A Legislative Update from the Texas Public Policy Foundation
Government-funded health insurance to families making as much as $66,000 per year. Medicaid eligibility expansion that will cost state taxpayers almost $300 million during the next two years. Unemployment eligibility changes that will permanently raise employer taxes by at least $75 million per year. Gasoline tax changes that could increase the taxes motorists pay by as much as 125% during the next decade. Burdensome air regulations that could stop power plant expansions and smother the state’s economic growth. An expensive state grant program for full-day pre-kindergarten despite research showing no lasting benefits.
Sound like California? How about New York or Massachusetts? Sadly, that could very well be the 81st Texas Legislature’s list of achievements in about three weeks.
With less than 20 days left in the legislative session, we now have a fairly representative snapshot of legislation that has an opportunity for passage. Unfortunately, taxpayers will be lucky to escape untouched, and if current momentum continues, they will be negatively affected well beyond the current national recession.
The federal government led the way by passing a spending plan so large that it crowds out the private sector and will actually cost Texas more than 130,000 jobs, according to our research. The state legislature began shortly thereafter, and gave taxpayers a glimmer of hope when the House and Senate adopted versions of the budget that appeared to reasonably hold the line on spending, coming in at just under the rate of growth for population plus inflation. Despite the use of federal stimulus money, budget writers generally limited stimulus spending to one-time expenses. But then came the tidal wave of tax-and-spend bills.
Everyone has heard the speeches and remarks from our legislators about Texas’ superior economic condition, and disparaging remarks about states that are raising taxes during a recession. But if these measures are adopted, expect Texas to join the list of states being singled out for misplaced fiscal priorities.
Thank you for your continued interest in our work. While the overall outlook for the session is grim, there have been a few modest successes, as you’ll see in the items below. As always, you can review our research, testimony, commentaries, podcasts, news coverage, and blog at www.texaspolicy.com.
Yours in Liberty,Justin KeenerVice President of Policy and Communications
Legislation to create another state grant program for pre-kindergarten passed the Texas House last week and will be considered by the Senate Education Committee on Thursday May 14th. HB 130 creates a full-day pre-K program at the cost of $25 million which will likely grow in the future. Pre-K advocates claim this program will lower crime and prison costs, as well as decrease the number of high school dropouts, saving much more taxpayer dollars than it costs. As we wrote to the legislature, research and common sense do not support these claims. Full-day pre-K programs are not more effective than half-day programs. An expensive pre-K program will do nothing to improve Texas’ struggling middle schools and high schools, magically solve the dropout crisis, or save taxpayer dollars.
CHIP & Medicaid Expansion
HB 2962, which expands the Children’s Health Insurance Program (CHIP) from 200 percent to 300 percent of the Federal Poverty Level, is on the House Major State calendar tomorrow. Not only will this have a negative effect on the budget, but extending CHIP to families making up to $66,000 per year morphs the program into an expensive entitlement for the middle class. Expanding this program while 170,000 children projected to be eligible for CHIP are still not participating is a wasteful decision. Additionally, HB 2962 creates a buy-in program for families whose net income is between 300 percent and 400 percent of FPL.
Last week, the House Human Services Committee passed HB 1541, expanding eligibility for the children’s Medicaid program from six months to 12. The Legislature should resist efforts to expand this program as it was intended to provide health care to our poorest citizens, and a six-month eligibility period ensures that the services provided are to the truly needy. Increasing the continuous eligibility period will increase the number of Medicaid recipients by more than 250,000 and cost taxpayers almost $300 million in state funds over the next biennium. The 12-month eligibility proposal will be a significant burden at a time when the state needs to restrain spending ahead of a projected budget shortfall in 2011.
The U.S. Supreme Court’s infamous Kelo decision essentially changed private property ownership from a fundamental civil right to a privilege granted by the state. Almost four years later, Texans are still subject to Kelo-style takings. The Foundation’s Center for Economic Freedom just released two new bill analyses, Senate Bill 18: Texas’ Kelo Problem Still Not Solved and Eminent Domain: SJR 42, to explain why these two major eminent domain bills don’t address the main problem they were originally intended to solve, and how each can be amended to fix our state’s Kelo problem.
On the other hand, HJR 14 by Rep. Frank Corte, which just passed the Texas House, will fix Texas’ Kelo problem by allowing takings for public use “only if the taking, damage, or destruction is necessary for the elimination of urban blight on a particular parcel of property or for the possession, occupation, and enjoyment of the property by a common carrier, by an entity providing utility service, by the public at large, by the State, or by a political subdivision of the State.”
The House has passed HB 2139 to create an adult victim-offender mediation program. This is a means for the victim and offender to resolve a matter with a binding agreement for restitution. It means less government is required to do justice. Studies show victim-offender mediation reduces recidivism and improves victim satisfaction. The bill now awaits a hearing before the Senate Criminal Justice Committee.
Tollroad Transparency & Transportation Taxes
An amendment was adopted to the TxDOT sunset bill, HB 300, that made significant transparency progress for regional tollway authorities, but there is already talk around the capitol that the toll authorities are attempting to strip this provision. If this amendment stands, toll authorities will be subject to annual audits by the State Auditor. The toll authorities will also be required to post their check register on their website, with updates at least once a month. The information is to be maintained on the site for at least one year.
Other actions were not so positive for taxpayers. The House Transportation Committee passed out bills that could raise motor fuel taxes by as much as 125% over the next 10 years. HB 9 and HJR 9 provide for motor fuel tax indexing that will automatically increase taxes up to three cents per biennium, if approved by the voters. SB 855 will allow for a 10-cent local option motor fuel tax if adopted by voters. The combined, increased cost to the taxpayers of Texas over a 10-year period – if these options are adopted by all regions and if the inflation factor allows for the 3-cent-per-biennium increase – could be as much as $21 billion. Supporters of the measure argue that because the taxes require voter approval, they should be approved – but we disagree and offered an alternative measure that would give voters a true option to redirect existing taxes towards transportation, allowing regions to build more roads without raising taxes. See the unified opposition to this tax increase from the state’s leading research and taxpayer advocacy groups.
Higher Education Financial Transparency
Despite Texas’ notable transparency achievements, one area that needs improvement is higher education. Fortunately, the legislature has two bills this session that would help begin to shine the light on university spending and educational quality: HB 2504 and SB 174. HB 2504 – which would require all universities to post course budgets, syllabi, and curriculum vitae online for the public – passed overwhelmingly in the House this week. SB 174, which would create resumes for all public universities, has passed the Senate and was recently voted out of the House Higher Education Committee. Publicly posting this information in an easily accessible and understandable format would be a good first step to promote competition and empower students by providing them with the ability to choose which university could provide them with the best quality education for the lowest price. Here is a link to our testimony on HB 2504.