Another day, another press conference, another spending cap proposal, and in a delightful turn of events, this one’s actually reasonable. Earlier today, Kelly Hancock, a Republican from North Richland Hills, filed the legislation which would enable voters to weigh in on whether Texas should tighten its spending cap. As it stands, the spending cap applies to general spending, not all-funds spending; it restricts biennial spending growth in relation to population, inflation, and personal income; and it can be overridden by a simple majority vote. Under Hancock’s proposal, the spending cap would apply to all spending; it would restrict spending growth in relation to population and inflation; and if the Lege wants to override it, they would need two-thirds of each chamber to approve.
Over the years a number of Republicans have advocated retooling the spending cap along these lines. Greg Abbott is among them; he recommends the three aforementioned tweaks in his campaign platform (section IV of the PDF), and makes a succinct but cogent case for them. As is probably clear, I’m an actual fiscal conservative, not a big-government progressive describing myself as a fiscal conservative for electoral gain. As such, I commend Hancock for offering this proposal because it, too, is actually fiscally conservative.
The most controversial provision, from a substantive perspective, is the idea of pegging spending growth to population and inflation. Since the spending cap was first adopted, in 1978, Texas has seen population growth and economic growth; the two are correlated, and both are expected to continue. But economic growth can easily outpace population growth, and create its own demands; the most recent example would be the recent boom in oil and gas production, which spurred Texas’s GDP but badly strained infrastructure in the Eagle Ford Shale. Insofar as the personal income provision of the spending cap serves as a rough proxy for economic growth, it can be useful. (For that matter—it’s hard for me to say because I can’t get my head around the idea of Texas in a recession—the personal income provision may make for a tighter spending cap in the event of that contingency.) But as the oil boom example suggests, personal income isn’t a perfect proxy for GDP, and future personal income growth will continue to be reflected in state and local revenue streams via sales and property taxes.
Beyond that, if you’re a fiscal conservative, extending the spending cap to cover all spending makes sense for obvious reasons. So does the two-thirds provision. Abbott’s platform argues that the simple majority requirement “effectively renders the existing spending limit a meaningless ‘safeguard.’” I don’t fully agree. I think the simplicity of overriding the cap is meaningful in its own way. As I put it Wednesday, this is a historic commitment that has been repeatedly reaffirmed by the Lege, which has had the option of busting the cap a number of times, and only done so once, in 2007 (and even then, they didn’t spend all the money). And in light of Wednesday’s spending-cap sabotage proposals, I’d add that the simple-majority provision can serve as a safeguard in a different way: it shows that Wednesday’s proposals were motivated by politics, not necessity. However, as a result of Wednesday’s proposals, I have to agree with Abbott on the practical issue: if we can’t count on the Lege to respect the spending cap, we’d better make it tougher for them to ignore it.
With all of that said: Hancock’s proposal is impossible to reconcile with the aforementioned proposals to exempt tax relief and debt serve from counting against the cap, which, as I argued yesterday, are tantamount to sabotage. (And Hancock, to his credit, isn’t trying to reconcile them: the only people who’ve signed on to the latter are Dan Patrick, Jane Nelson, Kevin Eltife, and Chuy Hinojosa.) Hancock’s proposal would make the spending cap a more powerful constraint. As a result, it would give fiscal liberals more incentive to try to get around the spending cap. The tax relief and debt service proposals, meanwhile, are case studies in sneaking past the spending cap. They set a clear and risky precedent. They open the door to ongoing ontological negotiations. If the Lege decides to exempt tax relief on the basis that “tax relief” sounds conservativey, it’s not going to be remotely hard for anyone to make similar arguments in the future. Why should we count Medicaid spending against the spending cap, for example, when Texas’s Medicaid spending is necessarily determined by the federal government’s parameters?
To lump these proposals together as some kind of fiscally conservative reform package is absurd, inconsistent, and dishonest. If Nelson’s exemption passes, it would directly undermine the reforms Hancock is proposing. And Hancock’s proposal, from a fiscally conservative perspective, is sound. All the more reason to oppose the others.