Gains in Texas Budget a Source of Hot Debate

A coalition of Republican leaders and conservative groups agrees that the Texas Constitution could use a tighter cap on state spending.

Where they disagree is why such an amendment is needed in the first place.

Officials including Gov. Rick Perry and Lt. Gov. David Dewhurst say they want to amend the Constitution to limit spending growth to the combined rate of population and inflation to keep Texas running conservatively, as they say it has been for years. Currently, the Constitution restricts spending to the typically higher rate of growth in state personal income.

“We need to make constitutionally sure the fiscal conservatism that got us to where we are now will continue in the decades to come,” Perry said in September.

For some prominent conservative activists, the proposal is about ending the excessive spending growth that they say has occurred over the last 20 years.

“The 2012-13 Texas state budget is a welcome break from that trend, but with the threat of a national recession looming, now is not the time to lose fiscal discipline,” read a statement sent out last month and signed by leaders of organizations like the Texas Public Policy Foundation and Americans for Prosperity-Texas.

From 1992 to 2010, the two-year budgets passed by Texas lawmakers have roughly tripled in size, to $187.5 billion from $62.8 billion. The budget grew an average of 3.9 percent every two years once inflation and the state’s population gains are factored in.

The trend shifted sharply last year largely because of a multibillion-dollar shortfall. The current $173.5 billion budget represented a sharp cut in financing but was also widely viewed as incomplete. Medicaid, for instance, was underpaid by nearly $5 billion. When the Legislature convenes in January, lawmakers plan to pass a supplemental budget that will add billions to the current budget’s final tally.

“The rule of thumb has been pretty much look and see how much money we have to spend and spend it,” said Talmadge Heflin, a budget expert with the Texas Public Policy Foundation and a former legislator. “Last couple of sessions, at least the last one, they’ve had to prioritize more because the money hasn’t been there.”

When talking about the state’s budget growth, Texas Republican lawmakers point a finger at federal mandates and entitlement programs. Instead of the full budget, they tend to tout the smaller growth in general revenue spending, the portion of the budget over which state officials have the most discretion. Not counting the current budget, general revenue spending, adjusted for population growth and inflation, has grown an average of less than 1 percent every two years since 1992.

“What is driving the growth is Medicaid, and that is being made by decisions in Washington, not decisions that state lawmakers made,” said Dale Craymer, the president of the Texas Taxpayers and Research Association.

The debate among Republicans over the state’s fiscal record exposed deep fissures in the party during this year’s primary. In his losing bid for U.S. Senate, Dewhurst vowed to bring the “Texas model” of fiscal restraint to Washington, a promise that was mocked by the winner, Ted Cruz, who had the support of Tea Party groups.

“In his entire tenure in elected office, he has never once cut one penny from the state budget,” Cruz said during a televised debate earlier this year.

At the time, Dewhurst accused Cruz of lying. Last month, Dewhurst said critics were still misinforming Texans about the state’s budget history.

“We have kept our spending as low as possible while, in my judgment, still funding our priorities,” he said, “and not enough credit is given to the members of the Legislature for that.”

The graph below shows Texas government spending from the 1992-93 budget to the current 2012-13 budget. We've included both total spending and general revenue as well as both of those figures adjusted for the state's population growth and inflation. The data is from the Legislative Budget Board. The 2012-13 figures are based on what the Legislature appropriated in 2011, and are expected to grow before the end of the budget cycle.