AUSTIN – Today, the Texas Public Policy Foundation released a report by Center for Fiscal Policy Director Talmadge Heflin and Economist Dr. Vance Ginn examining the historical nature of tax and expenditure limits (TELs), commonly known as a spending limit. The paper, Reforming Texas’ Tax and Expenditure Limit, evaluates Texas’ constitutional spending limit to identify how to control effectively government spending leaving more money in the hands of working taxpayers.
“Spending limits work like a governor on a truck. If the truck's speed is too fast, it goes out of control and wrecks,” said Heflin. “In times of high tax revenue in Texas, spending it all grows government at a pace that is not sustainable and eventually wrecks the economy. The Texas Legislature should reform the state’s weak spending limit by: limiting the total budget to end commonly used accounting gimmicks to avoid exceeding the cap; basing the limit on the lowest growth rate of population plus inflation, personal income, or gross state product to better match Texans’ ability to support core government functions; and calculating the growth rate using the two fiscal years immediately preceding the regular legislative session to stop relying on the projection personal income, which is almost impossible to accurately project.”
“The Texas model’s overwhelming economic success is based on the proverbial three-legged stool of low taxes, sensible regulation, and a good lawsuit climate,” said Ginn. “If excessive government spending growth is not controlled, the low-tax leg of the stool may soon crumble and threaten the economic gains to all Texans, particularly the working poor. If these recommended spending limit reforms outlined in the report had been in place since 2004, Texans would support a $23 billion smaller two-year budget than it is today translating into Texas families of four saving $1,700 more this year alone. To strengthen the three-legged stool that has provided Texans of all walks of life ample opportunity to prosper, the Texas Legislature should reform the state’s spending limit.”
The findings from the report will be discussed on Thursday, January 8, 2015 at the Foundation’s 13th Annual Policy Orientation. The panel, “TELs Matter for Opportunity in Texas,” will take place at 11:10 a.m. at the Sheraton Austin Hotel at the Capitol in Capitol View Terrace South. Panelists include:
- Senator Charles Perry, Texas State Senate, District 28
- Representative Donna Howard, Texas House of Representatives, District 48
- Dr. John Merrifield, Professor of Economics, University of Texas-San Antonio
- Dr. Vance Ginn, Economist, Texas Public Policy Foundation (Moderator)
To read the full report, visit: http://txpo.li/reforming-texas-tel
The Honorable Talmadge Heflin is Director of the Center for Fiscal Policy at the Texas Public Policy Foundation. In the 78th Session, Heflin served as chairman of the House Committee on Appropriations and navigated a $10 billion state budget shortfall through targeted spending cuts that allowed Texans to avoid a tax increase.
Vance Ginn, Ph.D. is an Economist in the Center for Fiscal Policy at the Texas Public Policy Foundation.
The Texas Public Policy Foundation is a non-profit, free-market research institute based in Austin, Texas.