Statement by The Honorable Talmadge Heflin, Director of TPPF’s Center for Fiscal Policy:

“Claims that adopting a 2012-13 state budget that is within existing revenues would decimate Texas’ economy misinterpret a central point in the Legislative Budget Board’s analysis.

The negative 272 thousand change in jobs predicted for 2012 does not imply the state will lose that many jobs from our current employment level upon enactment of CSHB1. Rather, that figure implies Texas will have 272 thousand jobs less than a baseline scenario where state expenditures remained constant relative to 2010-11 levels and available revenue matched these spending levels.

“The LBB’s baseline scenario assumes that Texas continues to support levels of spending where government has grown at almost three times the rate of population growth plus inflation over the last two decades, and has available revenue to match that bloated spending. Texas doesn’t have the available revenue to support that – and to get it would mean ruinous tax hikes that aren’t on the table.”

Statement by Dr. Arthur Laffer, TPPF Senior Fellow:

“The tax increase required to maintain all current programs would be crippling to the Texas economy and put it at a disadvantage relative to other states. The boom in Texas since 2003 when Texas avoided a tax increase has been impressive, and the economic growth has allowed Texas to be the nation’s leader in job growth.

“Economics is a double-entry system. Higher spending for the government means, by definition, higher taxes on the citizens of Texas. The spending increases from the government will be, by definition, offset dollar-for-dollar with reduced spending by the people who face the higher taxes. In addition, the negative incentives from the higher taxes will create additional negative incentives leading to even greater economic damage.”

The Honorable Talmadge Heflin is Director of the Center for Fiscal Policy at the Texas Public Policy Foundation. Heflin served 11 terms in the Texas House of Representatives and chaired the House Appropriations Committee in 2003, leading the Texas Legislature’s successful efforts to close a $10 billion budget deficit without a tax increase.

Dr. Arthur Laffer is a Senior Fellow of the Texas Public Policy Foundation and a partner with Arduin, Laffer & Moore Econometrics. Laffer was a member of President Ronald Reagan’s Economic Policy Advisory Board for both of his terms.

The Texas Public Policy Foundation is a non-profit free-market research institute based in Austin.

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