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Dedicated funds to get new transparency

Thursday, May 28, 2009
by Mike Ward
Austin American-Statesman

A measure that promises to trigger a debate in two years over how Texas collects taxes for so-called dedicated funds was approved tonight by the Texas Senate.

State Sen. Kirk Watson, D-Austin, attached an amendment to House Bill 4583 that requires the state comptroller in 2011 to detail for the first time how much money is in each dedicated fund.

This year alone, those funds held at least $3.3 billion, Watson said.

Those funds hold taxes collected for such things as 911 service fees, a fugitive apprehension fund, a clean-air fund, chauffeur licenses and a “system benefit fund” that is supposed to help needy Texans pay their electricity bills.

The funds continue to collect money, far more than they spend.

And under a policy enacted in 1991, the comptroller uses the balances in those funds to certify how much total revenues the state can spend — as move that Watson insisted is allowing the state to use the dedicated funds “to justify higher spending” in the biennial state budget.

By shining light on how much money each fund holds, the Legislature could have to justify why some of the dedicated funds run multimillion-dollar balances, whether the taxes that are being collected should be reduced or repealed and whether the excess money in the various funds should be swept into the state’s general fund for use on other projects.

Senate Finance Committee Chairman Steve Ogden, R-Bryan, the Senate sponsor of House Bill 4583, acknowledged that the change could spur questions about a tax system he labeled as “rickety.”

“This amendment will shine a light on this issue,” he said.

The Senate approved Watson’s amendment after Ogden accepted it.

“We have just taken a huge step in making this process more transparent,” Watson said afterward. “We’re loathe to raise fees or taxes in this building unless it’s for something the citizens want. And when we do that, there’s an express promise that the money will be spent for that purpose.

“In some cases, it’s not.”

Since the amended bill approved by the Senate is different than the version earlier approved by the House, it now goes back to the House for review.