There will be no bigger battle for Texas in 2015 than in figuring out how to stop the Texas Legislature from spending the projected budget surplus.
The nearby chart helps outline the importance of this battle. From 1983 to 1987, mostly under Gov. Mark White, Texas underwent an explosive expansion in government that we never recovered from. Government spending as a percent of the economy went from about 13% to about 19%, and it has hovered around that level since. However, since 2007, we have seen another expansion of government that took us up over 20% for the first time. Though we dipped down slightly through 2011, it has probably started to go up again based on the spending levels of the 2011 and 2013 Texas Legislatures. If it ratchets up again in 2015, that will be three straight sessions of rapidly increased spending, which may put us over the 20% mark permanently.
We aren’t the only state that is having this problem. The New York Times reports:
After so many years of sluggish revenues, layoffs and draconian service cuts, governors and legislators are eager to use the newfound money to cut taxes, restore spending or, in some cases, pay down debts or replenish rainy-day funds for future recessions. But though revenues are improving, lawmakers are likely to find that there is not enough to pay for everything they want to do, experts say.
However, the good news is that we still have almost a year to prepare for the battle ahead, and can learn some lessons from watching these other states. One thing the Foundation will be supporting is developing a mechanism to return tax revenue to taxpayers through a reduction in the sales tax. More to come.