​Yesterday, the Legislative Budget Board (LBB) released the Fiscal Size-Up 2016-17 Biennium that chronicles the $209.1 billion budget the Legislature passed last session.

The Conservative Texas Budget Coalition, comprised of the Foundation and 12 other prominent organizations, have called for a second consecutive conservative Texas budget, elimination of the business margin tax, more budget transparency, and other key items. For maximum transparency, budget data should be available online throughout the legislative process and be broken down by program instead of by opaque strategies.

To provide increased budget transparency, the Foundation released six papers in the Spotlight series that highlight each of the ten articles of the Texas budget. In addition to providing taxpayers with timely information about where their tax dollars are going, this series also provides more information about budget trends since the 2004-05 budget in each article and identifies functions that increase by more than 6.5 percent from the previous budget.

The 6.5 percent figure was the maximum growth rate that the Coalitionrecommended for the 2016-17 budget based on the rate of population growth plus inflation during fiscal years 2015 and 2016. We are working on providing a similar figure for the next budget in the next month or so before agencies begin submitting their legislation appropriation requests.

The Foundation recently had a commentary in the Austin American-Statesman that highlighted the Spotlight series. Here is key information from that commentary with links to each of the papers for your convenience.

• Article I is $6.3 billion for general government functions. This article has increased by 80 percent since 2004-05 and is up 17.5 percent from the previous budget, both outpacing the key measure in each period. The largest appropriations increase of 691 percent was in the Facilities Commission, primarily for new buildings.
• Article II is 37 percent of the budget, making it the second-largest item. Its $77.2 billion budget for health and human services functions has increased 76 percent since 2004-05 and only 3.3 percent from the previous budget. It was the largest item for the first time in Texas history in the 2014-15 budget and likely will continue to increase. Driving this growth is a 14.9 percent increase in the Department of Family and Protective Services for foster care and a rising amount to behavioral health services that now totals $6.7 billion.
• Article III, the largest budget item, includes K-12 and higher education that totals $78.6 billion. The current budget is up 59 percent since 2004-05 and up the largest amount of $3.9 billion, or 5.1 percent, from the previous budget.
• Article IV includes the judiciary. Article V includes funds for public safety and criminal justice. These two articles have increased by less than the key measure compared with the previous budget but the judiciary budget has increased by 88 percent since 2004-05.
• Article VII relates to business and economic development and includes the Department of Transportation and Texas Workforce Commission. It’s budget increased by 77 percent since 2004-05 and by only 1.7 percent from the previous budget. Article IX includes appropriations to general provisions that apply to multiple articles, and no amount is usually included in the final budget. However, $390.2 million is included in the current budget for salary and benefits increases.
• Articles VI and VIII showed decreases in the current budget, but that doesn’t tell the entire story. Appropriations to Article VI, which is for natural resources functions, declined by 37 percent because of a one-time amount of $2 billion for water projects in the previous budget. However, it increased by 86 percent since 2004-05. Funding for regulatory functions, Article VIII, declined 18 percent primarily because of a one-time decrease in the Public Utility Commission’s system benefit fund for the low-income electricity discount program.
• Article X includes functions related to the Legislature that includes the Senate, House of Representatives, and Legislative Council. Appropriations increase by $12.1 million, or 3.2 percent, to $386.1 million in the 2016-17 all funds budget.

It’s important to watch each article closely to ensure that the 2018-19 budgetdoesn’t exceed population growth plus inflation to keep a solid economic foundation for Texans to prosper.

​AUSTIN – Today, the Texas Public Policy Foundation released a paper by Center for Fiscal Policy Director Talmadge Heflin and Economist Dr. Vance Ginn on Articles VIII, IX, and X that include regulatory, general provisions, and legislature functions, respectively, in Texas’ state budget. The paper, Texas Budget Trends in Articles VIII-X, is the sixth of six in a series that examines trends in each article of the Texas budget.

“The 2016-17 budget increases funds to Articles VIII and X by less than population growth plus inflation from the previous budget and includes Article IX funding for the first time since at least the 2004-05 budget,” said Mr. Heflin. “Article VIII’s budget declined 18 percent because of a one-time decrease for the low income discount program for electricity in fiscal year 2016. Despite one budget cycle changes, these areas must be watched closely as agencies make their requests and during the legislative process next session.”

“Since the 2004-05 budget, the total state budget is up 40 percent for Article VIII and up 18 percent for Article X compared with an estimated 55 percent increase in compounded population growth plus inflation,” said Dr. Ginn. “While these trends indicate that these areas of the budget haven’t grown too fast over time, there are several functions that should be scrutinized to manage growth in the total budget.”
 
To read the full report, visit: http://txpo.li/spotlight-texas-budget-trends-articles-viii-x
The Honorable Talmadge Heflin is Director of the Center for Fiscal Policy at the Texas Public Policy Foundation, a non-profit, free-market research institute based in Austin. In the 78th Session, Heflin served as chairman of the House Committee on Appropriations and navigated a $10 billion state budget shortfall through targeted spending cuts that allowed Texans to avoid a tax increase. 
 
Vance Ginn, Ph.D., is an Economist at the Texas Public Policy Foundation, a non-profit, free-market research institute based in Austin. 

The Texas Public Policy Foundation is a non-profit, free-market research institute based in Austin, Texas.

http://www.texaspolicy.com/press_release/detail/tppf-releases-spotlight-paper-on-texas-budget-trends-in-articles-viii-x​

AUSTIN – Last Friday, the Texas Workforce Commission released Texas labor market information for April 2016. The Texas Public Policy Foundation’s Economist Dr. Vance Ginn issued the following statement:

“Texas created 8,300 net nonfarm jobs last month. This extends the remarkable positive jobs creation streak to 65 of the last 67 months despite economic headwinds,” said Dr. Ginn. “Fortunately, the economic tailwinds statewide supported by a diversified economy and pro-growth policies provide Texas families with robust opportunities to flourish. Texas’ 4.4 percent unemployment rate has now been at or below the U.S. average rate for a phenomenal 112 straight months. We recommend that the Texas Legislature expand on the Texas model’s limited government foundation by passing the second consecutive conservative budget and putting the business margin tax on a path to elimination.”

Vance Ginn, Ph.D. is an Economist in the Center for Fiscal Policy at the Texas Public Policy Foundation.

The Texas Public Policy Foundation is a non-profit, free-market research institute based in Austin, Texas.

http://www.texaspolicy.com/press_release/detail/new-texas-jobs-report-shows-unemployment-rate-at-or-below-us-average-for-112-consecutive-months​

Find us on Facebook
Follow us on Twitter

​AUSTIN – Texas Public Policy Foundation’s Center for Fiscal Policy Director Talmadge Heflin will testify before the Texas Senate Finance Committee TODAY, Tuesday, May 17, at 10:00 a.m. CDT in room E1.036 of the Texas State Capitol. Mr. Heflin will give invited testimony on an interim charge to recommend reforms for strengthening the state’s spending limit and consider options for providing tax relief with available revenue above the limit.  
“Limiting the size and scope of government is best achieved by passing a conservative budget. We believe this is a budget that doesn’t increase by more than population growth plus inflation based on actual past data,” said Heflin. “Any funds available above this limit should be placed in a fund to restrain growth in the budget by returning those dollars to taxpayers. These steps would limit government and allow Texans the best opportunity to improve their well-being.”

WHO:             The Honorable Talmadge Heflin, Director, Center for Fiscal Policy, TPPF
 
WHAT:           Testimony before the Texas Senate Finance Committee
 
WHEN:          TODAY, Tuesday, May 17, 2016
                      10:00 a.m. CDT
 
WHERE:        Texas State Capitol
                       Room E1.036

More information about the hearing can be found at: http://txpo.li/1XwQxhY
 
Mr. Heflin’s full testimony can be found at: http://txpo.li/1XwQTVL
 
To schedule an interview with Mr. Heflin, please contact Caroline Espinosa at [email protected] or 512-472-2700.

The Honorable Talmadge Heflin is Director of the Center for Fiscal Policy at the Texas Public Policy Foundation, a non-profit, free-market research institute based in Austin. In the 78th Session, Heflin served as chairman of the House Committee on Appropriations and navigated a $10 billion state budget shortfall through targeted spending cuts that allowed Texans to avoid a tax increase. 

The Texas Public Policy Foundation is a non-profit, free-market research institute based in Austin, Texas.

Find us on Facebook
Follow us on Twitter

http://www.texaspolicy.com/press_release/detail/todaytppfs-talmadge-heflin-to-testify-beforetexas-senate-finance-committee​

​AUSTIN – Today, the Texas Public Policy Foundation released a paper by Center for Fiscal Policy Director Talmadge Heflin and Economist Dr. Vance Ginn on Articles VI and VII that include natural resources and business and economic development functions in Texas’ state budget. The paper, Texas Budget Trends in Articles VI and VII, is the fifth of six in a series that examines trends in each article of the Texas budget.

“The 2016-17 budget includes increases in funds to Articles VI and VII by less than population growth plus inflation from the previous budget,” said Heflin. “In fact, Article VI declined by 37 percent, however, this decline was from a one-time removal of funds from the budget for water projects. Despite one budget cycle changes, budget trends suggest these areas should be watched closely as agencies make their requests and during the legislative process next session.”

“Since the 2004-05 budget, the total state budget is up 86 percent for natural resources and up 77 percent for business and economic development compared with an estimated 55 percent increase in compounded population growth plus inflation,” said Ginn. “These trends indicate individual functions that increase by more than this key metric deserve scrutiny each session to manage growth in the total budget.”
 
To read the full report, visit: http://txpo.li/spotlight-texas-budget-trends-articles-vi-vii
The Honorable Talmadge Heflin is Director of the Center for Fiscal Policy at the Texas Public Policy Foundation, a non-profit, free-market research institute based in Austin. In the 78th Session, Heflin served as chairman of the House Committee on Appropriations and navigated a $10 billion state budget shortfall through targeted spending cuts that allowed Texans to avoid a tax increase. 
 
Vance Ginn, Ph.D., is an Economist at the Texas Public Policy Foundation, a non-profit, free-market research institute based in Austin. 

The Texas Public Policy Foundation is a non-profit, free-market research institute based in Austin, Texas.

Find us on Facebook
Follow us on Twitter

http://www.texaspolicy.com/press_release/detail/tppf-releases-spotlight-paper-ontexas-budget-trends-in-articles-vi-vii​

​AUSTIN – Today, the Texas Public Policy Foundation released a paper by Center for Fiscal Policy Director Talmadge Heflin and Economist Dr. Vance Ginn on Articles IV and V, which include the judiciary, public safety, and criminal justice in Texas’ state budget. The paper,Texas Budget Trends in Articles IV and V, is the fourth of six in a series that examines trends in each article of the Texas budget.

“Order and safety are important for a peaceful society and well-functioning economy that support prosperity for Texas families,” said Heflin. “Articles IV and V of the state’s budget includes the judiciary, public safety, and criminal justice. The two articles combined account for $13.2 billion or 6 percent of the total budget, so changes in funding these with taxpayer dollars must be watched closely.”

“Since the 2004-05 budget, the total state budget is up 88 percent for the judiciary and up 51 percent for public safety and criminal justice compared with an estimated 55 percent increase in compounded population growth plus inflation,” said Ginn. “These trends indicate individual functions that increase by more than this key metric deserve scrutiny each session to manage growth in the total budget.”
 
To read the full report, visit: http://txpo.li/Texas-budget-trends-articles-iv-v

The Honorable Talmadge Heflin is Director of the Center for Fiscal Policy at the Texas Public Policy Foundation, a non-profit, free-market research institute based in Austin. In the 78th Session, Heflin served as chairman of the House Committee on Appropriations and navigated a $10 billion state budget shortfall through targeted spending cuts that allowed Texans to avoid a tax increase. 
 
Vance Ginn, Ph.D., is an Economist at the Texas Public Policy Foundation, a non-profit, free-market research institute based in Austin. 

The Texas Public Policy Foundation is a non-profit, free-market research institute based in Austin, Texas.

by Vance Ginn and Talmadge Heflin 
​
Texas faces multiple economic challenges. These headwinds have slowed economic growth of what would be the world’s 12th-largest economy, potentially leading to the state’s first major recession in 30 years. This has contributed to another possible challenge — a tight state budget in the 2017 legislative session.

Fortunately, Texas’ high level of economic freedom, diversified economy and pro-growth policies help weather these challenges and provide an environment conducive for Texans to prosper.

During the Great Recession and since, Texas has been America’s jobs engine, creating 34 percent of all U.S. civilian jobs during the last eight years in a state with less than 10 percent of the nation’s population. Texas has employed more net nonfarm jobs in 64 of the last 66 months, and created 152,300 private sector jobs during the 12 months ending in March.

Texas certainly faces challenges. There was a combined 95,500 job losses in Texas’ mining industry, primarily oil and gas activity, and manufacturing industry during those 12 months. More job losses and fewer openings were expected as the latest annualized increase in real gross domestic product was only 0.5 percent in the second quarter and 0.1 percent in the third quarter of 2015 — barely avoiding a technical recession.

These challenges would likely have caused a prolonged, severe recession in Texas if the economy looked like it did during the 1980s.

The mining industry is directly related to about 15 percent of the real private economy and less than 3 percent of the labor force today. This is substantially lower than in the 1980s, when it was about 21 percent of the real private economy and 5 percent of the labor force.

The combination of more economic diversification and pro-growth policies have supported a more resilient economy.

Consequently, the sustained steep drop in oil prices hasn’t taken nearly as much of a toll on the Texas economy as it did in 1986 when Texas had its last major recession that lasted two years.

However, increased diversification contributed to Texas being more dependent on the rest of the U.S. economy. Without growth in exports and the oil and gas sector, which fueled much of the U.S. economic expansion since 2009, the national economy stands on a shaky foundation.

With the Federal Reserve having held interest rates too low for too long and (rightly) beginning to tighten credit in December, slower economic growth and lower oil prices are likely, as highly distorted markets correct. In addition to overbearing regulations, including those of Dodd-Frank and others promulgated by the Obama administration, the American Dream is further out of reach for too many Americans.

Of course, Texas’ economic future is unknown, but so far the sky is not falling. Texas has been blessed with a long expansion contributing to great prosperity, but it will one day have another recession.

Fiscal challenges
Texas legislators increased the total state budget by far more than population growth plus inflation in both 2001 and 2009, the previous two recessions.

Excessive spending in 2001 was followed by a $10 billion revenue shortfall in 2003 that was resolved with steep spending cuts without raising taxes. The 2009 Legislature balanced its books by accepting a large short-term “stimulus” payment from the federal government. Two years later, it covered a larger revenue shortfall with accounting gimmicks that were reversed in 2013.

Previous spending excesses that expanded the government’s footprint hurt Texans by forcing them to pay higher taxes and lose government benefits. This cyclical nature of excessive spending has been going on too long in Austin.

The 2015 legislative session started with the state’s coffers overflowing with cash from a robust economy. Instead of discussing how much to spend, state officials discussed how much to cut taxes.

Before the session started that January, Comptroller Glenn Hegar gave his biennial revenue estimate, or BRE, to provide a guidepost of what was available to appropriate given the state’s requirement of a balanced budget. He then released the certification revenue estimate, or CRE, in October after the session ended. The CRE expected slower economic growth and lower oil prices that led to less general revenue-related funds for the 2016-17 budget cycle.

The revenue estimate shows a higher beginning balance, lower tax collections, less funds available for transfers, and a decline in the potential surplus.

Today, the taxable oil price in the CRE looks overestimated, as recent forecasts of the average oil price is about $15 lower in 2016 and 2017. This could lead to slower economic growth that would put pressure on fully funding the current budget and leave a tight budget next session.

Through the first seven months of fiscal year 2016, September through March, sales tax collections were down 2.6 percent.

Hegar recently said, “The modest growth in sales tax collections for March was in line with expectations and comes after five consecutive months of declining sales tax revenues.”
In addition, he highlighted the state’s diversity by “stronger growth in receipts” in other sectors that helped offset lower tax collections from oil and gas-related sectors.

Total tax collections are below the revenue estimate by $3.2 billion during those seven months, but a major portion of that is the franchise tax discrepancy.

Franchise tax collections are $2 billion below the CRE, but historically this tax is primarily collected monthly starting in March through the rest of the fiscal year. For example, there was $249 million net tax collected in March after six months of refunds to businesses that overpaid.

If you exclude this, total tax collections would be about $1.2 billion below the revenue estimate for fiscal year 2016.

With oil prices potentially averaging another $15 lower this year and with about a $1.2 billion decrease in revenue projected in fiscal year 2016, that could translate to $2.1 billion less for the full year. If this pace of total tax collections continues, there’s likely to be dollars available to fund the current budget but little to no potential surplus for the 2017 legislative session.

Advancing the Texas model
The 84th Texas Legislature made great strides last session to weather an economic downturn by passing a conservative budget, and $4 billion in tax and fee relief, leaving billions of dollars unspent, including about $10 billion in the state’s rainy day fund.
Texas faces real, and potentially major, economic and fiscal challenges. However, the proven recipe of a diversified economy and limited government philosophy must be enhanced to continue meeting these challenges and propel Texas toward greater economic prosperity.

The 85th Texas Legislature should provide the best economic environment for Texans to succeed and further cushion the effects of business cycles. This could be done by measures supported by the 13 influential organizations of theConservative Texas Budget Coalition. These include passing another conservative budget, eliminating the business franchise tax, reforming the state’s weak spending limit, adopting a mechanism to reduce the budget, stopping excessive growth in property taxes, and increasing budget transparency.

By advancing economic freedom and individual liberty, Texas will better deal with potentially deep downturns and other economic circumstances. This provides Texas with the best opportunity to remain a place where Americans can achieve their hopes and dreams.

​http://www.mysanantonio.com/opinion/commentary/article/Strengthen-the-conservative-Texas-model-7420444.php

​This commentary originally appeared in Forbes on May 2, 2016.

Are American governments making promises that American taxpayers can’t keep? The answer may well be “yes” when it comes to public pensions.

Unfunded pension liabilities, or the difference between what’s been promised to future retirees and what’s actually on hand to provide for those benefits, have grown to absolutely epic proportions. This raises serious concerns about the sustainability of America’s retirement systems and its ability to make good on the promises made.

Last month, Moody’s Investor Services, one of the nation’s top credit rating agencies, estimated that federal unfunded pension liabilities (including civilian and military obligations) had risen to $3.5 trillion, or about 20% of GDP. In addition, Moody’s pegged state and local governments’ unfunded liabilities at roughly the same amount, bringing the total U.S. pension shortfall to 40% of GDP.

Making matters even worse, total U.S. unfunded liabilities that includes Social Security, Medicare and other debts top $100 trillion, according to the website usdebtclock.org.

Regardless, there’s an ocean of retirement-related red ink that, at some point, will have to be mopped up either through massive future tax increases, a substantial reduction in benefits, or some costly combination of the two.

Part of the reason that things have gotten so far out of hand is government’s penchant for hiding the ball. U.S. Congressman Devin Nunes echoed this frustration when he said: “It has been clear for years that many cities and states are critically underfunding their pension programmes and hiding the fiscal holes with accounting tricks.” Nunes filed legislation recently to help get a handle on the issue.

In Texas, the problems with public pensions are less pronounced but still serious.
The latest figures from the Pension Review Board (PRB), the state agency charged with overseeing Texas’ state and local retirement systems, show that among the 93 systems monitored by the agency, unfunded liabilities topped $60 billion as of February 2016. That’s a spike in pension debt of $2.7 billion since June 2015 and an increase of $7.7 billion compared with two years ago.

Digging further into the data reveals that the funded ratio—a measure of a plan’s current assets as a share of its liabilities—averaged 80% across all plans. It’s generally held that a funded ratio of 80% or more signifies a firm financial footing, something that Texas’ systems are right on the brink of surpassing.

Looking at these plans’ amortization periods also hints at trouble. The PRB’s guidelines for actuarial soundness recommend that a plan’s amortization period ideally range between 15 and 25 years. However, 56 of the 93 plans exceeded that target as of February 2016.

Over a longer time horizon, it’s evident that fewer plans are able to achieve the recommended amortization period. A 2014 PRB report compares the financials of Texas’ 93 monitored plans in 2000 and 2013. The report finds that in 2000 roughly 46%, or 43 of the 93 plans, had amortization periods at or above 25 years. By 2013, however, that figure had grown to 65%, or 60 of the 93 plans.

On a more local level, the city of Houston—which is the largest city in Texas and the fourth biggest in the nation—is seeing its finances wrecked because of public pension problems. Its three major municipal systems, including the Houston Municipal Employees Pension System ($1.8 billion owed), the Houston Police Officers Pension System ($1.2 billion owed) and the Houston Firefighter’s Relief and Retirement Fund ($532 million owed), have unfunded liabilities totaling $3.5 billion. And thanks to a sweetheart setup, the city is limited on what it can do to bring down the swell of debt.

Recognizing Houston’s pension problems, Moody’s downgraded the city’s credit rating in March, citing “large unfunded pension liabilities (among the highest in the nation)” as one of core concerns. Shortly thereafter, Standard & Poor’s followed suit and dinged Houston’s credit rating citing: “the city’s large unfunded pension liability that has been exacerbated by what we consider optimistic rate of return assumptions and a history of lower-than-actuarially determined contributions…”

Be it from a statewide perspective or more locally, Texas’ public pension systems are clearly not headed in the appropriate direction. A course correction is needed before the problem metastasizes into something much, much worse.

At the core of the pension problem, both nationally and in Texas, is a fundamentally flawed system—the defined benefit (DB) system. DB-style pension plans promise current and future retirees a lifetime of monthly income, but do so without knowing whether the money will be in the fund.

These types of pension plans suffer from two major deficiencies: generational accounting and excessive expected rates of return.

The first is the issue of fewer people contributing to the pot of retirement benefits compared with the rapid pace of baby boomers receiving benefits that’s often more than what they contributed. Put another way, there are fewer dollars available for retirees. This is a huge burden on DB-style plans.

Another issue is the fact that many plans assume unrealistically high rates of return—like an 8.5% return expected annually by the Houston firefighters fund or an 8% yield assumed by Houston’s other two major pension plans. Houston is certainly not the only U.S. city guilty of being too bullish on future returns. This is a nationwide problem that’s leaving a wider gap in financial solvency over time. Moreover, many plan managers have invested in risky assets to achieve these returns that could come to bite them later.

For taxpayers and retirees, it’s imperative that substantive reforms are put in place. This starts with eliminating DB-style plans and transitioning to a more secure retirement option like defined contribution (DC) plans.

DC-style plans resemble 401(k)s in the private sector and the optional retirement programs (ORP) available for higher education employees in Texas. These DC-style plans put the power of an individual’s future in their own hands instead of depending on the good fortune of government-directed DB-style plans. DC-style plans are portable and sustainable over the long term as they are based on the contributions of retirees and a defined government match.

With DC-style plans, retirees will finally have the opportunity to determine how much risk they are willing to take. They also reduce the risk that the government will default on their retirement or fund those losses with dollars from taxpayers who never intended to use these pensions. By giving retirees more freedom on how to best provide for their family, they will be in a much better position to prosper.

Because of their efficiency, simplicity and fully funded nature, the private sector moved primarily to DC-style plans long ago. For the sake of taxpayers and retirees dependent on government pensions, it’s time for all governments to move to these types of plans as well.
With trillions of dollars in pension problems at the federal level and tens of billions of dollars in Texas, lawmakers at the federal, state and local levels must make changes now.

Specifically, they should transition all new employees and those interested into DC-style plans.​If not, our kids and grandkids will be saddled with pension debt and forced into a future of higher taxes and broken promises that could have been avoided.

​This commentary, written by Dr. Vance Ginn and Kiara Pillay, originally appeared in the Austin American-Statesman on May 2, 2016.

Texas’ 2017 legislative session is quickly approaching. The bedrock of the Texas miracle has been a diversified economy and a good tax climate. Lower oil prices and slower economic growth and job creation threaten the state’s prosperity.

With less revenue likely available next session, it’s essential to keep this solid economic foundation by scrutinizing every taxpayer dollar spent, so excesses and higher taxes are not on the table. The Texas Public Policy Foundation does this with its Spotlight series that highlights trends in all 10 articles of the 2016-17 state budget.

The findings are alarming when comparing budget increases with compounded population growth plus inflation. This key measure is included in the recommended spending-limit reform that covers the budget and uses actual past data. Thirteen member organizations of the Conservative Texas Budget Coalition support using this key measure as the budget’s maximum growth rate.

Since the 2004-05 budget, the overall budget has increased 69 percent, compared with an estimated 55 percent increase in the key measure. If our reforms were followed since the 2004-05 budget, taxpayers would be supporting a budget that’s $17 billion less than the 2016-17 budget of $209.1 billion.

This means Texans are paying higher taxes today than if the budget had increased at only the rate of essential demands of government. Therefore, it’s important for legislators and taxpayers to probe every budget area for excesses.

Fortunately, the Legislature passed a budget last session that increased 2.9 percent, which was less than our target based on this key measure of 6.5 percent. However, several functions have increased by more than this measure — and multiple articles increased by more than it has increased since the 2004-05 budget:

• Article I is $6.3 billion for general government functions. This article has increased by 80 percent since 2004-05 and is up 17.5 percent from the previous budget, both outpacing the key measure in each period. The largest appropriations increase of 691 percent was in the Facilities Commission, primarily for new buildings.
• Article II is 37 percent of the budget, making it the second-largest item. Its $77.2 billion budget for health and human services functions has increased 76 percent since 2004-05 and only 3.3 percent from the previous budget. It was the largest item for the first time in Texas history in the 2014-15 budget and likely will continue to increase. Driving this growth is a 14.9 percent increase in the Department of Family and Protective Services for foster care and a rising amount to behavioral health services that now totals $6.7 billion.
• Article III, the largest budget item, includes K-12 and higher education that totals $78.6 billion. The current budget is up 59 percent since 2004-05 and up the largest amount of $3.9 billion, or 5.1 percent, from the previous budget.
• Article IV includes the judiciary. Article V includes funds for public safety and criminal justice. These two articles have increased by less than the key measure compared with the previous budget but the judiciary budget has increased by 88 percent since 2004-05.
• Article VII relates to business and economic development and includes the Department of Transportation and Texas Workforce Commission. It’s budget increased by 77 percent since 2004-05 and by only 1.7 percent from the previous budget. Article IX includes appropriations to general provisions that apply to multiple articles, and no amount is usually included in the final budget. However, $390.2 million is included in the current budget for salary and benefits increases.
• Articles VI and VIII showed decreases in the current budget, but that doesn’t tell the entire story. Appropriations to Article VI, which is for natural resources functions, declined by 37 percent because of a one-time amount of $2 billion for water projects in the previous budget. However, it increased by 86 percent since 2004-05. Funding for regulatory functions, Article VIII, declined 18 percent primarily because of a one-time decrease in the Public Utility Commission’s system benefit fund for the low-income electricity discount program.

Bottom line: Each article must be watched closely to ensure that the 2018-19 budget doesn’t exceed population growth plus inflation. This will assure Texans that lawmakers are being good stewards of their tax dollars and are keeping a solid economic foundation for them to prosper.

http://www.texaspolicy.com/blog/detail/scrutinize-every-dollar-in-texas-state-budget

​Federal regulations are often a complex cobweb of repetitive, useless rules determined by federal bureaucrats rather than elected officers. These regulations may have good intentions of providing clean water, increasing public safety, and other benefits, but it’s important to consider the costs of those measures. Far too often, government avoids considering these costs that are detrimental to everyone’s well-being. 

It’s no secret that big government restricts the economy, but by how much?

According to a new study by the Mercatus Center, federal regulations that have accumulated from 1980 to 2012 cost Americans approximately $4 trillion!

Figure 1 shows that this huge cost translates into about 25 percent of the U.S economy, $13,000 per American, or the fourth largest economy in the world. Clearly, Americans are being stifled by too much red tape.

Figure 1: Federal regulations have hindered economic progress to the tune of $4 trillion since 1980.





























The study’s findings show that federal regulations have reduced average U.S. economic growth by about 0.8 percentage points per year since 1980. While this doesn’t seem like a big deal, it’s important to note that economic growth compounds over time. Therefore, the negative gap between economic growth without regulations compared with actual growth grows larger as it builds on itself each period.

Mercatus has the federal regulation and state enterprise (FRASE) index that ranks the economic impact of federal regulation on states. Texas ranks as having the 6th highest, or the state’s industries are negatively influenced 29 percent more than the national average.

This is a huge cost to Texans as noted in Figure 2 with the tremendous number of federal regulations on businesses.

The cost of federal regulation on Texas is not only burdensome at the federal level. States also plague their businesses with burdensome regulation. Texas' successful economic model is one that other states and federal lawmakers would be wise to follow, but even Texas could do far better when it comes to regulation.

In the Mercatus Center’s Freedom in the 50 States report, Texas ranks only 24th for regulatory freedom. One reason is stringent occupational-licensing requirements; the Institute of Justice ranks Texas as having the 17th most burdensome set of them. These regulations protect existing businesses from new competition and make it harder for low-skilled workers to find employment, making everyone losers in the process.

​To have the best economic environment for opportunities to prosper and higher standards of living, regulation at the federal and state levels should be dramatically scaled back. The cost of every regulation must be considered, and those that have a higher cost than benefit should be scrutinized and ultimately not imposed. This is how we can begin to reclaim the American Dream for far too many who feel as though it is out of reach.