WELCOME TRIBTALK READERS!If you’re here thanks to the opinion piece in TribTalk of 5 June 2014, “GOP voters are being misled on spending,” then we invite you to explore our Real Texas Budget report and our work surrounding it. You’ll find that the assertion that “[TPPF] now claims …. that state spending did not increase by 26 percent but by 9 percent,” is false: the two numbers are for different metrics, and the Foundation stands by both. Here is a great chart explaining the difference. If you want to know more, feel free to contact us!
Through checkbook registers and other means of improving transparency, Texas has made significant process lately in keeping its citizens informed about government spending. However, exactly how much money Texas government actually spends each year is still something of a mystery.
The latest mystery is the disappearance of $6.1 billion from the 2014-15 Texas budget.
During the appropriations process in 2013, the Legislature decided that patient fees collected and spent by health-related institutions should be eliminated as a line item in the appropriations bill. As a result, the appropriations bill shrunk by $6.1 billion-even though this money continues to be spent.
It is true that businesses often restate their earnings and make other adjustments to their financial statements, so there is nothing inherently wrong in making such adjustments. When businesses make these adjustments, though, they go back and adjust previous statements as well, so earnings and expenses can be properly compared over time. The state didn’t do this in regard to patient income.
As a result, Texas’ Legislative Budget Board (LBB) inaccurately reports that the state’s current biennial (two-year) budget increased by only $9.6 billion, or 5.1 percent, over the last budget.
To remedy this and other problems with the Texas’ official budget numbers, the Texas Public Policy Foundation recently released the Real Texas Budget. Developed using dozens of documents from legislative sources, the Real Texas Budget accurately portrays Texas spending beginning in the state’s 2004 fiscal year.
By adjusting for patient income and a likely increase in Medicaid spending, the Foundation estimates that total spending this biennium will increase by $16.7 billion, or 9.0 percent, over 2012-13; 74 percent higher than the LBB reported.
Spending over the years is also increasing rapidly. Since 2004, total spending has grown by $77.8 billion, or 62.7 percent.
The cost of Texas government during this period not only increased in absolute numbers, but grew 8.9 percent faster than population growth and inflation. The result is a budget that costs an additional $16.3 billion, or more than $600 for every man, woman, and child in Texas.
This is in stark contrast to numbers reported by the LBB last year, which showed an overall 1.2 percent decrease in real dollars spent since 2002.
Why the discrepancy?
Well, in addition to the removal of patient income spending, the LBB removed another $14 billion of education spending each biennium. They justify this because of the property tax cut adopted by the Legislature in 2006 which was offset by increased state education spending.
It’s debatable whether Texans ever experienced $14 billion of property tax relief. What’s not debatable is that whatever tax relief there was has vanished as school districts and other entities have significantly increased property taxes since 2006.
The LBB also chose as its baseline budget one of the biggest spending budgets Texas has seen in recent years. The higher baseline helps mask subsequent increases in spending.
On the other hand, the Foundation chose 2004-05 as its baseline budget because it is an example of moderate, controlled spending.
The different choices of the state and the Foundation highlight not only different levels of commitment to transparency, but also different philosophies of governance.
Instead of trying to justify spending increases, the Foundation sought to accurately portray spending and highlight opportunities for modest reductions in the growth of state government.
For instance, if Texas had merely restrained the growth of government to population plus inflation since 2004, Texans’ tax bill would be $8.1 billion less this year.
Restraint was clearly not the path that the Legislature took in 2013. When the Legislature discovered it had significantly more money available than it had two years before, it went on a spending spree, seemingly determined to keep money from retuning to taxpayers in the form of a tax cut. When all was said and done, the Legislature appropriated $44 billion more in 2013 than it had in 2013, an increase of 25.8 percent.
The Legislature’s determination to spend as much money as it could was so strong that it even took money out of the state’s savings account, despite the multi-billion surplus it had already spent.
Total Texas spending since 2004 will equal about $1 trillion by the end of the current biennium. While the Foundation believes that number is too high, we understand that others disagree with us. But we can’t have a genuine debate if the state won’t accurately report spending. And we can’t have a genuine debate if the big spenders in the Legislature, media, and special interests keep trying to hide the truth by falsely claiming that we no longer stand by our claim of the 25 percent increase in appropriations.
We stand by our claim; we are saying the same thing this year that we said last year. The only moving target here is state spending, which keeps getting bigger and bigger.
The stakes in this debate are big; we stand for liberty, and will continue the debate as long as needed to bring greater liberty to the people of Texas.