Analysis: For Budget Writers, Tax Cuts Are Spending Decisions

To think like a budget writer in the Texas Legislature, you need to treat tax cuts as spending decisions.

A budget starts with a stack of money and the question of how to use it. A tax cut goes on the same list as an increase in spending on state police, mental hospitals, public schools — or anything else interested parties seek.

This is familiar ground for the contestants. Some legislators get elected talking about what they would spend on programs and services like education, health care, highways or water. Some get elected talking about smaller government — about curbing taxes and reducing fees. It is not entirely a partisan split, and there is rarely a clean line between the product-sensitive legislators and the price-sensitive ones.

In 2011, lawmakers came to Austin and found a fiscal mess. They made some cuts, like more than $5 billion in public education spending. And they reached for a familiar bag of financial tricks, like delaying payments from one fiscal year to the next, that helped balance the books without deeper cuts to existing programs.

Two years later, they came back to find plenty of money. They undid their accounting magic, setting the books straight and moving payments into the proper budget years. They restored education financing and other cuts. They had enough money, in other words, to put the budget back on its pre-2011 course.

In 2015, assuming the current financial forecasts are correct and the economy keeps churning along, Texas lawmakers will again have plenty of money. This time, however, they will not have the list of obligations they faced in 2013, so they will not have to restore cuts or unwind their temporary financial ploys.

These are the times that try the nerves of the budget folks. Writing a state budget when money is tight can be less stressful — at least for the authors — than writing one when money is abundant.

The queue is already forming. The Texas Public Policy Foundation, a conservative outfit that produces studies it hopes will become law, is promoting a temporary sales tax cut that would have the effect of sending any government surplus back to taxpayers. The same group has previously promoted increasing sales taxes to pay for the abolition of property taxes. On the other side, the Center for Public Policy Priorities, a liberal outfit, is telling lawmakers that the state would have no surplus at all if they properly funded basic needs.

Both the Texas House and the Senate will enter the next session with new lawmakers writing the budget. Jim Pitts, the Republican chairman of the House Appropriations Committee, and Tommy Williams, the Republican chairman of the Senate Finance Committee, will not be back next year. New people will be in their seats, getting financial numbers from a new comptroller of public accounts and watching for policy signals from a new governor — and possibly a new lieutenant governor.

The most experienced people at next year’s budget hearings might be in the audience, not in the big leather chairs reserved for committee members. Experience will not necessarily carry the arguments, but at least the supplicants can start fresh, testing their persuasive abilities on lawmakers who have not already heard their stories several times.

Last year’s legislative session revealed some willingness to spend money on infrastructure. Lawmakers put a bond issue on the ballot — it passed in November — that raises money for water projects. One to raise money for highways, also approved by the Legislature last year, will be on the ballot next November.

More money is needed for both, if you go by the reports from various engineers and policy wonks. It costs more than $4 billion a year to keep the state’s transportation network from degrading — the price tag for making sure things do not get worse. Pending litigation over public school spending could produce judicial demands for higher spending there. Water got some money, but not enough. And hordes of voters have demonstrated their interest in lower taxes and fees.

Choosing favorites is never easy, but “no” is easier to swallow when money is tight.