Article Contents
The Legislative Budget Board (LBB) is a legislative agency in Texas that plays a key role in the state’s two-year budget cycle, working closely with other state agencies and the Legislature.
The LBB oversees spending by state agencies, prepares the first version of the Legislature’s appropriations bill (the law that authorizes state expenditures), and manages special requests from state agencies during the nearly two-year interim between legislative sessions.
The LBB also makes estimates of the costs of proposed legislation.
Governance
Administratively, the LBB functions as an distinct state agency. Technically, however, the LBB is a permanent joint committee of the Texas Legislature, chaired by the Speaker of the House and the Lieutenant Governor.
The term “Legislative Budget Board” is used interchangeably for both the governing body of the agency (the board) and the agency itself. For clarity, the agency is sometimes referred to as the “LBB staff” to distinguish it from the governing board.
The members of the board are:
- the Lieutenant Governor;
- the Speaker of the House of Representatives;
- the Chairperson of the Senate Finance Committee;
- the Chairperson of the House Appropriations Committee;
- the Chairperson of the House Ways and Means Committee;
- three members of the Senate appointed by the Lieutenant Governor; and
- two other members of the House appointed by the Speaker.
Under the board, the day-to-day management of the LBB falls to an appointed director who oversees about 100 staff, including budget analysts, contract specialists, lawyers, and other specialists.
Appropriations Bill
At the start of each regular legislative session, the LBB is responsible for introducing the general appropriations bill.
The agency prepares the bill based on the spending requests from state agencies and institutions. By law, each institution and agency of the state must prepare its spending request “under the board’s direction.”
This typically happens during the interim before legislative sessions.
Budget Oversight and Analysis
The LBB carries out performance audits and evaluations designed to improve the operations of state institutions and departments.
There are various types of review, including “strategic fiscal reviews” and “efficiency reviews.” Efficiency reviews involve an analysis of the effectiveness the policies, management, fiscal affairs, and operations of state agencies.
During the law-making process, LBB staff prepare various kinds of estimates and analyses. These include tax equity analyses and fiscal notes. A fiscal note typically states whether a proposed law will cost the state money or result in new revenue, and explains its methodology.
History of the Legislative Budget Board
The Legislative Budget Board was created in 1949 after the state auditor’s office recommended creating a legislative committee for the continuous review of state spending. Prior to the creation of the LBB, budgeting was assigned to the Board of Control, which was the state’s purchasing agent. However, the Board of Control had no authority to refuse requisitions or to make periodic adjustments in budgetary expenditures for state agencies.
The Legislature established the system of fiscal notes in 1973, tasking the LBB with estimating the probable costs of any bill. That same year, the Legislature also established a zero-based approach to creating the state budget.
Zero-based budgeting was used in Texas government until 1992, when the state shifted to a strategic planning and performance budget. This system was designed to recognize the relationships between funding and performance. Under this system, which remains in effect, an agency’s strategic plan is used as a starting point for developing the agency’s budget structure, with appropriations broken into different strategies.
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