Texans are beginning to feel the pain of the national recession and a cooling state economy. The Federal Reserve recently updated its forecast and said Texas could lose nearly 300,000 jobs this year with an unemployment rate upwards of 8 percent.
Perfect time for a massive tax increase? Sadly, several of our state legislators seem to think so.
Texas has a great story and stands as a model for other states. Through smart governance and fiscal restraint, our state leaders created an environment that allowed Texas to become America’s leading job creator last year.
Last fall, the Texas Public Policy Foundation commissioned internationally renowned economist Dr. Arthur Laffer to identify which factors contributed to Texas’ economic dominance over other states. His finding: states that pursue pro-growth economic policies – low taxes, appropriate regulations, and disciplined spending – experience higher income and population growth, lower unemployment, and rising housing values.
Texas’ fiscal prudence since 2003 has proven to be our deliverance from the financial ruin faced by states such as California and Kansas. Texas will not be firewalled from this economic crisis, but our job losses should be modest by comparison.
Despite our anemic economic condition, some believe we should make it even more expensive for people to drive to work, businesses to deliver their goods to market, or parents to drive to the grocery store.
Senate Bill 217, by Sen. John Carona of Dallas, would increase gas taxes statewide. From a single legislative vote this spring, the gas tax rate could rise up to 5 percent every year, based upon the rate of highway construction inflation. If Texans think they have a problem with runaway home appraisals and property taxes, they should ponder what will happen with a gas tax that is also placed on auto-pilot.
Since even with this increase North Texas residents apparently won’t be paying enough taxes, Senate Bill 855 by Sen. Carona and House Bill 9 by Rep. Vicki Truitt of Southlake create further tax and fee increases for anyone living in or moving to the Metroplex.
One bizarre provision in this bill could subject anyone moving into the region with a $250 fee, laying out the “go away” mat for any business or family interested in moving to the Metroplex.
Other provisions of these bills would authorize a $60 vehicle registration fee, a $1 hourly parking fee, a $15 vehicle emissions fee, and a doubling of the driver’s license fee from $24 to $48. Even worse is the Metroplex-only gas tax, up to 10 cents per gallon, which would also rise each year with the rate of inflation. Local voter approval provides little consolation since there will likely be massive amounts of money pumped into a campaign to pass these initiatives.
Advocates falsely claim these are user fees. But if these were user fees, then the new rail system would be paid for by its riders, just like a toll road relies on tolls from its drivers. Registering a vehicle and possessing a drivers license has no correlation to the amount one drives, if one drives at all.
Most importantly, these proposals conceal from taxpayers the reality that the legislature already diverts more than $1 billion from highway funding to pay for non-transportation purposes from narcotics enforcement to Medicaid programs. These new tax schemes would subject taxpayers to the same political smoke and mirror routine, compounded by the fact that it would reward fiscal mismanagement by sending huge sums of money to two agencies – TxDOT and DART – who each admitted billion-dollar accounting mistakes.
Many Texans’ jobs already hang delicately in the balance, and a complex and colossal tax increase of this magnitude could seal their fate. Instead of a tax-first posture, our legislature should instead exhaust all other options, such as ending transportation funding diversions and identifying cost savings, and relying on true user fees such as tolls and train fares, before forcing Texans – current and prospective – to dig further into their wallets.
Justin Keener is vice president of policy and communications for the Texas Public Policy Foundation, a non-profit, free-market research institute based in Austin.