I recently wrote that Texas state spending will increase on average by about 1.3 percent annually from 2009 to 2013, and noted that those favoring spending restraint should be pleased.
But there is more to the picture than just the most recent four years of somewhat restrained growth in state spending. Here is a look at Texas state spending since 2000:
Biennial Spending 2001-02 through 2012-132000-012002-032004-052006-072008-092012-112012-13$101,892,500,000$115,678,600,000$126,710,300,000$145,059,400,000$172,131,000,000$187,516,000,000$179,684,000,000Increase13.53%9.54%14.48%18.66%8.94%-4.18%
Here is a comparison of the growth of state spending to the growth of population plus inflation, a common standard being used today to measure whether or not spending growth is excessive:
Average Compound Annual Spending Growth 2001-01 to 2010-11: 5.70%Average Compound Annual Population Growth + Inflation 2001-01 to 2010-11: 4.02%
The average annual increase in Texas government spending from 2000 through 2012 is well above the growth of population plus inflation. And unless the inflation rate skyrockets in the next two years, the increase will still be higher after factoring in the spending reduction for the current biennium:
Average Compound Annual Spending Growth 2001-01 to 2012-13: 4.46%
In order to get the 2001-02 – 2012-13 growth in Texas government spending down to the level of population growth + inflation, this biennium’s budget would have to drop by $9.6 billion.
Clearly, even with the recent spending reduction, Texas budget writers cannot be accurately accused of being miserly.
Also, as seen above, the biggest spending increases during this period were passed by the Texas Legislature in 2005 and 2007, the sessions immediately following the spending restraint shown in 2003. Spending over those two bienniums jumped 8% annually, almost double the average growth in population plus inflation.
That is why Texans have to be especially vigilant now, because in 2013 everyone is going to want to “restore” funding for something, and the pressure on policymakers to increase funding for programs will be great.
But before we start talking about restoring anything, we ought to first consider how we are going to make ends meet just paying our current bills.
First, we are going to have to pay off the $8 billion worth of gimmicks the Legislature used to balance the budget last session. The only way to do that and “restore” funding will more than likely be with higher taxes. If we throw in the projected increase in Medicaid costs of $6 billion (or more), we’ll likely face higher taxes just to keep other spending level, without even considering restoring any funds.
That is why we need to talk about finding savings now. And that is exactly what our Real Texas Budget Solutions: 2013 and Beyond is about. It turns out that there are still plenty of opportunities to find savings in the Texas budget. Savings that will not only allow us to avoid a tax increase, but will also improve the growth of jobs and the economy by reducing government interference in the private sector.
Texas can continue to be the nation’s leading economic engine, but it is going to take some work to make it happen.
-Bill Peacock