With sine die on May 29th quickly approaching, the 85th Texas Legislature has much work to do to reduce the size and scope of government. Let us consider the status of the Conservative Texas Budget Coalition’s key legislative priorities in the waning days of session.
Pass a 2018-19 Conservative Texas Budget (CTB): Senate Bill 1 is the state government’s budget this session that appropriates taxpayer dollars to fund state agencies and programs. To keep the growth in the state budget from excessively burdening taxpayers, the CTB limits the increase in appropriations to no more than population growth plus inflation outlined in the following graphic:
As budget conferees complete final negotiations, the following table shows that the passed versions of SB 1 by the Senate and the House can keep appropriations below the CTB limits:
However, the House version of SB 1 uses an accounting measure to delay the appropriation of $1.9 billion in general revenue for public schools until the 2020-21 biennium. The Foundation will include this type of alternative accounting measure when comparing SB 1 against the Conservative Texas Budget. Meanwhile, the House passed the supplemental House Bill 2 that would cover extra spending not funded last session, so the 2016-17 budget increase would remain below population growth plus inflation.
Eliminate Texas’ Business Margins Tax: The Senate passed Senate Bill 17 and House passed House Bill 28, whereby each specifies different levels of tax revenue that would trigger a cut in the franchise tax until it is eliminated. While neither bill has received a hearing in the other chamber, there is time to move one through that includes the best components of both to quickly eliminate this costly tax.
Approve a Conservative Spending Limit: The Senate passed Senate Bill 9 that would strengthen the current appropriations limit by expanding the funds covered, base the limit on population growth and inflation, and use past and projected data. While this bill is not as restrictive as the Foundation’s recommendations, SB 9 is a step in the right direction and awaiting a hearing in the House.
Stop the Runaway Growth in Texas Property Taxes: The Senate passed Senate Bill 2 that would require cities, counties, and special districts to get permission from local voters if property taxes increase by more than 5 percent. The House Ways & Means Committee passed a substitute for SB 2 that would increase transparency of property taxes. Although these do not quite match the Foundation’s recommendations, the House should quickly act so that a conference committee can combine these essential elements for local voters to have more control of their future.
Adopt the Sales Tax Reduction (STaR) Fund: The STaR Fund would allow legislators to reduce the state’s budget while keeping money in taxpayers’ pocket by reducing the sales tax rate for a determined period. House Bill 1723 would have created the STaR Fund but did not receive a hearing in the House Appropriations Committee; however, one mechanism to transfer money to the STaR Fund of using surplus tax revenue has been included in other bills, including HB 28 to phase out the business franchise tax.
Provide 21st Century Budget Transparency: Increasing state budget transparency by adopting a program-based appropriations bill that is posted online in real time would allow taxpayers more opportunities to hold their government accountable. The Senate version of SB 1 includes five agencies that submitted their budget request by program, so this process continues to take hold. This initiative is a step toward state government practicing zero-based budgeting, whereby an agency starts at zero dollars and the need for every dollar is explained based on a measure of effectiveness and efficiency. House Bill 114 and Senate Bill 272 would have required forms of zero-based budgeting, but neither have received a hearing, yet are good opportunities next session. Other efforts such as Senate Bill 1831 would increase budget transparency by requiring the comptroller to issue a report on state programs that do not receive appropriations.
Excessive government spending must be controlled so that taxes do not unnecessarily burden Texans. By passing the legislation still in the process above this session, the Texas model can be substantially improved so that the state’s economic competitiveness does not fall and prosperity can be advanced for all those willing and able to work for it.