Texas leaders announce $1.2 billion in state cuts

AUSTIN — State leaders facing a budget shortfall announced $1.2 billion in cuts Tuesday, trimming such expenditures as Medicaid reimbursement rates for doctors but sparing areas including state psychiatric hospitals and most of the prison budget.

Gov. Rick Perry, Lt. Gov. David Dewhurst and House Speaker Joe Straus had asked state agencies to identify savings because of a looming budget gap through the next two-year fiscal period. Some put the shortfall as high as $18 billion.

The agencies had offered an estimated $1.7 billion in the current budget, based on targets set by the leaders. With Tuesday's exemptions, savings amount to $1.2 billion.

“Every penny we save now in the 2010-11 biennium is one penny closer to balancing the budget in the next legislative session,” Perry said in a statement.

Among cuts OK'd by the leaders is a drop in reimbursement rates for doctors and other health care providers who treat Medicaid patients, a move that doctors and advocates for lower-income Texans say would discourage providers from taking new Medicaid patients.

Some also have expressed concern because a cut in spending on human services programs means the loss of federal matching funds. The $205 million in overall cuts at health and human services agencies, including the reduced reimbursement rate, is estimated to cost another $190 million in federal matching funds.

Prison cuts pared

The Texas Department of Criminal Justice will see a $55 million reduction, but that's much less than the $294.3 million it had reluctantly offered in order to meet its target.

Prison officials had asked for exemptions from cutting items such as correctional officer positions and treatment programs, saying slashing those areas could hurt prison security and make it more likely offenders would commit crimes when released.

The leaders granted the exemptions. Cuts approved include unspent balances; money that was allocated for a facility whose opening is delayed for other reasons; and an initiative to hold down travel and overtime.

Among other savings, Perry identified $21.5 million in general-revenue spending cuts in his office, including $20 million from the deal-closing Texas Enterprise Fund that he has touted as a valuable tool to lure business. Perry, who said he wanted to lead by example, continues to champion the fund as a valuable tool. Democratic challenger Bill White is calling for an audit of the fund.

Mental hospitals spared

Items spared from cuts, besides prison programs, included hospital beds at the San Antonio, North Texas, Rusk and Terrell state hospitals. Human services officials had estimated the option would mean an estimated 1,447 fewer patients receiving services through fiscal 2011.

Leaders also protected Texas Department of Public Safety funds aimed at homeland and border security; Texas Workforce Commission job training and job creation programs; and Higher Education Coordinating Board increases in student financial aid.

The Texas Education Agency had offered cuts including eliminating of $1 million in state funding to the University Interscholastic League for steroid testing . Testing has found few students using steroids, but Dewhurst has championed the program, and leaders kept intact $750,000 of the money.

“We cannot afford business as usual, but must make tough choices and put every cost savings idea on the table,” Straus said in a statement. He has told House budget-writers to close the budget gap without new taxes.