The process takes four phases:
- Planning and proposal
- Legislative action
- Review and approval by comptroller and governor
- Implementation and monitoring
The Governor’s Office of Budget, Planning and Policy (GOBPP) and the Legislative Budget Board (LBB) issue instructions for developing strategic plans. After developing a strategic plan, agencies submit their plans to the GOBPP and the LBB for approval in late summer/early fall.
Around the same time that strategic plans are being developed, the LBB sends out instructions for Legislative Appropriation Requests (LARs). Agencies use these instructions to develop their budget requests. Each agency's LAR includes performance measures on which budgeting is based.
During the summer, the LBB and GOBPP hold hearings with each agency to review its strategic plan and draft LAR.
The finalized LARs must be submitted by the end of the summer, and copies must be provided to the LBB, GOBPP, the state auditor and the state comptroller. These LARs form the basis for the appropriations bill, which is prepared by the LBB.
The LBB prepares the draft of the general appropriations bill in the fall. This draft contains performance measures, the maximum number of full-time equivalent employment positions (FTEs) allowed, specific enumerated instructions, the amount of funding recommended by the LBB, and the method of financing each agency's appropriation.
Those processes will take us to January 2023, when the Legislature must attend to numerous legislative matters.
The draft of the appropriations bill is filed in both houses of the Legislature, allowing each house to work on the bill simultaneously from January to May. The state comptroller is required to provide the Legislature with a biennial revenue estimate shortly after the regular session begins in January to ensure that the Legislature does not violate the constitutional prohibition on appropriating more money than is expected to be collected.
The Senate Committee on Finance and the House Committee on Appropriations, working separately, hear testimony from state agencies and others on the budget. Each committee makes changes to the budget document, a process known as "markup." After the bill passes out of these committees, it comes to the floor of each chamber for debate and, ultimately, approval.
The bill is referred to a conference committee composed of members of both houses to resolve differences. After the conference committee has agreed on a version of the appropriations bill, it sends the bill back to both houses for a final up-or-down vote (no amendment allowed).
If the appropriations bill is passed by both houses, it is sent to the comptroller for certification.
The Texas Constitution requires the comptroller to certify that there will be sufficient revenue to cover the appropriations made by the Legislature. If not, then cuts need to be made.
When the appropriations bill is certified by the comptroller, it goes to the governor for signing. The Texas Constitution gives the governor line-item veto authority. If an item in that bill is vetoed and the Legislature is still in session, the Legislature may override any vetoed line items by a two-thirds majority vote in each house.
Although agencies are bound by the state budget, there is wiggle room. The governor and the LBB together are empowered with "budget execution authority," allowing them to shift funds among agency programs, or even between agencies, if the need arises.
