Texas Legislature Sets Budget Priorities

Texas Legislature Sets Budget Priorities

The new year has our families—and yours—thinking about our budget priorities for the coming year. Some families will be cutting back on things like fast food and increasing savings.

 But a budget is more than just a spending guideline; it’s also a statement of priorities. It reveals what’s important to us, beyond the basics of food, clothing, and shelter.

 It’s the same with the state’s budget.

 The 86th Texas Legislature just started, but both the House and Senate have recently released their initial recommended budgets for the upcoming 2020-21 period. We have a long way to go before these are finalized. But these recommendations give us a guide of each chamber’s priorities—much like a family’s budget.

 While it’s important for legislators to think about how a family budgets, they should be even more fiscally prudent—because they are spending someone else’s money.

 Let’s discuss each chamber’s legislative priorities based on its recommended budgets. But first, we need to keep government reined in for Texans to prosper.

 Government shouldn’t grow faster than the average taxpayer’s ability to pay as appropriately measured by population growth plus inflation. We call that a Conservative Texas Budget (CTB), and we’re joined by 17 other groups in asking legislators to let that be their guide. The two previous state budgets have come in under that limit; we should shoot for a historic third straight CTB.

 This session’s Conservative Texas Budget limits the increase in appropriations to no more than 8 percent based on population growth and inflation over the last two fiscal years, giving availability of $156.5 billion in state funds and $234.1 billion in all funds (state and federal). We exclude $7.1 billion in federal funds from our calculations for Harvey-related disaster recovery expenditures noted in the state’s recommended budgets because these should be only one-time, unwarranted costs.

 The House budget appropriates $160.2 billion in state funds, including $633 million in money from the Rainy Day Fund, and $240.2 billion in all funds, which both exceed the CTB limits.

 Within these amounts, the House prioritizes public education and property tax reform to the tune of $9 billion. However, the budget doesn’t distinguish what policy or how much to these priorities as these decisions will be determined by the appropriate committees during the legislative process.

 The Senate budget, on the other hand, doesn’t use the Rainy Day fund and fortunately comes in below the CTB limit with $155.8 billion in state funds but above the limit with $235.8 billion in all funds.

 The Senate allocates $6 billion to their top priorities of public education and property tax reform. Specifically, $3.7 billion goes to an across-the-board $5,000 increase in teacher pay and $2.3 billion to property tax reform.

 Priorities matter, and both chambers have clearly prioritized public education and property tax reform.

 Comparatively, the Senate’s budget looks to be in relatively good shape as the amount of state funds is within the Conservative Texas Budget’s limit but the amount of all funds needs work. And the House’s $3 billion in additional money compared with the Senate for the same general priorities is nearly its budget’s excess above the CTB limit in state funds.

 With just a bit more fiscal restraint, a third straight Conservative Texas Budget is possible so the average Texan’s tax burden doesn’t grow.   

 Regarding priorities, across-the-board pay raises for teachers might be popular, but they’re not the most effective way to spend that money.

 Instead, legislators should prioritize improving the classroom by making it clear to local districts that they must spend the money they already have responsibly and inside of the classroom—not on administrative bloat or water parks. And this should include encouraging districts to adopt merit-based pay programs—something that’s worked in Dallas ISD and has been supported by Gov. Greg Abbott.

 The reality is that by itself, new money won’t solve public schools’ problems. And it’s unlikely to do anything about the problem of skyrocketing property taxes.

 Instead, passage of the recently released property tax reform package by state leaders of local revenue triggers of 2.5 percent should be paired with taxpayer funds collected by the state above a certain threshold to lower property taxes.

 Specifically, this plan would use those new state dollars to freeze the maintenance and operations (M&O) property tax of school districts (which makes up the biggest portion of your yearly tax bill) and keep lowering that tax over time until it’s eliminated.

 These property tax relief efforts would cut the property tax burden in half over time. This could save someone paying $5,000 in total property taxes today more than $38,000 over 12 years.

By simply reining in government spending, Texans can receive substantial property tax relief so Texans have the best chance to prosper.

 Talmadge Heflin is director of the Center for Fiscal Policy and Vance Ginn, Ph.D., is director of the Center for Economic Prosperity and senior economist at the Texas Public Policy Foundation.

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