There is only one piece of legislation the state constitution requires the Texas Legislature to pass after it convened Jan. 8: the budget.

The battle over tens of billions of dollars in state spending began before the session did, as did the discussion on how to limit growth of that spending for future budget cycles.

State leaders have pledged to spend no more than $77.4 billion in nondedicated funds for the next budget cycle after the Legislative Budget Board set a mandatory spending growth cap at 10.71 percent in November.

Austerity option

They could tighten the belt even further if conservative lawmakers can muster support for austerity.

"The current fiscal crisis in Washington illustrates the consequences of fiscal irresponsibility: When spending is unchecked, and when vast deficits are accrued, the economy is at grave risk," said John Colyandro, executive director of the Texas Conservative Coalition Research Institute, in a statement. "Excessive government spending begets higher taxes, which penalize job growth, investment, savings and innovation in the private-sector economy."

But more left-leaning lawmakers cautioned against making decisions too early that might further limit spending on necessary services for Texans.

"As a legislator, I would not be representing my district in Houston if I were to not ensure that Texas moves forward in a responsible way that provides for the growth of its citizens and the needs of its children, the elderly, colleges, universities, financial aid for college students, and middle-income Texans," said Rep. Sylvester Turner, D-District 139, vice chairman of the House Appropriations Committee and a veteran of the budget writing group in that chamber.

Revenue outlook

When State Comptroller Susan Combs released her annual revenue estimate Jan. 7, she allotted $101.4 billion for general spending, well above last year, leaving lawmakers with a surplus of $8.8 billion.

The oil and gas boom produced billions in taxes for the state, she said, and helped Texas recover from a recession that left lawmakers facing a $25 billion shortfall in 2011.

"Texas experienced a very strong rebound from a severe recession," Combs said. "The state's robust economic recovery led to better-than-expected revenue collections in major taxes such as the sales tax, oil and natural gas production taxes and motor vehicle sales taxes.

"The outlook for both the economy and state revenue is for continuing expansion as the fast-growth of the economic recovery gives way to moderate, sustained growth."

Spending growth cap

The percentage adopted unanimously by the board, a permanent joint House-Senate committee that advises the Legislature on the budget, is the amount the state comptroller's office projects for the state average per capita income growth during that budget period from 2014–15.

The Texas Constitution requires that lawmakers increase the amount of spending from cycle to cycle only at a rate matched by personal income growth.

Conservatives said strengthening or lowering the cap should be part of any plan to rein in or prevent runaway spending.

"Texas, where we must balance the state budget every two years, is a superior model to Washington," Colyandro said. "To ensure that Texans are able to keep more of the dollars they work to earn, the existing constitutional state spending limit should be strengthened, zero-based budgeting adopted and 'truth in budgeting' practiced.

"These three tools will help restrain the reach of government."

Current budget

The current budget, passed by the Texas Legislature in 2011, includes $70.4 billion in nondedicated spending within the entire $173.5 billion budget for 2012–13, passed last session with a record $15 billion in cuts.

Nondedicated revenue is largely dependent on sales taxes and funds the budget requests of state agencies, which oversee—and pay for—programs such as electricity bill subsidies and financial aid.

The rest of the budget—just slightly more than $100 billion in the current cycle—is funded primarily with federal funds and dedicated general revenue such as franchise taxes, gas taxes, cigarette taxes and others collected for specific purposes.