Although the state’s budget for the next two fiscal years (the 2010-11 biennium) is far from complete, the version adopted by the Senate gives city officials some indication of priorities in at least one chamber.

For cities, there are three priority issues in the budget: (1) the diversion of transportation-related revenue to non-transportation spending; (2) revenue available for local parks grants; and (3) general fund revenue for the Texas Commission on Environmental Quality (TCEQ).

Diversion of Transportation-Related Revenue

A substantial part of the transportation-related fee revenue and tax revenue generated in Texas (more than $1 billion per biennium) is removed from the “Highway Fund” to support other state activities, principally the Department of Public Safety. The 2009 TML legislative program calls for support of legislation that “would discontinue the diversion of transportation revenues to non-transportation purposes and appropriate all revenues from highway user fees and taxes to fund transportation.”

The Senate version of the budget does very little to end these diversions of revenue. Some lawmakers, however, are working on a proposed constitutional amendment that would phase out the diversions over several years.

Local Parks Grants

Funding for local parks grants is more than 36 percent less than the funding for the 2008-09 biennium, when a substantial one-time balance was appropriated. However, total funding is $30.7 million, nearly three times the amount appropriated two sessions ago.

TCEQ Funding

As regular readers of the TML Legislative Update know, the TCEQ has proposed an increase in each of three water-related fees. When these rules become final, municipal fees paid to the TCEQ will increase unless the state appropriates more of its general fund revenue to support TCEQ activities.

The Senate version of the state budget does not appear to increase state funding for the TCEQ. Unless this changes before the budget is finally adopted, the fees imposed by the TCEQ on cities will increase in July 2009. Most cities, of course, will have no option other than increasing rates charged on water and wastewater customers. This is, once again, a shift in revenue-raising responsibility from the state to cities.

TML member cities may use the material herein for any purpose.
No other person or entity may reproduce, duplicate, or distribute any part of this document without the written authorization of the
Texas Municipal League.

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