Over the next two years, the Texas Comptroller forecasts that the personal income of Texas residents will grow by 8.92 percent. That prediction may play a central role in the upcoming budget cycle.
That is because earlier this week, the Legislative Budget Board chose the Comptroller’s estimate from among a group of five projections to determine the maximum rate of growth from state tax revenues in the state’s budget for fiscal 2012-13. The Comptroller’s growth estimate was the second-lowest projection offered up to the committee.
What does this mean for the average taxpayer?
Well, for starters, with the new ceiling in place, Texans could hypothetically be asked to support higher state spending based on the assumption that the economy will make modest gains over the next two years. In theory, now that the 8.92 percent growth limit is in place, the portion of the state budget subject to Texas’ tax and expenditure limit is allowed to grow from $71.7 billion to as much as $78 billion for the next biennium, or about a $6.5 billion increase.
However, even though the state’s budget has room to grow on paper, state revenues are not there to support higher state spending and the state’s leadership have already signaled their unwillingness to raise taxes. So for taxpayers, this whole discussion may be a moot point-which, in this case, isn’t much of a bad thing at all!
– Talmadge Heflin