Both the House and Senate took up the budget late Saturday night, almost simultaneously. The votes were largely along party lines.
In all funds, the plan for 2012-2013 is $15 billion less than the current budget, but that doesn't account for the costs of providing services to new population.
Medicaid reimbursements were underfunded by $4.8 billion, an expense Rep. Sylvester Turner (D-Houston), said was charged to a "Medicaid Mastercard." He and other Democrats compared the move to deficit spending in Washington D.C. that Republicans often complain about.
"This budget is shaky at best," Turner said.
For nursing homes that rely on Medicaid for most of their business, state and federal aid would be cut 37% compared with funding levels in the 2010-2011 budget, according to an analysis prepared by the Legislative Study Group and the Center for Public Policy Priorities.
Medicaid fee-for-service payments to hospitals are cut 8% under the budget, according to the Texas Hospital Association.
Lawmakers also agreed to cut family planning services by more than $73 million.
The shortfall was a result of a business tax that has consistently failed to generate forecasted funds and a slump in sales tax receipts.
The budget loomed over a session that Sen. Steve Ogden, chair of the Senate Finance Committee, called the most "challenging session that has faced our Legislature in the last 20 years."
Some lawmakers, including Ogden, started the session with hopes that the business tax could be overhauled, so the shortfall wouldn't be continued in future years. But Perry and Republican leaders made it clear that any new tax bills would be unacceptable.