The Legislature Is Hoarding $18 Billion of Your Money
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When the Eighty-fourth Legislature ends on Monday, your Texas leaders will brag that they have balanced the state budget and put forth proposals to cut the state business tax and to reduce property tax burdens. What they won’t tell you is they are hoarding more than $18 billion that could have gone to deeper tax cuts, or to repairing the state’s infrastructure or improving roads, or to reducing state debt, or to eliminating a deficit in the pension fund for state employees, or even to public education.
Nope. They’re just going to hoard that money like the dragon Smaug sitting on his pile of gold and jewels and other treasurers in J.R.R. Tolkien’s The Hobbit.
A vote on the final two-year state budget is expected Friday. That $18 billion is an estimate based on unspent money from the comptroller’s revenue estimate plus the expected ending balance of $11.1 billion in the state’s so-called Rainy Day Fund. The name Rainy Day Fund implies holding onto the money for a rainy day when the revenues aren’t there to pay the bills, but this really should be called the Texas Hoarding Fund.
In fact, until Comptroller Glenn Hegar suggested change this year, Rainy Day Fund money had just been sitting in interest-free accounts. At least Governor Greg Abbott has signed legislation to let Hegar invest the money to make money for the state instead of allowing billions of dollars to sit in the government’s equivalent of a mason jar buried in the back yard. That doesn’t make the state’s past fiscal irresponsibility any less reprehensible, because the leadership still is hoarding the money as smugly as Smaug. I can only imagine that the interest earnings will become more money coveted by the dragon.
Eighteen billion dollars is a big number and difficult to grasp: $18-000-000-000. A stack of one billion one-dollar bills is about 68 miles tall. So the stack of bills that the state is hoarding is about 1,224 miles tall. A journey from Texarkana to El Paso is only about 800 miles. To get a feel, drive From Here to There and Halfway Back Again.
To put this into another perspective, the money the state is hoarding would pay for an entire year of police and fire protection, garbage collection and wastewater service, parks and libraries and all the other incidental operations for the cities of Austin, Dallas, El Paso, Fort Worth, Houston and San Antonio – combined.
For all you tea party, conservatives who believe you are about to get a $3.8 billion tax cut on property and franchise taxes will make government smaller, you’ve been played. It all is a three-card Monte, a street hustle with Lieutenant Governor Dan Patrick as busker-in-chief. These are tax cuts that DO NOT REDUCE GOVERNMENT SPENDING. They just shift the tax burden from local school districts to the state.
Remember that great public school property tax cut you homeowners received in 2007? (You don’t? I’m sure there was one. But then we got headlines like Paul Burka’s 2007 What Happened to the Property Tax Cut?)
No one remembers it, but you are still paying for it. State budget writers have told me that the proposed budget will include at least $14 billion in state payments to school districts to cover the continuing costs of tax cuts passed under governors George W. Bush and Rick Perry.
That’s a stack of one-dollar bills 952 miles high to pay for a tax cut no one remembers getting.
This year’s proposed tax deal this year provides about $1.2 billion in tax relief for homeowners by increasing the homestead exemption by $10,000 – likely to result in an average savings of about $126 a year for each homeowner. Those cuts will be paid for by state taxpayers and become part of the continuing payments to school districts.
Who gets and who gives? According to the federal IRS, there were almost 11.6 million personal income tax returns filed by Texas individuals and families in 2012, the most recent year with numbers available. Of those, 2.4 million claimed a deduction for property taxes. That means there are about 9.2 million Texans and Texas families who will get nothing from the proeprty tax cut that Patrick and Abbott have pushed so hard to get. That is more people than live in the thirteen largest cities in Texas – combined.
Those 9.2 million Texans who get nothing will be paying for those who do, mostly through sales taxes, tobacco taxes and alcoholic beverage taxes. The working people who rent instead of own will have to work just a little harder so that homeowners can enjoy $126 in savings.
Former Governor Perry had a saying, the best fiscal conservative government doesn’t spend all the money, and yet in 2007 he criticized the Legislature for leaving $2.5 billion in tax revenue and $4 billion in the Rainy Day Fund unspent. That was money, he said, that could have gone to deeper tax cuts or infrastructure spending. The hoarded money now is three times that large.
Maintaining a balance of $3 billion to $5 billion against an economic downturn or an expected public school finance ruling unfavorable to the state is responsible. But state lawmakers are not being fiscally responsible when they treat the state spending cap like a commandment on a stone tablet or when they think of the Rainy Day Fund as an untouchable Golden Calf. Hoarding taxpayer dollars is no more responsible than runaway spending.
This Legislature could have put a lot more money on one-time expenditures or it could have financed much larger efforts to return revenues to the citizens. Instead, the state’s leaders sat on the money like the treasurer of Smaug. Poor Texans, poor little Hobbits are we all.