Transcript The William P. Hobby Policy Conference

900 Lydia Street - Austin, Texas 78702
Phone (512) 320-0222 – fax (512) 320-0227 www.cppp.org
State Budget Issues for 2006-07 and
Effects on Substance Abuse
Programs
February 3, 2005
Presentation to Texas Association of Addiction Professionals Legislative
Conference
Eva De Luna Castro, Senior Budget Analyst
[email protected]
Discuss:
 What happened last session
 Current state budget picture, in
general and for substance abuse
 Budget needs for 2006-07
 Revenue available for 2006-07
The “Balancing” of the 2004-05 State Budget
Cuts to 2003 Budget: $1.4 billion
Cost shifting: $1.0 billion
“Smoke and mirrors”: $1.2 billion
Rainy Day Fund: $1.3 billion
Estimated
General
Revenue
shortfall of
$15.6 billion
for 2004-05
Federal Fiscal Relief: $1.4 billion
Revenue Measures: $1.8 billion
Cuts to 2004-05 Budget:
$7.5 billion
Where Budget Cuts Were Made
•Health Care (not just Medicaid
and CHIP, but also teachers’
and state employees’ health
coverage)
•K-12 textbook funding; grant
programs such as kindergarten
and pre-K expansion grants;
Telecom Infrastructure Fund
(now funds Technology
Allotment)
•Layoffs of state employees
•More details available in
CPPP’s July 2004 report, at
http://www.cppp.org/products/report
s/budget-impact04/index.html
State vs. Federal Funds, 2004-05
Budget
Billion $
All-Funds Spending: $126.6 billion, total
$50
Federal
State*
$40
$30
$7.4
$0.3
$20
$10
$26.8
$27.2
$16.6
$17.2
$K-12
Education
Higher
Education
Health &
Human
Svcs.
$8.4
$0.4
$1.2
$7.3
$7.8
$6.0
Business &
Eco. Dev.
Public
Safety &
Crim.
Justice
All Other
* "State"
General Revenue,
dedicated,
and Other Funds.
Source:
TexasisLegislative
BudgetGeneral-Revenue
Board, Fiscal Size
Up 2004-05.
Drafting the 2006-07 Budget
•Agencies were told in June 2004 how to request
funding for next budget cycle
•For most programs, budget requests described what
could be done with 5% less General Revenue
•Exceptions: More GR needed for K-12 enrollment; maintaining a
constitutional school finance system; debt service; maintaining
caseloads for federal entitlement services (Medicaid, foster care)
•What’s left out of original baselines: growth in
entitlement caseloads, higher ed enrollment, and inmate
populations; more money needed to cover inflation and
utilization
•LBB added some of these, such as higher ed, inmate,
and entitlement
growth,
draft
budget
(SB
1); left many
Source:
Texas Legislative
Budget to
Board,
Fiscal
Size Up
2004-05.
other “current services” items out, along with most
Budget Proposal for 2006-07 (SB 1)
Billion $
$50
All-Funds Spending: $134.4 billion, total
Federal
State*
$40
$30
$8.1
$27.6
$0.3
$20
$28.6
$10
$17.7
$9.5
$0.3
$0.9
$9.1
$7.9
$5.6
Business &
Eco. Dev.
Public
Safety &
Crim.
Justice
All Other
$18.8
$K-12
Education
Higher
Education
Health &
Human
Svcs.
* "State"
General Revenue,
dedicated,
and Other Funds.
Source:
TexasisLegislative
BudgetGeneral-Revenue
Board, Fiscal Size
Up 2004-05.
State Govt. Spending as a Share of the Economy
Percent of Gross State Product
9.0%
8.0%
7.0%
6.0%
All-Funds
5.0%
4.0%
3.0%
General Revenue
2.0%
1991
1993
1995
1997
1999
2001
2003
2005
2007
Solid lines are historical or recommended (SB1 spending; dotted line shows amounts
requested. Sources: Legislative Budget Board; Comptroller of Public Accounts.
Very Little of State Budget Would Go To
Substance Abuse Services
All-Funds Spending for 2006-07,
Draft Budget Bill (SB 1)
Public Safety/
Crim. Justice
6%
All other
5%
Business
& Eco. Dev.
14%
All Other HHS
34%
K-12
28%
Higher ed
13%
Substance abuse
programs
0.3%
Substance Abuse Funding by Program
Historic and Proposed (SB 1) Funding
$250
TDCJ: Substance abuse treatment
Millions
$200
$150
DSHS: grant monitoring
DSHS treatment
$100
DSHS: intervention
$50
DSHS: prevention
$2001
2002
2003
2004
2005
2006
TDCJ = Texas Department of Criminal Justice; DSHS = Department of State Health Services
2007
Annual Funding, in Million $
2004
2005
2006
2007
Change,
2005 to
2007
$35.7
$36.8
$34.4
$34.4
-6.5%
Prevention
44.8
48.4
43.8
44.0
-9.0%
Intervention
18.4
16.8
15.8
15.7
-6.7%
Treatment
86.1
96.0
94.9
93.6
-2.5%
Grant Monitoring
1.6
1.8
1.9
1.9
5.1%
$186.6
$199.9
TDCJ: Treatment
State Health
Services:
TOTAL
$190.9 $189.7
-5.1%
SB 1 Assumptions: Caseloads for
DSHS
350,000
292,912
255,001 259,841
300,000
250,000
298,119
298,119
241,802
241,802
222,515
200,000
150,000
100,000
52,977
46,563
54,350
54,350
50,000
-
2004
DSHS prevention clients
2005
2006
DSHS intervention clients
2007
DSHS treatment clients
SB 1 Assumptions: Caseloads (cont’d)
7,000
6,000
6,265
5,700
5,360
5,400
6,082
5,400
6,082
5,400
5,000
4,000
3,000
2,000
1,000
-
2004
2005
2006
2007
Confinees completing treatment in TDCJ Substance Abuse Felony Punishment Facilities
Dual-diagnosis clients served by DSHS
SB 1 Assumptions: Cost Trends
Intervention
Costs
Treatment Costs
$50.00
$5,000
Youth served in
DSHS intervention
$40.00
$30.00
$4,000
$3,000
Youth completing
DSHS treatment
Adult served in
DSHS intervention
$20.00
$2,000
$10.00
$1,000
Adult completing
DSHS treatment
$-
$2003
2004
2005
2006
2007
Major Federal Source of Funding for
Substance Abuse Programs
Million $
Title V Delinquency;
Drug Courts
$160
$120
Residential Abuse
Treatment for Prisoners
$80
Substance Abuse
Prevention and
Treatment Block Grant
$40
$1993
1995
1997
1999
2001
2003
More Details: Federal Substance Abuse
Prevention and Treatment Block Grant
•In state fiscal year 2004, this grant brought $137.2 million to Texas
•Funds allocated to states based on weighted population and criteria
that take into account different states’ costs of delivering services
•Maintenance of effort requirement: States at a minimum must
maintain spending at the average level spent for two years before the
grant year in question. Spending on services for pregnant women and
women with dependent children must be kept at or above levels for
fiscal 1994.
•Uses: at least 35% has to fund alcohol prevention/treatment
activities; at least 35% on prevention and treatment for other drugs; at
least 20% for primary prevention services. 5% cap on administrative
expenses.
•Eligibility: No eligibility criteria for chemical dependency primary
prevention services. For treatment programs, client’s income must be
at or below 200% of poverty for free services, 200 to 300% of poverty
Indicators of Texas’ Need
for Public Social Services
Texas
US
Average
Texas
rank
% of Population under 18, 2002
28.0 %
25.3 %
3rd
Child Poverty Rate, 2003
22.8 %
17.7 %
8th
Elderly Poverty Rate, 2003
13.0 %
9.8 %
7th
% of Under-65 Population with No
Health Insurance, 2003
26.9 %
17.6 %
1st
% of Residents Aged 25 or over with
at least a High School Diploma,
2003
77.8 %
83.6 %
49th
% of Residents Aged 25 or over with
at least a Bachelor’s Degree, 2003
24.5 %
26.5 %
27th
Source: U.S. Bureau of the Census, March CPS and American
Community Survey
State Health Services: Major Exceptional Items in
original request (Fall 2004)
•$107 million in GR to restore 5% cuts to GR: major programs include
child immunizations; HIV/Sexually Transmitted Disease & Hepatitis C
Prevention; TB, Hansen’s, & Refugee Health; Kidney Health; Children
with Special Health Care Needs; Mental Health Services for Adults &
Children; Northstar Behavioral Health; Women & Children’s Health
Programs; Family Planning; Substance Abuse Prevention,
Intervention, & Treatment; County Indigent Health Care; State
Hospitals; Radiation Control; Food (Meat) & Drug Safety
•Medicaid match rates and loss of one-time funding: $8 million
•Texas HIV Medication program: $5.7 million
•General Revenue restoration for Substance Abuse programs: $10
million
•State facilities/infrastructure: $29 million
•Salary upgrades for nurses/LVNs: $10.5 million
Other Price Tags
Biennial GR
State Budget, 2004-05
Replacing Robin Hood
“Buying down” local school
property taxes by 10 cents per
$100 taxable value
Teacher health “pass
through”
State employee health
insurance
Reaching the national
average in state/local
spending from taxes

%
$59.7 billion
At least $2.3 billion
4%
$2 billion
3%
$1.1 billion
2%
$427 million
0.7%
$16 billion
27%
Outcome Depends on Available
Revenue
•Comptroller gave legislators the official revenue
estimate on January 10. Good news: 2004-05 revenues
show higher-than-expected growth, unspent balance of
$2.3 billion by end of fiscal 2005. Rainy Day Fund
balance will be back up to $2 billion by fiscal 2007 (RDF
not part of General Revenue)
•Bad news: health care costs—one-third of state
budget—expected to continue rising at double-digit rates
•Long-term structural inadequacies of state/local tax
system are putting too much pressure on property taxes
•Heavy reliance on sales taxes also makes Texas taxes
very regressive (take more from families with the lowest
incomes)
State/Local Taxes: Lower than a Decade Ago
Texas state & major local taxes as a share of personal income
10.0%
9.5%
9.0%
8.5%
8.0%
7.5%
1990
1992
1994
1996
1998
2000
2002
2004
Tax Effort Would be Even Lower if Not For
Local Decisions to Fund Basic Services
5.4%
5.0%
4.6%
4.2%
3.8%
State taxes as % of Personal Income
3.4%
Local taxes as % of Personal Income
3.0%
1990
1992
1994
1996
1998
2000
2002
2004
2006
Source: Comptroller of Public Accounts, Historic and Estimated Revenue and
Economic Forecasts; Census Bureau.
From a Taxpayer’s Point of View
Major State and Local Taxes in Texas, 2004
School Property
28%
Other State
Taxes
21%
Property
Tax 47%
Sales Tax
32%
State Sales
25%
Local Sales
7%
City Property
7%
County Property
7%
Special District
Property
5%
Source: Comptroller of Public Accounts, Annual Property Tax Report; Cash
Report.
From the State’s Point of View: All
Revenue
State Revenue Sources, 2004
(Total: $62.1 billion)
Taxes
45%
Federal Funds
35%
Lottery
3%
Other
6%
Interest/
Investment Income
2%
Licenses, Fees,
Permits, Fines,
Penalties
9%
From the State’s Point of View: Taxes Only
State Tax Collections, 2004
(Total: $27.9 billion)
Motor Vehicle Sales
and Rental
10%
Motor Fuels
10%
Franchise
7%
Insurance
4%
Sales
55%
Sin (Cigarette,
Tobacco,
Alcohol)
4%
Gas/Oil Production
3%
Other
6%
Revenue Options Likely to be
Considered
•Cigarette tax: $1/pack
increase raises $1.7 billion
biennially
•Video lottery terminals: $1.1 billion biennially.
“Crack cocaine” of gambling.
•Revised Franchise Tax (Business Activity Tax):
Pre-tax net income, add back compensation minus
first $30,000 per job times 1.95%
•Sales tax rate increase — but this is extremely
regressive, and TX already has one of the highest
rates
•Sales tax base expansion (to services not covered
Texas State and Local Taxes as a Percent of Household
Income, by Quintile*
15.0%
11.9%
12.0%
9.0%
5.8%
6.0%
4.6%
4.1%
3.3%
3.0%
0.0%
Under $26,816
$26,816 to
$52,844
$52,844 to
$81,990
$81,990 to
$126,345
Over $126,345
Household Income
* Each bar represents approximately 1.6 million households.
Source: Comptroller of Public Accounts, Tax Exemptions and Tax Incidence