Spending cap

The transportation debate and the state spending cap, revisited

Apr 23, 2009 By Paul Burka

Yesterday I posted a report on Texas Public Policy Foundation’s testimony before House Transportation earlier this week, in which I questioned TPPF’s continuing advocacy for measuring the growth in state spending compared to an index of population growth plus inflation. Later, I learned that Michael Villarreal, one of the sponsors…

The transportation debate and the state spending cap

Apr 22, 2009 By Paul Burka

The Texas Public Policy Foundation testified before the House Transportation committee this week concerning the mammoth local option transportation funding bill that has passed the Senate. TPPF's Justin Keener expressed alarm about the rising cost of government (to no one's surprise): Between 2000 and 2008, the state’s total budget grew by 73.1 percent from $49.5 billion to $85.7 billion, while the sum of population plus inflation only increased by 41.3 percent over the same period. That means the cost of government per person has gone up during this decade. The discrepancy between spending and the population plus inflation measure is even more distinct at the local level. Keener's point is that government at all levels is growing faster than the index of population growth plus inflation. This index represents what TPPF, and conservatives generally, believe the state spending cap ought to be. The question I have is whether TPPF's measure of population growth plus inflation is the best gauge of how much spending the state can afford. I believe that the answer is no. Texas already has a spending cap on general revenue. This is Article 8, Section 22 of the state constitution, adopted in 1978: RESTRICTION ON APPROPRIATIONS. (a) In no biennium shall the rate of growth of appropriations from state tax revenues not dedicated by this constitution exceed the estimated rate of growth of the state's economy. The legislature shall provide by general law procedures to implement this subsection. [Section (b) authorizes the Legislature to suspend the cap by majority vote if it declares an emergency.] Economic growth is determined by the Legislative Budget Board--not the staff, but the elected officials who comprise the board. The LBB provides five scenarios for estimated economic growth, ranging from the most optimistic to the least, and the Board chooses one. In 2007, for example, it chose the least optimistic. I believe that using the measure of economic growth has served Texas well. It is a a realistic spending cap, whereas inflation plus population growth is an ideological one, designed to achieve a predetermined outcome of less spending. Economic growth measures the ability of the state to pay for state services: greater in good times, lesser in bad times.