​Don't miss my recent interview on NTD News: https://www.ntd.com/house-budget-resolution-a-step-in-the-right-direction-as-large-deficits-not-sustainable-economist_1060006.html

Originally posted at Texans for Fiscal Responsibility.

Introduction

The 2026–27 Texas proposed biennial budget should be rejected this week when brought to the House floor on Thursday, April 10th. This budget, and many before it over the last two decades since Republicans gained a trifecta in 2003, appropriates too much compared with population growth plus inflation, a good measure of the average taxpayer’s ability to pay for government spending. 

​This budget also delivers too little tax relief. It puts Texas on a path that mirrors the bloated budgets of states like California, not the fiscally responsible model that Texans have long preferred. While the state has appropriated less per biennium since the 2016-17 budget than prior budgets back to 2004-05, appropriations in both periods in the table below show they are above population growth plus inflation and for the entire period.

In the Legislature’s 2026-27 proposed budget, state funds appropriations that exclude federal funds rise by 8.2% from the 2024-25 biennium and nearly 43% compared to the 2022–23 biennium—well above the maximum rate of population growth plus inflation. But even that is too high as the goal should be freezing or even reducing the budget after past spending excesses. The all-funds budget with state and federal funds would rise nearly 5% from 2024–25 and 27% since 2022–23. Yet, despite a historic $24 billion surplus, just $6 billion is earmarked for property tax relief—leaving most of the surplus untouched or wasted on expanding government instead of returning it to taxpayers. Another expected $28 billion in the state’s rainy day fund (Economic Stabilization Fund) is sitting outside of the productive private sector. The budget does almost nothing to put school district M&O property taxes on a path to elimination and continues to fund outdated or ineffective programs.

This budget grows spending across nearly every article of the budget without meaningful reforms. Education funding grows substantially, yet universal school choice is mainly ignored. Meanwhile, corporate welfare schemes—such as $500 million in film subsidies and billions more for government expansion and handouts to contractors for natural gas, water, nuclear energy projects, and more—balloon at the expense of tax relief. It gets worse in the supplemental budget bill (HB 500), which piles on $13.7 billion in additional GR spending and $12 billion in All Funds—most of it going to pet projects, deferred maintenance, and politically motivated funds. These are not emergency items. They’re permanent spending wrapped in a one-time package.

This report thoroughly examines the spending growth by fund and article, highlights the most wasteful programs, and provides clear policy recommendations. It urges lawmakers to reject this budget version, eliminate corporate subsidies, restore transparency, empower oversight through the DOGE Committee, and use surplus dollars to compress and eliminate school M&O property taxes until they are zero. Texans deserve a government that spends less so they can keep more—and this budget falls far short of that goal.

I. Unchecked Budget Growth

This section incorporates detailed initial appropriations data from the full House Appropriations Bill (HCSSB1) and the summary document (Summary). Together, they provide a comprehensive look at the true scale and structure of spending in the 2026–27 budget. The summary document is especially useful in tracking changes across major funding categories. 

For example, according to the LBB summary, Article III (Education) alone accounts for $134.55 billion in All Funds in the House budget. Public education funding rises by $8.1 billion, and higher education climbs nearly $3.5 billion. Article VII (Business and Economic Development) grows to almost $49 billion, including expanding economic incentive programs and subsidies, including the Texas Energy Fund, Water Fund, and others. 

These are not short-term outlays; they will become part of the base budget going forward. These data validate that spending increases have far outpaced reasonable benchmarks. 

Unlike the Legislative Budget Board’s practice of comparing spending from one biennium to initial appropriations in the next—which makes current proposals appear smaller—this report compares appropriations to appropriations for a clearer, more accurate picture. 

Texans deserve a transparent, sustainable budget rooted in conservative principles. The numbers here show just how far we’ve strayed from that path.

Fundamentally, the Texas House’s proposed 2026–27 budget reflects a dramatic expansion in government appropriations detached from Texas’ conservative fiscal roots. Comparing biennium appropriations from 2022–23 to 2026–27 reveals how far off course we’ve veered. These are not modest or strategic increases; they are sweeping and unrestrained expansions that far exceed the maximum rate of population growth plus inflation or, even better, the Frozen Texas Budget. 

The following table provides an overview of the Texas House budgets based on the inconsistent comparison by the LBB since 2024-25 and consistent comparisons since 2024-25 or 2022-23. The latter two comparisons include the differences and percent changes in appropriations without property tax relief efforts. 

Many of these supplemental expenditures would be considered new base-level spending going forward. Worse, they lock the state into future liabilities and crowd out future tax relief options. Instead of being a responsible tool to manage emergencies or fund shortfalls, HB 500 has become a wishlist for well-connected interests and a backdoor method to increase base year expenditures to increase the spending limit for the next period. Lawmakers should reject these items outright or move their funding into the Property Tax Relief Fund.

IV. Policy Recommendations

The current fiscal path Texas is on is unsustainable—but it’s also reversible. Legislators have a unique opportunity this session to right the ship, reduce waste, and return power and resources to Texans. The following recommendations outline the clearest path forward for restoring fiscal discipline, spurring economic opportunity, and advancing individual liberty across the state:

1. Reduce Current Spending By 15% and Cap Future Spending Growth to a Maximum Rate of Population Plus Inflation: Texas should reduce spending by at least 15% in the budget to deal with past excesses and pass a stronger constitutional spending cap that limits budget growth by state and local governments to a maximum rate of population growth plus inflation. This commonsense metric has long been the gold standard for responsible budgeting. Without such a guardrail, the Legislature can inflate spending well beyond what Texas families can afford, as we’ve seen with this budget.
2. Eliminate M&O School Property Taxes via Compression: With nearly $24 billion in overcollected taxpayer money called a surplus, Texas has the means to compress aggressively—and ultimately eliminate—school district maintenance and operations (M&O) property taxes. Rather than continuing to raise the homestead exemption or relying on other temporary fixes, lawmakers should prioritize permanent compression by dedicating surplus dollars to buy down school district M&O rates year after year. Full elimination of these property taxes, nearly half of all property taxes, is achievable within a decade or less. Local governments should use their surpluses to reduce their property tax rates until Texas has zero property taxes.
3. Reject Corporate Welfare and Special-Interest Giveaways: The Texas budget includes subsidies and handouts to politically favored industries and institutions of higher education. From millions of dollars in film subsidies to billions of dollars more for the Texas Energy Fund, Water Fund, Dementia Prevention and Research Institute, and Nuclear Fund, these programs inappropriately pick winners and losers with taxpayer money. Eliminating them could save taxpayers more than $7 billion per year. Instead of distorting the free market, Texas should let competition—not cronyism—drive growth and stability.
4. Empower the DOGE Committee to Root Out Waste and Inefficiency: The Texas House’s Delivery of Government Efficiency Committee (DOGE) must do more than meet and talk—it must lead. Empower it with the authority and resources for external audits of every state agency, evaluate program outcomes, and recommend permanent government staffing and overhead reductions. Texas taxpayers fund nearly 1.9 million state and local government employees—many in roles that offer minimal public value. Exposing this bloat is key to driving reform.
5. Implement Universal Education Savings Accounts (ESAs) If every Texas student were given an ESA worth $12,000, the state could save an estimated $20 billion per year by transitioning students from costly government schools to more efficient, parent-directed options. Universal ESAs would increase competition, improve student outcomes, and finally deliver on the promise of school choice for all—while saving taxpayers billions of dollars.
6. Reform Medicaid with a Block Grant-HSA Model: Medicaid continues to consume an ever-larger share of the state budget, with little evidence of improved outcomes. Transitioning to a block grant model with HSAs for recipients would help empower Texas to control costs, eliminate inefficiencies, and tailor services to actual needs. Such a reform could yield $3 billion in annual savings while providing better care.
7. Increase Budget Transparency and Accountability: Recent moves to cancel public testimony and negotiate appropriations behind closed doors violate the trust of Texans. The Legislature must recommit to transparency by holding open budget hearings, archiving testimony, and making all appropriations searchable and understandable to the public. Additionally, all budget gimmicks—like shifting spending to off-book funds—must be eliminated. Moreover, the state should use priority-based budgeting that combines performance-based budgeting and zero-based budgeting to start budgets from zero and find constitutional and performance reasoning for every taxpayer dollar spent.
   
   

These recommendations aren’t just theoretical. They’re practical, tested, and popular with Texas voters. The only thing standing in the way is political will. Lawmakers who want to be remembered as champions of liberty, prosperity, and good government must act boldly now to restore trust and chart a better path forward. With the reforms above, they could reduce appropriations by as much as $30 billion per year, which would be nearly enough to eliminate school district M&O property taxes forever.

Conclusion: Texas Can Still Choose a Better Path

The evidence laid out in this report is clear: The 2026–27 Texas House budget is a sharp break from the principles of fiscal responsibility, conservative budgeting, and pro-growth governance that once set Texas apart from states like California. Instead of honoring the values of limited government and taxpayer accountability, this budget expands nearly every corner of state bureaucracy and prioritizes new spending over meaningful reform. 

Despite a historic budget surplus of $24 billion, only $6 billion is being used for property tax relief—leaving Texans burdened by excessive taxes while the government grows unchecked. From the billions wasted on corporate welfare in HB 500 to the bloated education budget with limited school choice, this budget reflects the interests of bureaucracy and political favoritism, not working families.

Texans deserve better. Legislators must choose whether to defend the status quo or take a stand for fiscal sanity. That begins by rejecting this budget and revisiting the core principles that made Texas an economic powerhouse: small government, low taxes, and trust in the people—not government programs—to drive prosperity. 
​
There is still time to get this right. But that time is running out.

​The U.S. budget deficit surged this year, surpassing $1 trillion, and we’re not even halfway through the fiscal year! While government spending slightly decreased, it still far outpaced revenue, leading to a deficit of over $307 billion for February. We just saw another federal budget battle in Congress. Despite government shutdown threats, a continuing resolution was passed to fund the government until September. It seems our lawmakers just can’t stick to a spending diet!

But why does federal overspending matter?

In this special edition of This Week’s Economy, I offer a Federal Spending 101 lesson outlining key principles to tackle Congress’s bad financial habits. We need urgent spending reform to turn the economy around—and it’s time lawmakers start listening!

For more insights, visit vanceginn.com and get even greater value with a subscription to my Substack newsletter at vanceginn.substack.com.

Originally published as an article on X.

Texas’ state government has a $24 billion surplus and a $28.5 billion Rainy Day Fund. Instead of using this over-collected taxpayer money to cut taxes, government spending, and regulations substantially, the 89th Texas Legislature is too often advancing legislation in this session that grows government rather than shrinks it.

Gov. Greg Abbott should help steer things toward pro-growth, pro-liberty legislation to improve the state’s economy and fiscal situations along with his legacy.

This should include pushing for sustainable budgeting, prioritizing substantial tax relief, creating universal school choice, and reducing regulations. Unfortunately, the current legislative trajectory is not bold enough, and other states are moving faster toward pro-growth reforms.

With too much spending, too little tax relief, and too much regulation, Gov. Abbott can—and should—steer this session toward limited government and more prosperity for all Texans.

Here’s how.

🚨 A Sustainable Budget: Stop the Spending Explosion. Texas Has the Resources for Big Reforms—But Is Squandering the Opportunity

Texas has $194.6 billion available for general spending in 2025-2027, including a $24 billion surplus from the previous budget cycle.

The Rainy Day Fund will hit its $28.5 billion cap, meaning excess revenues could be returned to taxpayers instead of more spending.

Yet, the proposed total budget is more than $330 billion, marking the largest budget in state history. It will grow by more than 40% over two budget cycles, well beyond population growth plus inflation.

Texas must stop growing government at a pace faster than the average taxpayer can afford.

What the Legislature Is Doing
❌ Ignoring spending caps—Budget growth over two periods exceeds the sustainable population plus inflation benchmark.
❌ Expanding government programs—Instead of using the surplus to cut taxes, much of it is being appropriated for new spending.

What Abbott Should Champion
✅ HJR 212 / HB 5449 – Surplus Buydown & Spending Limits: Caps spending growth with pop+inf and requires surplus funds to reduce tax rates, not more government spending.
✅ HB 3537 / HB 325 / HB 5267 – State and local spending limits that tie government growth to a maximum rate of population growth and inflation.
✅ Reduce the Rainy Day Fund Cap—Excess beyond $28.5 billion should be returned to taxpayers through lower tax rates, including severance and sales taxes, not stockpiled for future government spending.

➡️ Abbott should push for spending less now and strict spending limits that rein in government growth at the state and local levels and ensure every dollar of surplus is used for permanent tax cuts, not new spending.


💰 Tax Relief: Focus on Permanent Rate Reductions. Texas has the opportunity to provide major property and business tax relief, but the current proposals fall short of their potential

What the Legislature Is Doing
❌ Only $6.5 billion in tax relief—Despite a $24 billion surplus, only a fraction is going to permanent tax reductions.
❌ SB 4 (Homestead Exemption Increase)—While well-intended, this bill shifts tax burdens rather than reducing tax rates, making it harder to eliminate property taxes in the future.

What Abbott Should Champion
✅ HB 8 (School M&O Property Tax Rate Reduction) – Directly lowers property tax rates for all Texans, reducing the largest component of property taxes and moving Texas toward eliminating school property taxes. Also, consider HB 275 / HB 698 / HB 5226 / HJR 64 / HB 5502.
✅ HB 9 (Business Personal Property Tax Relief) – Exempts up to $250,000 in business equipment from property taxes, helping Texas businesses grow.
✅ SB 32 (Business Franchise Tax Relief) – Reduces the franchise tax, but Abbott should push for a long-term plan to eliminate it.

➡️ Abbott should ensure that the entire surplus is used to compress school M&O tax rates (HB 8) and work toward eliminating school district M&O property taxes, with local governments also eliminating their property taxes.


📚 School Choice: Expand, Don’t Just Spend More on the Same System. Texas has a real opportunity to empower parents and students by expanding school choice, but current proposals would instead spend more money on a failing government school monopoly.

What the Legislature Is Doing
❌ HB 2 (Massive Public School Spending Increase)—Pumps billions into the same failing government schools while only offering limited school choice.
❌ SB 26 (Teacher Pay Raises Without School Choice Expansion)—More money for public schools without accountability or competition will do little to improve teacher pay or student outcomes, which are better done through competition.

What Abbott Should Champion
✅ HB 3 (Education Savings Accounts - ESAs)—Better than SB 2, but should have funding for every student who applies and free of unnecessary restrictions.
✅ Shift taxpayer dollars to parents with ESAs, not failing systems—The more Texas spends on a broken government school monopoly, the harder it becomes to create real competition that drives improvement.

➡️ Abbott should demand a universal school choice bill (HB 3) and ensure state education funding follows students, not failing government schools.


🤖 AI & Innovation: Keep Texas the Leader, Not a Regulated Mess. Texas is a leader in AI and tech innovation, but some legislative proposals could drive investment elsewhere through excessive regulations that help China and other states instead.

What the Legislature Is Doing
❌ HB 1709 (TRAIGA: AI Regulation Bill)—Overreaching regulations that add massive compliance costs and could push AI businesses out of Texas.
❌ HB 149 (Revised TRAIGA Bill)—Better than HB 1709 but still contains vague and burdensome AI discrimination and regulatory mandates that would stifle Texas’ ability to lead in tech.

What Abbott Should Champion
✅ HB 3808 (Texas AI Freedom Act) – Takes a pro-innovation approach by creating an AI advisory council that will sunset and a learning lab instead of heavy-handed regulations.
✅ Encourage industry-led solutions—Texas should trust businesses and entrepreneurs to develop AI standards rather than impose top-down state mandates.

➡️ Abbott should support HB 3808 and push back against unnecessary AI regulations that could make Texas a less attractive tech hub.


🛑 Stop Expanding Bureaucracy & Banning Markets: Texas should reduce government interference, not expand it.

What the Legislature Is Doing
❌ SB 3 (Hemp Ban)—Banning legal hemp and THC products closes small businesses, eliminates safer consumer choices, and empowers drug cartels and dealers.
❌ HB 5 (Dementia Research Institute)—Medical research should be led by universities and private industry, not state government.
❌ SB 6 (Electric Grid Controls) is a dangerous government overreach—Texas must let private energy markets function freely rather than dictating power use.
❌ HB 7 (Water Infrastructure Spending)—A better approach would involve private investment, not more state spending. This is true for the Texas Energy Fund, Texas Nuclear Fund, and other funds outside the spending limit that should not exist because they aren’t roles for a limited government.
❌ SB 22 (Hollywood Film Subsidies)—Texas does not need to subsidize Hollywood—this is classic corporate welfare.

What Abbott Should Champion
✅ Veto unnecessary spending bills—Texas should reduce government, not grow it.
✅ Support free-market solutions—Texans should be free to run businesses and access legal markets without government interference.

➡️ Abbott should reject those above, veto wasteful spending, and push for more free-market reforms.


🚀 A Pro-Growth Path Forward for Texas
🔹 Cut spending now and advance spending limits (HJR 212, HB 5449) to control government growth.
🔹 Push for permanent tax cuts (HB 8) but make a larger amount of relief.
🔹 Support less regulation with HB 3808 for AI and other bills that would reduce occupational licensing.
🔹 Create school choice (HB 3) but fully fund it without excessive restrictions.

​Spend Less, Prosper More! Let People Prosper.

Originally published at Pelican Institute.

​Louisiana has long struggled with budget challenges, but Gov. Jeff Landry’s administration is taking a significant step toward addressing them. The newly established Fiscal Responsibility Program (FRP), similar in its goals to those by the federal Department of Government Efficiency (DOGE), aims to uncover and eliminate waste, fraud, and abuse in state spending. With President Donald Trump and Elon Musk at the federal level and other states proposing similar oversight initiatives, Louisiana can lead in making the government more accountable to taxpayers.

The DOGE is designed to correct excessive spending by identifying inefficiencies and ensuring every taxpayer dollar is used effectively. If implemented correctly, this initiative could help Louisiana rein in spending and avoid the cycle of higher spending and higher taxes that have plagued the state, burdening citizens and making the state less economically competitive.

The state’s legislative auditor has long pointed to inefficiencies and opportunities to streamline and improve outcomes. For instance, state audits have previously found millions wasted on inefficient Medicaid payments, misallocated education funds, and bloated administrative costs in various agencies. In 2022 alone, Louisiana’s Legislative Auditor flagged over $100 million in improper Medicaid payments, highlighting the urgent need for stronger oversight. 

Governor Landry recently announced a partnership with the state legislative auditor to leverage financial and performance audit reports and make sure they don’t just sit on the shelf but get put to good use.

The program mirrors efforts in other states that have seen success with fiscal watchdogs. Florida’s Office of Policy and Budget regularly identifies savings opportunities, and Texas has implemented efficiency audits that have helped curb unnecessary spending in TANF. Trump’s proposal for a federal-level DOGE underscores a growing recognition that government waste isn’t just a state issue but a national one, costing taxpayers billions annually.

Louisiana’s long-term economic success depends on responsible budgeting. While this new initiative is a much-needed and great start, limiting overall government spending growth to a maximum rate of population growth plus inflation would prevent unnecessary expansions and help keep the state’s finances sustainable. The DOGE’s efforts should focus on identifying wasteful programs and restructuring government operations to be more efficient. Louisiana’s FRP should also review spending to non-governmental organizations and local governments. This spending is a growing concern and could help shed light on the uses of taxpayer money while also ensuring that the state’s priorities are being met.

Transparency and involving the public will be critical. By receiving input from citizens and publicizing the DOGE’s findings, taxpayers can hold lawmakers accountable for acting on them. Too often, politically popular programs avoid scrutiny, and government inefficiencies are identified but not addressed, allowing waste to continue unchecked. If Louisiana follows through, it can serve as a model for other states and even the federal government.

Gov. Landry’s Fiscal Responsibility Program represents an opportunity to make a lasting impact. If Louisiana successfully reduces waste and passes responsible budgets, it will be well-positioned for stronger economic growth. Taxpayers should demand no less. 

You can get involved by posting your cost-cutting ideas at LA DOGE.