American households are under pressure like never before.
Thanks to spendthrift politicians in Washington D.C. and unelected central bankers prone to mistakes, the average American is paying more for food, gas, rent, and clothing. In fact, it’s estimated that “the average US household is now paying $450 more per month for the same goods as last year due to today’s 40-year-high inflation.” That big, new monthly burden is forcing many people to make all sorts of tough choices, like postponing the purchase of a new car, putting off taking a vacation, switching to generic brands, and even picking up a side gig to bring in extra income.
It’s hard to say when the economic storm will pass. America’s political elite appear either unwilling or unable to address the root causes of the crisis—a leadership deficit, central planning failures, a souped-up administrative state, and fiscal recklessness. And so American households will likely endure tough times into the foreseeable future.
But Texas households may be a different story.
Like everyone else, Texans are struggling with inflation-related cost of living increases; but unlike others, they reside in a state with a strong conservative ethos and a robust economy. As a result, Texas state government is experiencing record revenue growth, presenting policymakers with a golden opportunity to cut property taxes and give people some much-needed breathing room.
The potential for real relief is significant, too.
Headed into the next legislative session, which begins January 2023, the Texas Comptroller anticipates state lawmakers will have as much as $30 billion in excess funds, stemming from a combination of surplus general revenue and accumulated state savings. Here’s more from The Texan: “…current projections estimate the state treasury to have a balance of between $15 billion and $16 billion at the end of the year. The Economic Stabilization Fund (ESF), also known as the state savings account or ‘Rainy Day Fund,’ is estimated to have a $13.5 billion balance by January.”
Needless to say, it’s expected that the state will have a significant windfall. Though to be fair, state lawmakers won’t be able to give it all back. That’s because the Medicaid program will likely require $3 – $5 billion in supplemental appropriations and an as-yet-unknown amount will be needed to pay for a tax relief measure passed in 2019. Also, it wouldn’t be prudent to entirely empty out the state’s savings account, especially with economic uncertainty on the rise.
Still, it’s not unthinkable that state lawmakers could return $10 billion or more to Texas taxpayers next session while still funding the core functions of government and retaining a sizeable reserve. The idea in general seems to have won some influential backing too.
On Tuesday, Texas Gov. Greg Abbott tweeted out support for the use of surplus funds to lower taxes, saying: “We must use a substantial portion of this money to cut property taxes in Texas.” For its part, the Texas Public Policy Foundation has also championed the same notion, urging the legislature to put “at least 90% of the surplus to tax relief.”
In the ideal, state lawmakers would return any surplus funds in a way that engenders lasting change, too. That is, excess monies ought to be used to permanently buy down the school district maintenance and operations (M&O) tax rate, which would see the state assume a greater role in public education funding while also enabling it to cut taxes. If this approach were repeated enough in earnest, then policymakers could eventually get us to a place where the M&O tax is eliminated entirely.
But for now, it’s best to focus on the 2023 legislative session. Then policymakers will have a historic opportunity to set Texas apart from every other state by returning surplus and savings back to people ravaged by inflation—and doing so in a big way.
Perhaps then those in Washington D.C. will be reminded of what good government looks like.