Conservative Groups Urge Strict Budget Spending Cap

A coalition of conservative groups on Tuesday set forth a strict proposal for the state’s fiscal future, emphasizing hard spending caps to limit the size of government.

The report from the Conservative Texas Budget coalition recommends that lawmakers limit funds for the 2016-17 state budget to current budget levels plus expected population growth and inflation rates. The report was created by the Texas Public Policy Foundation, which is one of more than a dozen groups in the coalition. Others include Americans for Prosperity - Texas, the National Federation of Independent Business - Texas, the Texas Eagle Forum, Texans for Fiscal Responsibility and Young Conservatives of Texas.

The proposal takes the current two-year budget and adds an expected 6.2 percent combined growth in population and inflation. That would bring spending levels to $140.5 billion in state funds and $214.4 billion total, including federal funds, and the report argues that legislators should spend not a penny more.

The proposal, written by former state Rep. Talmadge Heflin and economist Vance Ginn — both of the foundation's Center for Fiscal Policy — seeks to “draw a line in the sand” for the next legislative session, Jenna White, executive director of Young Conservatives of Texas, said at a news conference Tuesday.

At the event, a stream of leaders of conservative groups touted the necessity of keeping spending levels low to avoid tax increases and spur job creation. The report notes that the unemployment rate in Texas, where tax rates are among the lowest in the country, has beaten or equaled the national average for 88 consecutive months.

But despite the success of the “Texas miracle,” the leaders said, there is still a long way to go. The report calculates that state spending increases since 2004 have outpaced the growth rate of population plus inflation by 8.8 percent, translating to $8 billion in excess spending in 2014.

Texas has benefited from other states’ poor choices, yielding strong economic growth in comparison, but beating California is not the same as fully succeeding, said Michael Quinn Sullivan, president of Texans for Fiscal Responsibility. “The least drunk person in the room probably still shouldn’t be held up as a model of sobriety," he said.

The report emphasizes that spending limits are particularly necessary because Texas is forecast to enter the next biennium with a surplus — $2.6 billion per the Texas comptroller of public accounts’ estimation, or $10 billion, according to Heflin and Ginn, who incorporated expected increases in sales tax and school district property tax revenue.

The conservative groups warned on Tuesday that such stuffed coffers could turn into wasteful spending if legislators do not impose clear limits.

They also expressed hope that the report’s stark recommendations would be clear enough to make budget discussions accessible to all Texans. “This gives your grassroots groups in Texas an opportunity to go around this state and talk about what really happens in Austin,” said JoAnn Fleming, executive director of Grassroots America – We the People and chairwoman of the Legislature’s Tea Party Caucus Advisory Committee. “And we’re making sure that what happens in Austin no longer stays here.”

But not everyone agrees with the report’s findings or methodology. “They aren’t doing the math right,” said Eva DeLuna Castro, senior budget analyst at the Center for Public Policy Priorities, a liberal think tank. “There’s just a basic problem with how the understanding of population and inflation is carried out by [the Texas Public Policy Foundation].” The method of adding population growth and inflation rates underestimates the actual rate at which spending needs are naturally growing, which is closer to 9 or 10 percent, she said.

DeLuna Castro said the report fails to mention that current budget funding is still below pre-recession levels, adjusted for population growth and inflation. She also noted that the report forecasts large budget surpluses in part due to higher property tax revenue from local school districts, so the money will be coming out of Texas taxpayers’ pockets even if the state cuts other taxes.

Dale Craymer, president of the Texas Taxpayers and Research Association, said it was difficult to evaluate the merits of the proposal because it set forth a number rather than a full budget that incorporated specific components. “Until you can look at the trees, it’s hard to say what kind of forest you have.”

Though the report does not get into specific areas of spending to limit or cut, the conservative groups delved into a few targets at Tuesday's news conference. Light rail emerged as the greatest antagonist, with several people criticizing proposals to invest in such systems at the expense of strengthening existing transportation infrastructure.

Chuck DeVore, the foundation’s vice president for policy, said the groups would push for the elimination of the margins tax, which taxes businesses’ gross receipts. In the longer term, they plan to advocate for the creation of a fund that would temporarily reduce the sales tax rate, he said.