In the coming months, state agencies will begin submitting their spending requests to the Legislative Budget Board as part of their Legislative Appropriations Requests for the 2014-2015 biennium budget.  These requests will include the use of general revenue dedicated accounts, which are accounts based on a user fee in which the money is supposed to be  used only for the intended purpose of the program.

With this in mind, I find some information, cited by Talmadge Heflin and James Quintero of Texas Public Policy Foundation in their recent report Texas 2012-2013 Budget, the Good, the Bad, and the Ugly, particularly troubling.  According to the report, the unexpended balances of dedicated accounts that the Legislature uses to balance the budget have $4.3 billion, up from $1.8 billion in 2003.  In other words, fees that are collected from Texans for specific purposes are being diverted from their dedicated funds and are instead being saved to temporarily balance the budget on paper.

The mix of fees that may or may not be used for their original legislative purposes is confusing to the taxpayer, the tax collector, and the programs that operate on these dedicated fees.  Some of these dedicated funds are dormant, as the program has been eliminated, but the user fee remains in place.  Other programs collect twice as much in fees as the legislature appropriates each biennium, which creates large fund balances.

One particular case in point was the Telecommunications Infrastructure Fund (TIF), which stopped providing services in 2003.  In 2007, the Legislature passed legislation to eliminate the fee associated with the TIF tax, thus lowering cell phone bills for all Texans.  This session, other dormant dedicated accounts were restructured to allow the user fees held on deposit to be used for improved 9-1-1 communications equipment and for support of trauma centers.

With improved budget transparency, Texans would be able to see which fees they are paying and what the intended purpose of the fee was meant for.  Legislation that was pushed by Rep. Erwin Cain and supported by a majority of the Texas House of Representatives would have required the Legislative Budget Board to post the legal citations that currently authorize and require state spending as part of the budget process to improve transparency in the Texas budget.  Sadly, this legislation, House Bill 2804, failed to pass the Legislature, so the public has a harder time searching for these user fees and the purpose of these dedicated funds.

Many dedicated accounts have exceptional balances, but the money remains unspent.  The Legislature needs to examine the dedicated fees in place and either reduce the fees to match the actual appropriated amount for the program or eliminate the fee entirely if the program is dormant.  The alignment or elimination of these dedicated funds will go a long way towards building public trust in how fees are utilized by the Legislature, not to mention give us a much clearer budgetary picture each cycle.