2007 Policy Orientation Panel Summaries
One Part Limiting Spending, One Part Maximizing Tax Reduction: A Recipe for...?
Should state and local governments in Texas be subject to stricter taxing and/or spending restraints? State Rep. Carl Isett moderated this session, which included perspectives from state Sen. Dan Patrick, Tim Dunn, Dr. Barry Poulson, and Dick Lavine. Isett, who has long supported tighter limits on local property tax revenues, spoke on his efforts to limit increases in property tax revenues and give voters a greater voice in the level of taxation. Patrick spoke mostly on his objection to surpassing the state’s expenditure limit for the sake of property tax relief. Dunn gave an impassioned philosophical defense of tax and expenditure limits. Poulson talked about the experience of Colorado with its strict expenditure limits. Lavine presented the perspective that limits can potentially have deleterious effects.
Budgeting Appropriately: Perfecting Texas' Appropriations Process
Texas' budget is huge. With a very limited period of time to consider budget requests, legislators are at the mercy of agencies with respect to the amount and kind of information they receive. They then must sift through that information to determine that which is most important. How might the process be streamlined and improved to yield relevant information valuable for both legislators and agencies? Former House Appropriations Chairman Talmadge Heflin spoke to importance of setting budget priorities and the principles that should guide priority setting. Eileen Norcross from the Mercatus Center spoke on efforts at the federal level to measure performance and make use of such data to more rationally budget. Mike Morrissey, Director of Budget, Policy & Planning for Gov. Rick Perry, spoke of the real-world difficulties inherent in budgeting. Finally, state Rep. Dan Gattis spoke on the need to make the appropriations process more transparent.
Business Overcriminalization: From Arthur Andersen to Farmers and Fishermen
The panel featured a lively discussion concerning the proliferation of Texas state and local laws that criminalize ordinary business practices such as violating obscure state rules on labeling seafood and operating a grain warehouse. Our analysis has revealed more than 1,700 criminal offenses in Texas, most of which are not in the Penal Code and concern conduct not traditionally thought of as criminal. Stetson University Law Professor Ellen Podgor began the discussion, outlining the criteria legislators should use in determining whether criminal law should be invoked. Brian Walsh, Senior Fellow at the Heritage Foundation, discussed the importance of mens rea -- a culpable mental state – and other due process protection and the negative economic impact of Sarbanes-Oxley, which criminalizes accounting errors. A state version of this law (that has cost the U.S. economy $1.4 trillion) nearly passed in the 79th Legislature and would have even applied to privately held companies. Ryan Turner, Director of the Texas Municipal Courts Education Center, offered insights from the field in Texas and warned against converting minor Class C regulatory misdemeanors into civil infractions, since due process protections such as a right to a jury trial would then be unavailable.
Texas' New Business Tax: Gilded Goose or Goose that Laid the Golden Egg?
Though still called the franchise tax, Texas' business tax has been converted from a corporate income tax easily avoided to a "margins" tax that most limited liability companies will have to pay. Only enacted into law in May 2006 businesses will see their first revised franchise tax bill in January, 2008. What can they expect? Jennifer Patterson, a tax legal expert, discussed how the margins tax is neither like the old franchise tax nor like an income tax and how it taxes businesses that are losing money. State Sen. Kyle Janek expressed his concern about the fairness of the new tax and how it might affect certain businesses. Joe Crosby from the Council on State Taxation addressed how the new tax is like a gross receipts tax and how detrimental such taxes are economically. Mike Reissig, Deputy Comptroller, explained the basics of the tax and described how the Comptroller's office was preparing for it.
Will Competition Keep the Lights on in Texas?
This panel featured state Sen. Troy Fraser; PUC Commissioner Barry Smitherman; Tom Smith of Public Citizen; and Dr. Robert Michaels, Professor of Economics at Cal-State Fullerton. The panel was extremely timely, as Sen. Fraser had filed major legislation that day regarding regulation of the Texas electric industry. Much of the panel discussion focused on the performance of the market to date, and whether there was a need to make major revisions to the market structure. Global warming and clean air issues were also highlighted. While no consensus was reached on what needed to be done, there was significant evidence presented as to the success story that Texas is when it comes to the deregulation of its electric market.
Planning for an Aging Texas: Medicaid Long-Term Care Reform
Like the country as a whole, Texas faces an aging baby boom population that will soon make demands on the state's Medicaid program, and particularly on Medicaid-paid long term care. Today, the aged, blind, and disabled populations on the Medicaid program consume the vast majority of Medicaid funding, but represent a disproportionate minority of the Medicaid caseload, which gives lawmakers and budget writers real concern about the increases in Medicaid spending as a result of a growing long term care caseload. In this panel discussion, state Sen. Bob Deuell, also a practicing doctor in Greenville, identified some of the challenges of meeting these growing demands in Medicaid, as well as in addressing the health care needs of the state at large. Stephen Moses of the Center for Long-Term Care Reform discussed his observations of the state's Medicaid long term care program, and the need to protect this safety net program from people who rely on it despite having resources to plan for and support their own long term care needs. Representing the Governor's office, Nora Belcher discussed Governor Perry's initiative to engage Texans in planning for their long term care, in addition to Medicaid long term care reforms under discussion and consideration in the Texas Legislature today.
Task Force on Appraisal Reform: What’s Really Being Recommended?
Gov. Rick Perry appointed the Texas Task Force on Appraisal Reform in 2006 to look into property tax appraisals. The realization is that the benefits for taxpayers of property tax rate reductions can be erased by property appraisal increases. Many issues were considered and the Task Force proposed several reforms in January, 2007. Task force chairman Tom Pauken outlined the proposed reforms, placing special emphasis on the proposal to allow cities and counties to replace part of their property taxes with one-half cent of sales tax revenue. Gary Boren of Lubbock emphasized the proposal to reduce the allowed percentage increase in property tax revenue and reform the effective rate calculation. Finally, Bob Garrett of Tyler spoke on the need to rein in local government spending.
Pre-Kindergarten: Parent or Government Responsibility?
Pre-K panelists included state Rep. Lois Kolkhorst, Lance Izumi of the Pacific Research Institute, Dr. Bruce Fuller of UC-Berkeley, Jason Sabo of United Ways of Texas, and private preschool operator David Fincher. Rep. Kolkhorst gave an overview of the Legislature’s past and future work with regard to early childhood education in Texas. Mr. Izumi summarized some of the myths and facts of government-sponsored pre-K, and shared his experience with the universal preschool ballot initiative in California, which was rejected by voters. Dr. Fuller explained his research in the field of early childhood education, finding that preschool provides lasting benefits for some, but not all children. Mr. Sabo provided his perspective on the benefits of taxpayer-funded preschool for all Texas four-year-olds. Finally, Mr. Fincher shared his perspective as a private preschool provider, and also shared his research on preschool participation rates in Texas. According to Mr. Fincher, 82 percent of Texas four-year-olds are enrolled in center-based preschool, either public or private.
Telecom Fees Too Taxing?
This panel consisted of House Regulated Industries Chairman Phil King, House Speaker Pro Tem Sylvester Turner, Paul Bachman of the Beacon Hill Institute, and telecommunications attorney Clarence West. Panel moderator Bill Peacock pointed out that Texans are burdened with the third highest telecommunications tax rate in the nation. National studies have shown that the average tax rate for landline telephone service in Texas is nearly 30 percent. The Foundation's new study, using different methodology and a broader sample, placed it at about 21 percent. But in either case, only sin taxes run higher than telecom taxes. The panel identified several of the taxes, including the Telecommunications Infrastructure Fund tax (which might be repealed this session), right-of-way fees, Universal Service Fund fees, and the sales tax that is charged on services and on other taxes.
Criminal Justice Budgeting: Restoring Victims, Reforming Offenders and Respecting Taxpayers
The panel offered a timely discussion on how to reform the criminal justice system to address the prison overflow of over 17,000 inmates that is projected by 2012. Dr. Tony Fabelo, former head of the state's Criminal Justice Policy Council, highlighted how Texas' policies on probation and parole have contributed to a 310 percent increase in the prison population since 1985, far exceeding population growth during that time. Senate Criminal Justice Chairman John Whitmire discussed ongoing reform efforts he is leading that focus entirely on nonviolent offenders, utilizing short-term treatment beds to divert these offenders from long terms in prison, where only percent currently receive treatment for their drug, alcohol, and mental health problems. House Corrections Chairman Jerry Madden joined Chairman Whitmire in commending the work of the Texas Public Policy Foundation and emphasized the need to avoid building new prisons that will cost taxpayers more than $1 billion to construct and operate over the next decade. Finally, Walker County District Attorney David Weeks spoke favorably about the Madden-Whitmire proposed reforms, stating that prosecutors are willing to utilize options such as intermediate sanctions and community-based treatment beds for nonviolent offenders and probationers who commit technical violations if the Legislature will deliver on making these beds available for which there are currently long waiting lists. He said he likes nothing better than to see a former minor drug possession offender in the supermarket who he kept out of prison and put on the road to recovery through one of these programs while, at the same time, saving the state money in incarceration costs.
Texas' Math/Science Deficit: Changing the Equation
The panel on math and science issues explored the topics of the current deficit of math and science graduates in Texas. State Rep. Dan Branch discussed the importance of education in growing Texas' economy. Dr. Glenda Barron, Associate Commissioner at the Texas Higher Education Coordinating Board, talked about the implementation of HB 1 from the last Texas legislative special session and the changes in curriculum at the high school and college level. Tegwin Pulley, Vice President at Texas Instruments, discussed the aging engineer workforce and the need for more electrical engineers to continue inventing new technologies like the iPod. Dr. Sandra Stotsky, a mathematics expert, shared ideas on improving teacher training in mathematics and changing teacher licensure tests. One panelist recommended encouraging more students to graduate in math and science fields by educating them on the value of strong math and science skills and the high salaries engineers make. Another recommendation is to improve teacher training in math skills by having all elementary math teachers take at least three math classes to be licensed. In addition, a panelist suggested restructuring school schedules in elementary schools to allow teachers to specialize in math, science, history and foreign languages.
Higher Education: Who’s the Customer?
Addressing the Uninsured
Texas has the highest rate of uninsured persons in the nation, with some 25 percent of Texans reportedly going without insurance. Although Texas has the dubious distinction of being first, states around the country have sought solutions to address the uninsured in their state, and many of those ideas have been discussed or replicated in other states. Dr. Steve Murdock, the state's demographer, presented a look at the demographics of the state and the impact of the uninsured today and into the future. Anne Dunkelberg with the Center for Public Policy Priorities argued that Texas' high rate of uninsured persons is tied to its low rate of employer sponsored health insurance. Dunkelberg urged the state to look at progressive revenue sources that allow everyone to carry part of the financial responsibility of getting insurance to the uninsured, while stressing the need for a comprehensive and "universal" solution. Sally Pipes from California’s Pacific Research Institute discussed her concerns about plans like those passed in Massachusetts and proposed California, while addressing the interest in "universal" coverage from her personal experience growing up and living in Canada before coming to the United States. Tarren Bragdon from the Maine Heritage Policy Center presented Maine’s solution to addressing the uninsured through Dirigo Health, but explaining how the plan had failed to make any real progress in addressing the uninsured.
Competition in Education: Giving Parents a Choice
The Role of Transparency in Health Care Reform
Price transparency in health care has gained increasing attention as lawmakers look for ways to pull back the price curtain so consumers can determine what health care costs, while weighing that cost with the quality of the care. State Sen. Robert Duncan authored a bill in the last legislative session to bring greater transparency to health care and discussed his intentions to pass legislation promoting price transparency this session. The Cato Institute’s Michael Cannon discussed the importance of price transparency for patients, but cautioned against government intrusion that would make price disclosure less meaningful to consumers seeking care. Shelton Green represented the employers' perspective from his position at the Texas Association of Business, highlighting the need for price transparency to help control health care costs, which are a major cost and concern for employers trying to offer these benefits to their employees. Finally, Tom Suehs of the Texas Health and Human Services Commission discussed the impact of price transparency discussions on government programs like Medicaid and hospital costs for uncompensated care. Suehs reviewed the Commission's work in adjusting the billed charges submitted by hospitals for uncompensated care to reflect what the hospital would actually receive from other payment sources (like private health insurance), in an effort to identify how much uncompensated care hospitals are providing and whether reimbursements and payments from the government actually come closer to covering those costs than some claim.