The 80th Texas Legislature should have enjoyed a relatively amicable budget process compared to the brutal battles of the past two sessions. Because there is an ample stash of cash carried over from prior years, lawmakers could be turning their attention to restoration of vitally needed programs such as children’s health, and strategic new initiatives such as the Governor’s proposal to make Texas the national leader in cancer research.
 
Instead, the state budget process is off to a frightening start for anyone who expects their elected officials to make reasoned and deliberate choices about budget priorities. In their haste to fund property tax cuts that were promised during last year’s special session on school finance, lawmakers are carving out areas of state spending and exempting them from the normal budget processes, including processes designed to ensure public participation. In adopting ad hoc rules that only apply to some parts of the budget, legislators are establishing dangerous precedents.

Two weeks ago, Senator Averitt proposed a resolution that would have asked voters to choose whether property tax cuts should be named in the state constitution as Texas’ number one spending priority. Texas Impact testified that legislators should not ask voters to make that decision, because the voters have elected legislators to be the “experts” and take the responsibility for setting state spending priorities.
 
The good news is, legislators heard what we said and decided to make the decision themselves without passing the buck to the voters. Unfortunately, they decided to make the decision as fast as possible without the full and fair debate that should accompany public spending decisions.
 
At issue is whether lawmakers should move forward with a plan to cut local property taxes using state general revenue—in addition to money raised specifically for this purpose during last year’s special session—without considering the impact of the cuts on any other parts of the budget. Even if most legislators feel duty-bound to honor the tax cut promise, they owe it to the public to make sure the costs and benefits of the tax cut plan are well-understood within the broader context of state spending.

When lawmakers passed their school finance reform/ tax cut plan last May, they knew they were building a hole into the budget. The latest estimate shows that the hole is more than $6 billion over the next two years: in other words, after accounting for new revenue from  reforming the franchise tax reform and increasing the cigarette tax, legislators would still need to dip into general revenue for more than $6 billion to meet the promises they made last spring.
 
Lawmakers feel lucky, because the comptroller estimates that they can expect to have $14.3 billion more available to spend over the next two years than they spent in 2005-2006. The amount over previous spending is being referred to as “surplus” revenue, implying that unneeded extra money that can be given away in tax cuts.
 
But in fact, the reason we can expect such greatly increased revenues over last year’s spending is because lawmakers made deep cuts in 2003 that have unraveled many of Texas’ longstanding policy priorities.
 
In 2003, lawmakers cut funding for state programs such as the children’s health programs and parks funding. Revenues have recovered as expected since 2003, but most of the cuts have not been restored, so the general fund balance has grown even while state services have suffered.
 
Now, facing rebounded revenues and healthy fund balances, lawmakers are proposing to spend nearly all of the cash carried over from prior years on local tax cuts instead of taking a balanced approach that would deliver tax cuts while also funding key state services.
 
Think of it like a landlord: if this month your rental income is unexpectedly low, you might put off maintenance on your rent properties. Next month, when rents are back to normal, you would probably put that deferred maintenance at the top of your “to-do” list.
 
But what if you decided that a lot of that maintenance is really “optional”? What if instead of catching up on your deferred projects, you decided to go out and buy your business partner an expensive gift, although your rents are only back to normal? Your business partner would probably want to have a serious heart-to-heart with you about priorities.
 
Lawmakers want to use the back-to-normal rent money to buy voters a present: they want to fund local property tax cuts with the state’s operating funds.
 
Like a business partner who might welcome a reasonable gift but not an ill-advised splurge, many Texas taxpayers believe lawmakers should be clear with the public about what priorities will go unfunded if so much of the “surplus” revenue is dedicated to local tax cuts. For example, with a small fraction of the “surplus,” legislators could completely restore the Children’s Health Insurance Program to its pre-2003 status when it was recognized as a national model program.
 
People of goodwill can disagree about spending priorities. Many Texans probably want every penny of state revenue to go for property tax cuts. Even groups like Texas Impact that favor growth in state spending support proportional tax cuts for the elderly and disabled. And what programs would be restored first? If we don’t fund the state parks, no one can use them—but if we don’t fund clean air and public safety programs, no one will want to go outside anyway.
 
These should be the issues and questions legislators debate. They could be taking public testimony and doing surveys in their districts to find out what their constituents think.
 
Instead, the Senate on February 14 took up a new resolution by Senator Ogden that would effectively appropriate more than $6 billion in general revenue for property tax cuts, taking those funds off the table before the rest of the state budget receives further consideration during the legislative session. The resolution was proposed and voted out in the same day with no public testimony; this was possible because Lt. Governor Dewhurst ruled that the decision to spend $6 billion of taxpayer money was “non-substantive.”
 
The next day, the House Appropriations Committee met in a hastily called meeting and passed out the same spending decision in what Chairman Warren Chisum announced was a “formal meeting,” meaning there was no need to take public testimony or broadcast the meeting over the legislative video broadcast service.
 
Texas Impact congratulates lawmakers for their willingness to own responsibility as the final arbiters of the state budget. Now, we hope they will rethink their stealth tactics and engage the public in a genuine discussion about spending priorities.