverman, 2014). With the expansion, roughly 1.5 million people living in Texas who currently do not have health insurance would be eligible for Medicaid—a system that nearly anyone with a job has paid into for years, perhaps decades (Silverman, 2014). Note that the federal government pays 100 percent of the costs of the health care program for the first three years, and during the fourth year, Texas would need to contribute 10 percent of the program's health care costs (Silverman, 2014).

Perry claimed that the 10 percent contribution would bankrupt the state. Abbott concurs, stating: "What I don't want to do is bankrupt Texas by imposing on Texas the overwhelming Obamacare disaster...If Texas participates, we are making a deal with a federal government that is $18 trillion in debt, that is a bargain I'm not willing to make" (Silverman, 2014). Abbott would like to reform Medicaid and obtain a block grant for a revised program. And so, the poor people in Texas are held hostage and will do without healthcare as the Texas governor and state government have determined that it is more important to make their point about the debt ceiling than it is to ensure the people of Texas are well served by their government.

Wendy Davis, on the other hand, said, "What I will do is work with my legislature, Republicans and Democrats alike, who know this is the right thing to do for their communities, who aren't afraid of being labeled as partisans...I'll work with them to bring their tax dollars, our community tax dollars back to Texas and to keep property taxes from increasing."