As Yogi Berra once said, “If you don’t know where you’re going, you’ll wind up somewhere else.”
That’s exactly where the Texas Legislature might find itself on the state’s budget for 2020-2021—somewhere else. Without a benchmark for the budget—an answer to the question of how much we have to spend—lawmakers are in danger of outstripping the ability of Texans to pay for their state government.
Any approach to budgeting without such a benchmark gets it exactly backwards. Texas families know this; when they make their own budgets, they begin with the benchmark—what is our take-home pay each month?—and then decide how to allocate their limited resources.
But legislators might not feel their resources are limited. By deciding first what they want to fund, based on the priorities of 150 Texas House members and 31 Texas senators, they’re in danger of writing a wish list worthy of a kid who has been good for nearly all of November.
And Texas families, meanwhile, will be expected to fund that wish list.
The benchmark we’re talking about here is what the Texas Public Policy Foundation refers to as the “Conservative Texas Budget,” but it’s not really a line-item budget with specific amounts for each agency and department. Instead, it’s the first part of any Texas family’s budgetary equation—how much should we spend?
The goal, of course, is to fund government without growing government. That’s why the CTB uses a simple equation: The Texas budget shouldn’t grow any faster than population growth plus inflation, a standard measurement of Texans’ ability to pay.
State spending has increased faster than the pace of population growth and inflation since 2004, at a cost to taxpayers of $15 billion this biennium, or almost $1,000 more, on average, for a family of four this year. That’s a real burden placed on real Texas families.
What does a CTB look like today?
TPPF’s Conservative Texas Budget limits the state's 2020-21 total budget growth to no more than population growth plus inflation (which combined total 8 percent). Within this constraint, we recommend capping general revenue (GR) spending at 4 percent, or $4.5 billion this session, and using 90 percent of the remaining GR, or $4.1 billion, to permanently compress the maintenance and operations (M&O) school district property tax rates each session until that tax is eliminated.
That’s a long way to say the TPPF plan provides the real property tax relief Texans want while ensuring government has the resources it needs.
Under the Conservative Texas Budget, Texas would spend no more than $234.1 billion in the next biennium.
However, the House and Senate recommended budgets exceed the CTB.
The House budget proposal came in at $240.2 billion, while the Senate version came in at $235.8 billion. Within these proposals, the House allocates $9 billion to public education and temporary tax relief, while the Senate allocates about $6.3 billion to public education and temporary tax relief.
The good news is that the Texas Legislature knows how to rein in spending. The last two budgets, 2016-17 and 2018-19, qualified as Conservative Texas Budgets when legislators left town, but the supplemental bill to finish the 2018-19 budget puts that streak at risk. Assuming they can keep that under a 4.5 percent growth rate, lawmakers this session have a historic opportunity to pass a third CTB.
Furthermore, it’s important that legislators work to ensure that the money they’re already collecting is spent wisely.
If the Texas Legislature is to budget the way Texas families do—with an eye to limited resources and an aversion to waste—then increased transparency is a must. Expenditures should be audited and agency budgets should be transparent.
But really, legislators should budget even more frugally than a family because it’s not their money. They could work to achieve this by using zero-based budgeting, whereby every expenditure of taxpayer dollars must have a legitimate reason to exist before receiving funding each budgetary cycle.
Texas is in a great place right now.
We’re the jobs engine—having created almost one-in-four U.S. jobs since the Great Recession—and the energy powerhouse of America. We’ve gotten here by knowing where we want to go, by ensuring that government is out of the way and Texans are free to pursue their own dreams.
Abandoning this model for a California-like model of more government and more taxes would be a mistake. Let’s ensure that Texas lawmakers adopt a Conservative Texas Budget—so that Texans can prosper.
Talmadge Heflin is director of the Center for Fiscal Policy, and Vance Ginn is director of the Center for Economic Prosperity and a senior economist at the Texas Public Policy Foundation.