AUSTIN – In advance of the Legislative Budget Board’s (LBB) meeting today, the Texas Public Policy Foundation released updates to key budget research, The Real Texas Budget and The Conservative Texas Budget, using the latest Texas budget and economic data. The Conservative Texas Budget uses the actual 6.5 percent increase in population plus inflation during the last two fiscal years to recommend that the Texas budget grow to no more than $217.1 billion in 2016-17 while the spending of state funds should remain below $142.2 billion. The Real Texas Budget uses the latest LBB numbers to show that spending for all funds and state funds in the current biennium will total about $203.8 billion and $133.5 billion, respectively.
“While the Legislative Budget Board is required to set a spending limit based on personal income growth, the Legislature should set a higher standard of protecting taxpayers from higher taxes,” said Talmadge Heflin, the director of the Foundation’s Center for Fiscal Policy. “Limiting the growth of all spending to no more 6.5 percent will likely leave enough surplus revenue for the Legislature to provide substantial tax relief in 2015.”
Both documents have been released as part of the effort by the Conservative Texas Budget Coalition to restrain the growth in state spending in order to maintain Texas’ national leadership in job growth and promote economic prosperity for all Texas. Additional initiatives by the Coalition include passing the Sales Tax Relief (STaR) Fund, which would create a mechanism to control spending growth through sales tax relief, and the elimination of the Texas margin tax, recognized as one of the worst business taxes in the United States.
“The excessive growth in the total spending relative to population growth plus inflation reduces the ability of Texas families to live out the American Dream here in Texas,” said Dr. Vance Ginn, an economist in the Center for Fiscal Policy. “Clearly, for the well-being of all Texans, there is need for effectively limiting state spending next session.”
The updates to The Real Texas Budget report include recent 2014-15 budget additions: 1) $2.6 billion requested by the Health and Human Services Commission to fully fund Medicaid this biennium, and 2) $1.7 billion in transportation spending based on the approval by voters in November of Proposition 1.
The Conservative Texas Budget recommends using population growth plus inflation to cap the spending of all funds, rather than the current constitutional spending limit that caps spending of only the state’s non-dedicated general revenue, about 40 percent of the Texas budget. In addition, the paper recommends using actual economic data rather than the current practice of using projections of economic data for the next two fiscal years. The projections are usually well off the mark. Using actual data for population growth plus inflation during the previous two fiscal years 2013 and 2014, the suggested 2016-17 spending growth limit is calculated to be 6.5 percent.
“We encourage the Legislative Budget Board and the committee of the governor, lieutenant governor, speaker of the house, and comptroller to consider in their discussions the importance of using population growth plus inflation in the 2016-17 spending limit,” said Heflin.
To see the updated Real Texas Budget, visit: http://txpo.li/real-tx-budget-worksheet
To read the updated paper explaining the Real Texas Budget, visit: http://txpo.li/real-tx-budget-paper
To read the updated Conservative Budget, visit: http://txpo.li/tx-budget
The authors of the Conservative Texas Budget and the Real Texas Budget are:
The Honorable Talmadge Heflin, 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., an Economist in the Center for Fiscal Policy at the Texas Public Policy Foundation.
Bill Peacock, Vice President of Research and Director of the Center for Economic Freedom at the Texas Public Policy Foundation.
The Texas Public Policy Foundation is a non-profit, free-market research institute based in Austin, Texas.