AUSTIN, Texas — Fiscal conservatives are urging the Texas Legislative Budget Board (LBB) to adopt a stricter budget cap than the 11.68 percent growth rate they approved in an unanimous vote on Monday.
The LBB is a permanent joint legislative committee comprised of the Lieutenant Governor, Speaker of the House, and four members each from the Texas House and Senate. Current membership is Lieutenant Governor David Dewhurst, Speaker of the House Joe Straus, Senators Kevin Eltife, Craig Estes, Juan Hinojosa, and Jane Nelson, and Representatives Drew Darby, John Otto, Sylvester Turner, and John Zerwas.
The Texas Constitution directs the LBB to set a limit for the growth of appropriations from state revenue to an estimated rate of growth of Texas’ economy, and the LBB has some flexibility in how they calculate that rate of growth. This limit only applies to about forty percent of the budget, addressing the appropriations not dedicated under the constitution to specific budget items. The LBB adopts a recommendation every two years before the start of each new Legislative Session, which is then sent to a committee comprised of the Governor, Lieutenant Governor, Speaker of the House, and Comptroller, who have ten days to officially declare an appropriations growth rate, either by accepting the LBB’s recommendation, or by selecting their own method. If this committee fails to affirmatively select their own method within that ten day period, the LBB’s recommendation becomes final, and the Legislature cannot “bust” this spending cap without a majority vote.
This year’s LBB spending cap recommendation, 11.68 percent, is a slightly less than 1 percent increase over the spending cap for the current two-year budget, and was based on the estimated rate of growth in Texans’ personal income over the next two years. This is the method that the LBB has traditionally selected, but there are drawbacks: because the estimated rate of growth in personal income is a future projection, there is by definition uncertainty in calculating the figure. According to the Texas Tribune, LBB staff provided four options for the LBB to consider, ranging from the “most pessimistic take” from the Comptroller’s office of 11.68 percent, to Moody’s Analytics projection of 15.71 percent.
Because of Texas’ booming economy, the state has been experiencing significant budget surpluses during the past few Legislative Sessions, leading to some to call for spending the windfall on education, infrastructure projects, etc., while conservatives have raised concerns that the Legislature is going on a spending spree that will prove to be unsustainable. The Wall Street Journal made waves in 2013 with an editorial titled, “Texas Goes Sacramento,” that made this exact point: “The danger is that Texas will repeat the fiscal mistake that California has made repeatedly: spend during the glory days and, once the economy slows, raise taxes to cover the deficit.”
Dale Craymer, president of the Texas Taxpayers and Research Association, told the Tribune that his organization was urging Legislators to “continue to exercise restraint as they begin work on the 2016-17 state budget,” and “to remember that the limit is a cap, not an obligation.”
The Texas Public Policy Foundation (TPPF), an Austin-based conservative free-market think tank, recommended officially setting the spending cap at a lower figure, 6.5 percent. This figure is based on the state’s growth in population plus the rate of inflation for the past two fiscal years, and unlike the LBB’s method of using personal income projections, the TPPF figure is based on current, precisely known figures. TPPF’s recommended figure of 6.5 percent would set total appropriations at $217.1 billion, about $10.5 billion less than the 11.68 percent cap recommended by the LBB. As mentioned above, the committee is free to adopt TPPF’s recommendation, or another method of calculating the state’s economic growth, as long as they affirmatively vote to do so before the ten day period lapses.
In an exclusive interview with Breitbart Texas, Dr. Vance Ginn, an economist with TPPF’s Center for Fiscal Policy, shared why they are urging the adoption of the lower spending cap. “Restraining spending to the growth rate of population plus inflation is important for the future of Texans, especially the neediest among us,” said Ginn, “because if [spending] continues to grow faster than this rate, they will be burdened with funding a higher cost of state government.” Ginn added, “Since the 2004-2005 budget, total spending is up 13.4 percent above population growth plus inflation. Texans cannot afford the higher taxes and fees to continue to fund this larger footprint of government.”
Talmadge Heflin, the Center’s Director and former chairman of the Texas House Committee on Appropriations, released a statement on Monday that said that this spending increase costs a Texas family of four $1,800 more this year to support the state’s government, and adopting TPPF’s recommended 6.5 percent cap would “better match spending growth with Texas families’ ability to support it.”
JoAnn Fleming, the Executive Director of Grassroots America and Breitbart Texas contributor, similarly urged greater restraints on spending. According to Fleming, from 1990 to 2012, population growth plus inflation (the figure TPPF recommends to be used to calculate the cap) totaled 132%, while Texas state spending rose 310%. “This is not how a conservative ‘red state’ should be governed,” said Fleming. “We are looking forward to Governor Abbott and Lt. Governor Patrick reining in this dangerous pattern of spending. Texans cannot afford a Texas run like Washington, DC.”
[Disclosure: The author was previously employed by the Texas Public Policy Foundation.]
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