The Conservative Texas Budget Coalition’s key fiscal priorities for the 2017 Texas Legislature would support more economic prosperity for all Texans. The Foundation applauds much of what Governor Abbott said in his State of the State speech and included in his budget proposal to make these priorities a reality by advancing the case for the second consecutive conservative budget, tax relief, not dipping in the rainy day fund, strengthening the spending limit, and increasing budget transparency.
Here are a few highlights:
Put the Franchise Tax on a Path to Elimination
Governor Abbott said to put the franchise tax on a path to elimination by noting, “We must continue to cut the business franchise tax until it fits in a coffin.” After cutting it by 25 percent last session, he recommends saving businesses another $250 million by cutting the tax rates. Our research shows that the biggest economic bang for the buck comes from ending this onerous business tax, so further cuts are welcome news.
Approve a Conservative Spending Limit
We have long advocated for a stronger spending limit that covers the entire budget, or at least all state funds, and is based on the lessor growth rate of population growth plus inflation, personal income, or gross state product during the two fiscal years immediately preceding a regular legislative session. During much of the last two decades, the lowest of these three metrics is population growth plus inflation, which is why we use it to calculate the growth rate of the Conservative Texas Budget. The Governor reiterated the need for a similar spending limit when he said the following: “To help cement conservative Texas budgets for decades to come, the legislature should pass a constitutional amendment limiting growth in the state government to growth in population growth and inflation” (emphasis added). This would be a huge step in the right direction to limiting the size and scope of government so you have the freedom to do more with your money.
Stop the Runaway Growth in Property Taxes
We consider the best way to limit the 14th most burdensome property tax and the 6th highest effective property tax rate nationwide is to educate Texans at the ballot box on the tax ramifications of their vote while requiring voter approval for property tax increases that exceed the lesser of 4 percent or population growth plus inflation. Governor Abbott highlighted the huge burden of property taxes when he said, “That is why we need property tax reform that prevents cities from raising property taxes without voter approval. We need serious property tax reform with a real revenue cap.”
Provide 21st Century Budget Transparency
It’s time for the budget to be as transparent as possible and be provided in real-time for the legislators and all Texans to have timely access to how their tax dollars may be spent. We have advocated for the budget to be presented by program instead of by strategy online in real-time throughout the legislative process. This would not only increase budget transparency, but it would also provide easier access to conducting zero-based budgeting. The Governor highlighted the need for “program-level budgeting” and “zero-based budgeting” in his budget document.
The Texas model of less government spending and taxes, stable regulation, no personal income tax, and fewer frivolous lawsuits has long supported an economic environment conducive to robust economic growth and job creation. However, there’s much more that legislators must do to keep Texas from losing its competitiveness with other states and for more people to have the best chance to prosper. The key fiscal priorities highlighted by the Conservative Texas Budget Coalition would help achieve these goals.