By Corrie MacLaggan
AUSTIN, Texas (Reuters) - Texas House and Senate budget writers approved on Thursday a two-year, $172 billion budget that reduces spending by 8 percent.
The approval by the conference committee sends the plan to the full House and Senate, which could vote on the measure this weekend. Texas' biennial legislative session ends Monday.
The budget proposal for 2012-2013 spends $15 billion less in state and federal dollars compared to the 2010-2011 budget. Texas has a two-year budget cycle.
The plan slashes $4 billion from Texas schools, which have already begun laying off teachers in anticipation of the cuts. The cuts are not as deep as those outlined in the House's budget proposal. The budget agreement also cuts health and human services.
Senate Finance Committee Chairman Steve Ogden, a Republican, said the budget was an extraordinary accomplishment given the situation the state found itself in when the legislature convened.
Texas, the second most populous state behind California, has been doing better financially than other states, but still began the legislative session in January with a budget shortfall of up to $27 billion.
"This was the most difficult task I've ever been involved in," Ogden said before the conference committee voted 9-1 to approve the budget.
The spending plan doesn't add new taxes or dip into the state's rainy-day fund. Republican Governor Rick Perry opposes doing either.
"Texas is leading the way in showing that government can be made smaller -- and that's an example for all of America," said Talmadge Heflin, director of the Center for Fiscal Policy at the Texas Public Policy Foundation.
But critics of the budget have called for using the $9.7 billion rainy day fund.
"If the legislature adopts this budget, the legislature will have failed to meet the needs of Texas," said Scott McCown, executive director of the Center for Public Policy Priorities, which advocates for low- and middle-income Texans.
State Representative Garnet Coleman, a Houston Democrat, wrote to Comptroller Susan Combs questioning whether the budget is balanced as required by the Texas Constitution. He wrote that the budget relies on "smoke and mirrors accounting" by, for example, pushing some $4.8 billion in Medicaid expenses into the next budget cycle.
The budget plan relies on the legislature making changes to the state's school finance requirements. If lawmakers can't come to an agreement on that before the session ends, they may have to return for a special session.
(Editing by Jerry Norton)