Texans today possess the same fighting spirit exhibited when the Texian army sent Santa Anna’s troops packing back to Mexico. So it is no surprise that a vigorous debate has erupted about the Texas budget — and Texas’ future prosperity — months before the 84th Texas Legislature convenes in 2015.
The debate began in April when our Texas Public Policy Foundation suggested reforms to the appropriations process that could lead to a sales tax cut for Texas consumers. Big spenders responded by objecting to any reduction in revenue.
The discussion intensified last month when the foundation showed, in its Real Texas Budget, that spending by the state government since 2004 has grown 8.9 percent faster than population growth plus inflation — this year at a cost of $8 billion.
These are not the numbers you’ll find in the state’s official budget documents, which last year showed that spending, with a few adjustments here and there, had actually decreased since 2001.
The big spenders quickly dismissed the foundation’s findings but did not challenge their accuracy. Instead, they mischaracterized our work while rehashing the budget debate from 2013.
There is a good reason they avoided a debate over the increase in state spending: It is not a debate they can win.
Most Texans understand the heavy costs of increased government spending, perhaps because since 2001 they have experienced firsthand the benefits of keeping spending under control.
During this period, Texas has created new jobs at almost five times the pace of the rest of the country. Wage growth is currently second in the nation. Texas cities are at or near the top of the fastest-growing cities in America. And no other large state comes close to matching Texas’ economic growth.
This growth, which encompasses Texans of all economic strata, has been accomplished without the massive spending increases advocated here in Austin and taking place in Washington and many other states.
Yet the spending debate continues, even as surging revenues at the state and local levels are likely to make a huge surplus of funds available to the 2015 Legislature. If all those funds are spent, Texas could easily find itself joining the ranks of states that spend themselves into economic decline.
This is why the foundation has joined with its allies to introduce the Conservative Texas Budget, which calls for a cap on spending growth in the 2016-17 state budget of population growth plus inflation, estimated to be 6.2 percent.
To maintain the strong economic growth that has been called the Texas Miracle, state spending of all funds should be capped at $214.4 billion; spending of state funds should be capped at $140.5 billion.
With more money likely to be available than could be spent under these caps, the question then becomes, “What should we do with all the ‘extra’ money?”
A lot of people believe they have the answer and are already lining up at the trough for a chance to get their hands on the surplus.
But the best answer is: Give the money back to taxpayers. The Legislature could accomplish this by eliminating the Texas margins tax and reducing the sales tax.
In his autobiography, An American Life, Ronald Reagan wrote, “If … you reduce tax rates and allow people to spend or save more of what they earn, they’ll be more industrious; they’ll have more incentive to work hard, and money they earn will add fuel to the great economic machine that energizes our national progress. The result: more prosperity for all.”
In Texas, we have proven that more taxes and spending are not the pathway to prosperity. Not everyone has learned the lesson, however.
So it is a good time to be having this debate. The stakes couldn’t be higher.
Bill Peacock is vice president for research and director of the Center for Economic Freedom at the Texas Public Policy Foundation. He may be reached at email@example.com.