Is maneuver to balance budget legal?

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AUSTIN – The Senate’s chief budget writer asked Attorney General Ken Paxton on Wednesday whether an accounting maneuver that the Senate used to balance its budget is legal.

If Paxton agrees, it would affirm the Senate’s plan to delay for one month the transfer of $2.5 billion from sales tax revenues to the state highway fund.

The request appears to cloud the legitimacy of the Senate plan, until Paxton’s decision is rendered.

Senate leaders said privately they are confident Paxton will affirm their plan, that Senate Finance Committee Chairman Jane Nelson‘s request was only to quiet criticism about its transfer plan once and for all.

House not on board

The Senate budget maneuver has been blasted by House leaders as improper and illegal, with House Speaker Joe Straus saying his chamber would not go along with the other chamber’s plan. The House has instead proposed drawing roughly the same amount from the state’s savings account – commonly called the Rainy Day Fund – to balance its version of the budget.

In a two-page letter to the head of Paxton’s opinions committee that affirms decisions about the wording and meaning of state law, Nelson, R-Flower Mound, asked whether “a delay in making each fiscal year deposit to the state highway fund under … the Texas Constitution until September of the following year violate that constitutional provision.”

“The Comptroller expressly informed me that it is not possible to calculate net revenue and remit the appropriate payment to the highway fund until after the close of the fiscal year” on Aug. 31,” Nelson wrote.

“Is a strict interpretation of (the constitutional provision) required when it would be impossible to actually comply? Or may the Comptroller comply with that provision by making the payment as soon as it can be calculated?”

Net revenue ‘critical’

The request to Paxton came Wednesday after Comptroller Glenn Hegar, in a two-page letter to Nelson, appeared to leave open the question of how the transfer could be handled. Hegar noted that he “identified a conflict in the constitutional provision (establishing the fund) that requires the transfer be made out of net revenue and where the same provision also appears to require that the transfer be made in the same fiscal year as the revenue was collected and deposited to (the state’s general revenue fund).”

“The concept of net revenue is critical to this discussion,” Hegar states in his letter.

On Tuesday, Nelson asked Hegar to clarify how the transfer needed to take place to be legal. With budget negotiations between the Senate and House expected to start next week, she asked for an expedited response.

“A resolution of this issue is paramount in order for the conference committee on Senate Bill 1 (the budget) to make an informed decision about our state budget,” Nelson said in her clarification request to Hegar.

Senate leaders said Wednesday that they would let Nelson’s correspondence speak for itself. House officials said they had not seen the request for Paxton’s opinion, but they said it highlights why they questioned the maneuver in the first place.

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