Originally published at Texans for Fiscal Responsibility.
States across the country are rethinking tax reform to stay competitive for residents and businesses. Many are exploring ways to phase out personal income, business franchise, and property taxes to attract workers, foster economic growth, and ensure property rights. But doing so requires careful planning to ensure stability and fiscal responsibility. One of the most important decisions in this process is choosing the right mechanism to trigger tax cuts. Two common approaches are revenue triggers and surplus triggers. While both have their merits, surplus triggers are far more reliable and sustainable. They base tax cuts on actual fiscal surpluses rather than optimistic revenue projections and address the core problem of government: spending. Why Spending Limits and Surplus Triggers Make Sense Tax reform doesn’t happen in isolation—it needs to be part of a broader strategy to limit government growth and promote fiscal discipline. This is where spending limits come into play. A spending limit ties annual increases in government spending to measurable factors like population growth and inflation. By keeping spending under control, surpluses naturally occur when revenues grow faster than the spending limit, creating the perfect opportunity for meaningful tax cuts. Here’s why a surplus trigger, paired with a spending limit, is the best approach for phasing out taxes: 1. Stability Over Speculation Revenue triggers rely on meeting specific revenue targets before tax cuts are implemented. While this sounds straightforward, it assumes continuous economic growth—a risky gamble. If revenues fall short due to economic downturns or other factors, tax cuts may be delayed or reversed, creating uncertainty for taxpayers and businesses. Surplus triggers, on the other hand, only initiate tax cuts when there are genuine excess funds at the end of the year. This approach ensures that tax relief is stable, reliable, and based on real financial health rather than speculation. 2. Encouraging Fiscal Discipline A surplus trigger works hand-in-hand with a spending limit, which naturally generates surpluses by controlling government expansion. This ensures that tax cuts are backed by actual savings, not temporary windfalls. Revenue triggers, by contrast, don’t address the root cause of fiscal instability—unrestrained spending. Without limits, even rising revenues can be outpaced by unchecked spending growth, leaving little room for tax relief. By focusing on spending, surplus triggers encourage long-term fiscal discipline, making tax reform sustainable. 3. Reducing the Risk of Tax Reversals Revenue-triggered tax cuts can be politically fragile. If revenue growth slows, lawmakers may feel pressured to raise taxes again, undermining the entire reform effort. Surplus triggers avoid this problem by tying tax reductions to actual fiscal conditions. This ensures that cuts are less likely to be reversed, providing certainty for taxpayers and businesses alike. How Surplus Triggers Work in Practice A surplus trigger takes the revenue collected above the spending limit at the end of each fiscal year and allocates it toward specific priorities. Here’s a practical example of how this can work: 90% of the surplus is directed to a Tax Relief Fund to reduce the income tax rate gradually over time. This fund can also act as a buffer to cover limited spending needs, if necessary. Any leftover funds can go toward paying down debt, further strengthening the state’s financial health. The remaining 10% (or less) is left in the general fund or a rainy day fund for unforeseen revenue shortfalls due to a recession, natural disaster, or other reasons. But the focus during those shortfalls should be reducing spending so more money remains for tax relief when people tend to be hurting the most. By splitting surplus funds between tax relief and rainy day funds, states can provide immediate benefits while laying the groundwork for future prosperity. Flexible, Sustainable Tax Reform Unlike revenue triggers, surplus triggers don’t lock states into rigid tax cut schedules. Instead, they allow flexibility to adjust the pace of tax reductions based on actual surpluses. This makes a complete phase-out of the income tax achievable within a reasonable timeframe, such as a decade, while ensuring that essential services and fiscal stability are preserved. When combined with a spending limit, surplus-triggered tax relief delivers significant economic benefits. Lower income taxes increase disposable income for families, encourage consumer spending, and attract businesses looking for a more favorable tax environment. Over time, the resulting economic growth broadens the tax base, generating additional revenue from sales and property taxes to offset the reduced reliance on income taxes. Research shows that phased tax relief can drive billions in economic growth and create thousands of new jobs. It’s a strategy that not only improves the fiscal health of the state but also enhances the quality of life for residents. The Bottom Line Surplus triggers, paired with a spending limit, offer a sustainable and disciplined path to meaningful tax reform. They provide a reliable framework for reducing and eventually eliminating personal income taxes, ensuring that tax cuts are based on real fiscal health rather than speculative revenue growth. By focusing on spending restraint, states can achieve tax reform that is both responsible and transformative, paving the way for economic growth and competitiveness for years to come. The choice is clear: surplus triggers are the smarter, more stable way to deliver lasting tax relief and fiscal stability.
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States across the country are rethinking tax reform to stay competitive for residents and businesses. Many are exploring ways to phase out personal income, business franchise, and property taxes to attract workers, foster economic growth, and ensure property rights. But doing so requires careful planning to ensure stability and fiscal responsibility.
One of the most important decisions in this process is choosing the right mechanism to trigger tax cuts. Two common approaches are revenue triggers and surplus triggers. While both have their merits, surplus triggers are far more reliable and sustainable. They base tax cuts on actual fiscal surpluses rather than optimistic revenue projections and address the core problem of government: spending. Why Spending Limits and Surplus Triggers Make Sense Tax reform doesn’t happen in isolation—it needs to be part of a broader strategy to limit government growth and promote fiscal discipline. This is where spending limits come into play. A spending limit ties annual increases in government spending to measurable factors like population growth and inflation. By keeping spending under control, surpluses naturally occur when revenues grow faster than the spending limit, creating the perfect opportunity for meaningful tax cuts. Here’s why a surplus trigger, paired with a spending limit, is the best approach for phasing out taxes: 1. Stability Over Speculation Revenue triggers rely on meeting specific revenue targets before tax cuts are implemented. While this sounds straightforward, it assumes continuous economic growth—a risky gamble. If revenues fall short due to economic downturns or other factors, tax cuts may be delayed or reversed, creating uncertainty for taxpayers and businesses. Surplus triggers, on the other hand, only initiate tax cuts when there are genuine excess funds at the end of the year. This approach ensures that tax relief is stable, reliable, and based on real financial health rather than speculation. 2. Encouraging Fiscal Discipline A surplus trigger works hand-in-hand with a spending limit, which naturally generates surpluses by controlling government expansion. This ensures that tax cuts are backed by actual savings, not temporary windfalls. Revenue triggers, by contrast, don’t address the root cause of fiscal instability—unrestrained spending. Without limits, even rising revenues can be outpaced by unchecked spending growth, leaving little room for tax relief. By focusing on spending, surplus triggers encourage long-term fiscal discipline, making tax reform sustainable. 3. Reducing the Risk of Tax Reversals Revenue-triggered tax cuts can be politically fragile. If revenue growth slows, lawmakers may feel pressured to raise taxes again, undermining the entire reform effort. Surplus triggers avoid this problem by tying tax reductions to actual fiscal conditions. This ensures that cuts are less likely to be reversed, providing certainty for taxpayers and businesses alike. How Surplus Triggers Work in Practice A surplus trigger takes the revenue collected above the spending limit at the end of each fiscal year and allocates it toward specific priorities. Here’s a practical example of how this can work:
Flexible, Sustainable Tax Reform Unlike revenue triggers, surplus triggers don’t lock states into rigid tax cut schedules. Instead, they allow flexibility to adjust the pace of tax reductions based on actual surpluses. This makes a complete phase-out of the income tax achievable within a reasonable timeframe, such as a decade, while ensuring that essential services and fiscal stability are preserved. When combined with a spending limit, surplus-triggered tax relief delivers significant economic benefits. Lower income taxes increase disposable income for families, encourage consumer spending, and attract businesses looking for a more favorable tax environment. Over time, the resulting economic growth broadens the tax base, generating additional revenue from sales and property taxes to offset the reduced reliance on income taxes. Research shows that phased tax relief can drive billions in economic growth and create thousands of new jobs. It’s a strategy that not only improves the fiscal health of the state but also enhances the quality of life for residents. The Bottom Line Surplus triggers, paired with a spending limit, offer a sustainable and disciplined path to meaningful tax reform. They provide a reliable framework for reducing and eventually eliminating personal income taxes, ensuring that tax cuts are based on real fiscal health rather than speculative revenue growth. By focusing on spending restraint, states can achieve tax reform that is both responsible and transformative, paving the way for economic growth and competitiveness for years to come. The choice is clear: surplus triggers are the smarter, more stable way to deliver lasting tax relief and fiscal stability. Chairman Bettencourt and members of the committee, Thank you for holding this hearing. I am Dr. Vance Ginn, president of Ginn Economic Consulting, Texan, and father who is concerned about Texas's housing affordability crisis. While the state can’t address general inflation and interest rates, as those have been failures of Washington, policymakers can tackle restrictive local zoning and high property taxes. First, restrictive zoning regulations restrict the housing supply, driving up housing prices faster than many can afford.
Second, regarding the 11th most burdensome property taxes, achieving affordable housing means committing to eliminating them.
These reforms can benefit Texans, but achieving them will require political courage. Combining local zoning reform with a path to eliminate property taxes provides a practical approach to housing affordability that the Legislature can accomplish in the next session. Thank you for considering these ideas to remove government obstacles and make housing affordable for Texans. Vance Ginn, Ph.D., is president of Ginn Economic Consulting and contributor to more than 15 think tanks, including Americans for Tax Reform and Texans for Fiscal Responsibility. Dr. Ginn was previously a lecturer at multiple higher education institutions, chief economist at the Texas Public Policy Foundation, and chief economist at the White House's Office of Management and Budget. He earned his doctorate in economics at Texas Tech University. Follow him on X.com at @VanceGinn and get more of his research at vanceginn.com. Government Spending Is The Problem The late, great economist Milton Friedman said, "The real problem is government spending." This is true as spending comes before taxes or regulations. In fact, if people didn't form a government or politicians didn’t create new programs, then there would be no need for government spending and no need for taxes. And if there was no government spending nor taxes to fund spending then there would be no one to create or enforce regulations. While this might sound like a utopian paradise, which I desire, there are essential limited roles for governments outlined in constitutions and laws. Of course, most governments are doing much more than providing limited roles that preserve life, liberty, and property. This is why I have long been working diligently for more than a decade to get a strong fiscal rule of a spending limit enacted by federal, state, and local governments promptly under my calling to "let people prosper," as effectively limiting government supports more liberty and therefore more opportunities to flourish. Empirical research underscores the importance of spending restraint over tax hikes in promoting economic growth. Studies by economists Alberto Alesina and Silvia Ardagna, John Taylor, Casey Mulligan, and others have consistently shown that fiscal adjustments based on reducing government spending better foster economic growth than those based on raising taxes. Fortunately, there have been multiple state think tanks that have championed this sound budgeting approach through what they've called either the Responsible, Conservative, or Sustainable State Budget. I recently worked with Americans for Tax Reform to publish the Sustainable Budget Project, which provides spending comparisons and other valuable information for every state. This groundbreaking approach was outlined recently in my co-authored op-ed with Grover Norquest of ATR in the Wall Street Journal. When Did This Budget Approach Begin? I started this approach in 2013 with my former colleagues at the Texas Public Policy Foundation with work on the Conservative Texas Budget. The approach is a fiscal rule based on an appropriations limit that covers as much of the budget as possible, ideally the entire budget, with a maximum amount based on the rate of population growth plus inflation and a supermajority (two-thirds) vote to exceed it. A version of this approach was started in Colorado in 1992 with their taxpayer's bill of rights (TABOR), which was championed by key folks like Dr. Barry Poulson and others. (picture below is from a road sign in Texas) Why Population Growth Plus Inflation? While there are many measures to use for a spending growth limit, the rate of population growth plus inflation provides the best reasonable measure of the average taxpayer's ability to pay for government spending without excessively crowding out their productive activities. It is important to look at this from the taxpayer’s perspective rather than the appropriator’s view given taxpayers fund every dollar that appropriators redistribute from the private sector. Population growth plus inflation is also a stable metric reducing uncertainty for taxpayers (and appropriators) and essentially freezes inflation-adjusted per capita government spending over time. The research in this space is clear that the best fiscal rule is a spending limit using the rate of population growth plus inflation, not gross state product, personal income, or other growth rates. In fact, population growth plus inflation typically grows slower than these other rates so that more money stays in the productive private sector where it belongs. To get technical for a moment, personal income growth and gross state product growth are essentially population growth plus inflation plus productivity growth. There's no reasonable consideration that government is more productive over time, so that term would be zero leaving population growth plus inflation. And if you consider the productivity growth in the private sector, then more money should be in that sector at the margin for the greatest rate of return, leaving just population growth plus inflation. Population growth plus inflation becomes the best measure to use no matter how you look at it. Given the high inflation rate more recently, it is wise to use the average growth rate of population growth plus inflation over a number of years to smooth out the increased volatility (ATR's Sustainable Budget Project uses the average rate over the three years prior to a session year). And this rate of population growth plus inflation should be a ceiling and not a target as governments should be appropriating less than this limit. Ideally, governments should freeze or cut government spending at all levels of government to provide more room for tax relief, less regulation, and more money in taxpayers' pockets. Overview of Conservative Texas Budget Approach Figure 1 shows how the growth in Texas’ biennial budget was cut by one-fourth after the creation of the Conservative Texas Budget in 2014 that first influenced the 2015 Legislature when crafting the 2016-17 budget along with changes in the state’s governor (Gov. Greg Abbott), lieutenant governor (Lt. Gov. Dan Patrick), and some legislators. The 8.9% average growth rate of appropriations since then was below the 9.5% biennial average rate of population growth plus inflation since then, which this was drive substantially higher after the latest 2024-25 budget that is well above this key metric (before this biennial budget the growth rate was 5.2% compared with 9.4% in the rate of population growth plus inflation). This approach was mostly put into state law in Texas in 2021 with Senate Bill 1336, as the state already has a spending limit in the constitution. The bill improved the limit to cover all general revenue ("consolidated general revenue") or 55% of the total budget rather than just 45% previously, base the growth limit on the rate of population growth times inflation instead of personal income growth, and raise the vote from a simple majority to three-fifths of both chambers to exceed it instead of a simple majority. There are improvements that should be made to this recent statutory spending limit change in Texas, such as adding it to the constitution and improving the growth rate to population growth plus inflation instead of population growth times inflation calculated by (1+pop)*(1+inf). But this limit is now one of the strongest in the nation as historically the gold standard for a spending limit of the Colorado's Taxpayer Bill of Rights (TABOR) has been watered down over the years by their courts and legislators, as it currently covers just 43% of the budget instead of the original 67%. My Work On The Federal Budget In The White House From June 2019 to May 2020, I took a hiatus from state policy work to serve Americans as the associate director for economic policy ("chief economist") at the White House's Office of Management and Budget. There I learned much about the federal budget, the appropriations process, and the economic assumptions which are used to provide the upcoming 10-year budget projections. In the President's FY 2021 budget, we found $4.6 trillion in fiscal savings and I was able to include the need for a fiscal rule which rarely happens (pic of President Trump's last budget). Sustainable Budget Work With Other States and ATR When I returned to the Texas Public Policy Foundation in May 2020, as I wanted to get back to a place with some sense of freedom during the COVID-19 pandemic and to be closer to family, I started an effort to work on this sound budgeting approach with other state think tanks. This contributed to me working with many fantastic people who are trying to restrain government spending in their states and the federal levels. Here are the latest data on the federal and state budgets as part of ATR's Sustainable Budget Project. From 2014 to 2023, the following happened: Federal spending increased by 81.7%, nearly four times faster than the 23.1% increase in the rate of population growth plus inflation.
Result: American taxpayers could have been spared more than $2.5 trillion in taxes and debt just in 2023 if federal and state governments had grown no faster than the rate of population growth plus inflation during the previous decade. And this would be even more if we considered the cumulative savings over the period. My hope is that if we can get enough state think tanks to promote this budgeting approach, get this approach put into constitutions and statutes, and use it to limit local government spending as well, there will be plenty of momentum to provide sustainable, substantial tax relief and eventually impose a fiscal rule of a spending limit on the federal budget. This is an uphill battle but I believe it is necessary to preserve liberty and provide more opportunities to let people prosper.
Sustainable State Budget Revolution Across The Country Below are the states and think tanks which I'm working with and this revolution is going, which you can find an overview of this budgeting approach in Louisiana and should be applied elsewhere. Here are the latest efforts:
If you're interested in doing this in your state, please reach out to me. For more details, check out these write-ups on this issue by Grover Norquist and I at WSJ, Dan Mitchell at International Liberty, and The Economist. Originally published at Tholos Foundation. Your browser does not support viewing this document. Click here to download the document. Originally posted at The Sentinal. Read my full testimony here or watch it at YouTube below at minute 38:00. Kansas is spending too much and needs to reform the way it creates the yearly budget, was the message Dr. Vance Ginn — a senior fellow at the Kansas Policy Institute, told a state legislature committee on Oct. 2, 2024. Dr. Vance Ginn Ginn, who was also the former chief economist in the White House Office of Management and Budget and is president of Ginn Economic Consulting, told the Special Committee on Budget Process and Development the “main problem of government” is how much is spent. “Unfortunately, in Kansas, there’s too much that’s being spent,” he said. “I know that’s why you’re looking at budget process reforms and how to spend less over time to make sure that you have the best use of taxpayer money that’s coming out of the productive private sector.” Ginn pointed to Colorado as a good example. “When you look at Colorado, which has (gone) from red to purple to blue over time, one of the things that’s helped them to restrain spending, no matter what the political situation has been, is their Taxpayer Bill of Rights,” Ginn said. “TABOR, as it’s called, is a spending limit that limits the growth of the budget to no more than population growth plus inflation, which is a good measure of the average taxpayer’s ability to pay for government spending. “Now it’s been weakened a little bit over time by some courts and by politicians and things of that nature, but it still has been able to hold their spending to population and inflation and keep taxes down lower than it otherwise would be.” Ginn noted that other countries are doing something similar as well. “We’ve also seen spending limits work in other countries. Sweden and others. The Swiss debt break is another example of that, ” he said. “So it’s not just the states, which I think is important, as we’re talking about here in Kansas today, but also to look at what other countries have done.” Ginn also suggested looking at a longer-term budget — if perhaps not as long as the federal government’s 10-year budget projections. “I don’t know how far in advance you want to go, but maybe a couple of years, two or three years, I think looks good to figure out what’s happening for the future,” he said. “How are the trends looking for different areas of the budget, whether you look at health care, education, transportation, I think those things are really important. It’s something that’s been able to work in Florida to help to restrain the spending over time.” Ginn suggested other measures as well, including independent efficiency audits, such as Texas uses, to help find waste within state departments. He also said the state should look at an annual budget analysis. “So you have the budget that’s passed, but then look at it throughout each year to ensure that those dollars are being spent wisely and that we’re getting the effectiveness — the intended goals are being met for each one of these programs as well,” he said. Ginn is also an advocate of “zero-based” and “priority-based budgeting,” as well. “I think it is really important to adopt priority-based budgeting,” Ginn said. “Zero-based budgeting is important. Start from scratch and build your way up. It’s kind of costly, it’s time consuming to do some of those things. But there’s also performance-based budgeting to make sure that you’re getting the performance out of these. So a combination of those is priority-based budgeting, which I think, if you’re looking at the annual reviews, would be a great opportunity for you all to make some suggestions, make some changes.” Spending per resident in 2022Kansas spent $4,941 per resident in 2022, excluding federal and debt-related spending, as reported by the National Association of State Budget Officers. By comparison, Colorado spent $3,935 per resident. Missouri ($3,110) and Oklahoma ($3,404) also spent a lot less per resident to provide the same services as Kansas. Only Nebraska spent more, at $5,268 per resident. Just getting to Colorado’s level of efficiency would save taxpayers almost $3 billion annually. Responsible Kansas Budget would meet many of Ginn’s suggestions Ginn pushed something KPI has proposed for two years now. “The Responsible Kansas Budget” is a model to achieve a sustainable budget through tax-and-expenditure limits based on transparency and performance-based budgeting, which will rein in government spending to avoid deficits. In 2022, KPI released its first edition of the Responsible Kansas Budget for 2023. The model proposed a limit on All Funds (state funds plus federal funds) appropriations in 2023 at $21.0 billion based on limiting spending increases to the combined rate of population growth and inflation. Instead, the Legislature approved an All-Funds budget of $22.9 billion—nearly $2 billion more than the RKB. The RKB uses a simple calculation of finding the growth rate of the state’s resident population and adding it to the growth rate of the state’s Consumer Price Index [a common measure of inflation] to set maximum appropriation limits. Indeed, from fiscal 2005, through fiscal 2023, state appropriations grew from $7.2 billion to 17.1 billion. Had the RKB’s appropriation limits been in place, the growth would have been to “only” $11.4 billion, saving Kansas taxpayers roughly $5.7 billion. Listen to my discussion with Mandy Connell.
And once again pass a giant Continuing Resolution to keep spending until the end of December. Do you really think they are going to craft and pass 12 spending bills before Christmas? No, they won't. That means either another Continuing Resolution or a giant pork filled Omnibus bill that allows everyone in Congress to hide the pork they are bringing back to their districts so they can keep getting re elected. I've got Former White House OMB Chief Economist, Vance Ginn, Ph.D., today at 2:30. We're talking about how Congress is pretending that there is not a spending crisis. It’s time to address the root issue — overspending. Excessive government spending and deficits lead to inflation, higher prices, and a weaker dollar. When the government runs deficits, the Federal Reserve prints more money by mostly buying Treasury securities to cover the deficit. Find Dr. Ginn's website and sign up for his newsletter here. Originally published at Texans for Fiscal Responsibility. Get the full report there.
Overview
Economics and Spending, National and Local on Qualified Opinions Podcast with Veronique De Rugy9/6/2024
Joining the show today is Vance Ginn. Vance is the founder and president of Ginn Economic Consulting, where he leverages data-driven insights to shape economic policy discussions across the nation.
Over the course of the show, Veronique and Vance discuss state and local government spending, federal spending, and the connection between the two.
Originally posted here: https://www.politicsandparenting.com/p/the-economy.
Today on the show I am joined by Vance Ginn, Ph.D. A leading economist and advocate for free-market principles and fiscal conservatism. He is the former associate director for economic policy at the White House’s Office of Management and Budget and chief economist at the Texas Public Policy Foundation. He is the founder and president of Ginn Economic Consulting and host of the Let People Prosper Show podcast, providing high-impact economic consulting that dives deep into pressing issues with top influencers. He lives in Round Rock, Texas, with his family, championing policies that promote economic freedom and prosperity. We discuss inflation, debt, minimum wage, currency, and tariffs. This is a great episode for average citizens trying to get a handle on this complex topic. Be sure to follow Vance on X and Substack, and check out his new article out in the Freemen-News Letter. Chair Huffman and Members of the Committee, Thank you for the opportunity to testify today. I am Dr. Vance Ginn, president of Ginn Economic Consulting. Over the last decade, the Texas Legislature has made progress in property tax relief, but the affordability crisis demands more action. Property taxes are not just a financial burden—they are fundamentally immoral. They force Texans to perpetually rent from the government, functioning as unrealized capital gains and wealth taxes paid annually. This system makes it difficult for families with low or fixed incomes to build and pass on a legacy. Last session, despite a $32.7 billion surplus, new property tax relief was limited to just $12.7 billion. And the state budget increased by a record 32% in state funds from GAA appropriations to appropriations Although this was the second-largest tax relief amount in Texas history, property taxes increased by $165 million last year from excessive spending by local governments. The path forward is clear: spend less and reduce property tax rates rather than complicating the housing market with homestead exemptions, discounts, and abatements that make elimination more difficult. To eliminate property taxes, consider three simple steps:
This three-step process will help curb soaring property taxes and pave the way for a more prosperous future without property taxes to preserve life, liberty, and prosperity. Thank you for your time, and I’m glad to answer any questions.
Your browser does not support viewing this document. Click here to download the document. This research was originally published at Iowans for Tax Relief Foundation.
Originally published at Kansas Policy Institute.
The Kansas Legislature will consider transformative changes to the long-standing challenges in the state’s budgeting process this fall. State law mandates that the governor provide a budget report to the Legislature. However, this practice has evolved into the governor proposing an entire budget, with the Legislature making adjustments. The Legislature should instead have a more active role in proposing the budget, working with the governor to improve it, and giving the governor ways to adjust it with line-item vetoes afterward to help provide effective fiscal management. Opportunities Moving Forward Regardless of who proposes the budget, the state should consider a year-round approach to spending and budget review. The budget committees should meet periodically after a regular session annually to conduct performance-based analyses. State law requires performance-based budgeting, but it has yet to be faithfully implemented, and time limits during the legislative session make it difficult to police. As part of a year-round budget process, the Legislature should notify agencies that no spending increases will be approved for agencies that fall short of performance-based budgeting expectations. This proactive approach would replace the current practice where budget committees listen to agency proposals without adequate analysis. Another effective method for evaluating whether programs are delivering their intended goals is through independent, external efficiency audits. Unlike internal reviews, these audits objectively assess government programs’ effectiveness, which can suffer from the “fox guarding the henhouse” syndrome. While not perfect, efficiency audits can mobilize public interest from taxpayers and watchdogs to advocate for reforms or eliminate inefficient programs, thereby reducing unnecessary taxpayer expenditures. Other ideas include improving the sunset review process and requiring the sundown of programs and agencies to enhance Kansas’ budget effectiveness. This process can help with priority-based budgeting, which combines performance-based and zero-based budgeting. Combining better review processes during the year, sunset meetings, and program sundown at fixed intervals would improve the budget process. Add a broad spending limit with a strong, preferably constitutional, constraint. This would compel legislators to identify inefficiencies and phase out failing programs. A fiscal rule such as the Responsible Kansas Budget could serve this purpose effectively, ensuring that spending grows sustainably, aligned with population growth and inflation. Learning from Other States Many states have adopted best practices to improve their budget processes, drawing from performance-based budgeting, zero-based budgeting, efficiency audits, and spending limits. Here’s an overview of what other states are doing. Colorado
Recommendations for Kansas Kansas can draw inspiration from these states and ALEC’s budget reform toolkit:
By adopting these best practices, Kansas can move towards a more efficient, accountable, and fiscally responsible budget process. Incorporating these reforms will help Kansas enhance its budget process, ensuring more effective and efficient use of taxpayer dollars. The upcoming informational hearings provide an excellent opportunity to advocate for these changes and set Kansas on a path to long-term fiscal health. Originally published at Mackinac Center.
Michigan is spending money at an unsustainable rate, and the state’s latest state budget shows why this can’t go on. The state-funds budget for fiscal year 2024-25 is $46.8 billion, a 0.4% decline from the previous year. While this amount is below the Sustainable Michigan Budget level, it hides deeper problems threatening the state’s economic future. Lawmakers are spending less because of a lack of tax revenue, not a lack of desire. Lower revenue stems from a slow-growing state economy. Michigan’s economic output ranked just 38th out of 50 states last year. Without more taxpayer money, lawmakers irresponsibly skimped on pension contributions to pay for questionable priorities. The state-managed public school retirement system is underfunded by $29.9 billion, but lawmakers decided to lower pension contributions by $670 million. The new budget is loaded with pork. Local district grants amount to $1 billion, taking resources away from the state’s necessary purposes and putting them toward some lawmakers’ political interests. Pork projects in Michigan, whereby taxpayer funds are directed to specific legislative districts for political favor, represent another misuse of taxpayer money. These projects often fail to serve the broader public interest and divert resources from critical areas such as infrastructure, education and health care. Eliminating these pork projects could free up funds for more pressing needs or make it possible to return money to taxpayers through tax relief, fostering long-term economic stability. The demand for district grants is also leading lawmakers to another unsustainable practice: spending state savings. Legislators started their term with $7 billion in cash in the state’s accounts, but administrators expect the latest budget to reduce that to $350 million. In short, lawmakers passed an unsustainable budget that deferred pension debts and wasted money on pet projects. There are better ways to run a budget. Lawmakers have spent about $19 billion more than sustainable levels since fiscal year 2018-19. Michigan taxpayers could have saved roughly $4 billion from the current budget alone if lawmakers had budgeted sustainably over the period, and they could have avoided dipping into savings or underfunded pensions. As a result of unsustainable budgeting, the budget includes a massive amount of pork. Next year’s Legislature will have plenty to cut if it needs to save money. Lawmakers could do better if they abide by the Sustainable Michigan Budget, a strict budgetary method that aligns spending growth with the rate of population growth plus inflation. Spending caps and mandatory budget reviews are essential tools to maintain fiscal discipline. Legislators should allocate resources effectively and eliminate wasteful expenditures to create a more sustainable fiscal path. Lawmakers could have let people keep an additional 0.2% of their income had they practiced sustainable budgeting. Gov. Gretchen Whitmer rescinded a modest tax cut in the tax rate, and the latest budget spends the money from the resulting tax hike. Lowering taxes would make Michigan’s business environment more competitive, encourage job creation, spur higher wagess and foster a more vibrant economy. This approach enhances economic freedom and ensures that future tax increases are avoided, preventing additional burdens on residents. Addressing the pension shortfall and eliminating inefficient pork projects would reduce unnecessary expenditures and allocate resources more effectively. This approach will prevent future fiscal crises and ensure the state does not have to raise taxes on its residents to cover shortfalls. Reducing government spending is more than balancing the budget. It’s about unleashing Michigan's full potential and ensuring a brighter future. A little restraint can go a long way. It can ease the burdens taxpayers face, catch up on what is owed and leaves money in the bank. Michigan would be better positioned if lawmakers kept a Sustainable Michigan Budget. Originally published at Dallas Morning News.
More conservatives are likely to be elected to the statehouse in November. This is a historic opportunity in 2025 to enact a new budget that provides property tax relief, empowers all families with universal school choice and puts state spending in Texas on a more sustainable trajectory in 2025. Texas, in a nation grappling with unsustainable government spending, stands out for its relative fiscal restraint and economic dynamism. However, despite historically prudent budgetary policies, Texas lawmakers enacted the largest two-year budget increase last year and the second-largest property tax relief measure (though many claimed it was the largest). According to the Sustainable Budget Project by Americans for Tax Reform, Texas, unlike the federal government and the vast majority of states, has done better at aligning its budget growth with the average taxpayer’s ability to pay for government spending, as measured by the rate of population growth plus inflation. Over the past decade, federal spending has escalated by an astonishing 81.7%, nearly quadrupling the 23.2% rate of population growth plus inflation, according to Americans for Tax Reform data. In stark contrast, Texas has exhibited fiscal restraint, ensuring its spending did not spiral out of control. The implications of such fiscal prudence are profound. If the federal government had followed the sustainable budget approach from 2014 to 2023, it could have saved taxpayers an estimated $2.1 trillion in 2023 alone. Texas’ measured approach during this period allowed the state to spend and tax $22.0 billion less than it might have otherwise, benefiting taxpayers and the broader economy. The recent and uncharacteristic budgetary excesses in Texas diminish the capacity for property tax relief. Further property tax reform is crucial. Property taxes are unfair, burdensome, and they keep people renting from the government by paying property taxes forever. The competitive landscape is also evolving, with states like North Carolina and Florida thriving by implementing aggressive tax cuts and regulatory reforms. Texas must respond by intensifying its commitment to pro-growth policies and fiscal conservatism if the Lone Star State is to maintain economic leadership. A constitutional spending limit, similar to Colorado’s Taxpayer Bill of Rights, would help put state spending in Texas on a sustainable trajectory. Even in a blue state where progressives are in charge, this measure has effectively kept state and local spending in check. Its adoption in Texas would ensure that state and local budgets grow in line with the average taxpayer’s ability to pay. To truly distinguish itself, Texas should consider a strategic overhaul of its tax system, particularly in property taxes. With no personal income tax, Texas could relieve property holders of a significant financial burden by eliminating school district maintenance and operations property taxes. This shift, funded through better-controlled state and local government spending, could transform the economic landscape for homeowners and businesses. The state could achieve this monumental feat by using the resulting surpluses from spending restraint to reduce school district M&O property tax rates, aiming to phase them out over the next decade. The Texas Legislature already controls the school finance formulas so this property tax is mostly “local” in name only, and legislators have been phasing it down in recent years. It’s possible to reduce and even eliminate truly local property taxes by cities, counties, and special purpose districts through spending restraint that would produce surpluses, which can then be used to drive property tax rates down to zero over time. Some localities would take longer than others to accomplish this, but as people vote with their feet to places without property taxes, other local governments would look for ways to eliminate theirs. The result would be less government spending and little to no property taxes in Texas. This shift in a pro-growth direction would enhance homeowners’ financial freedom and support more economic growth through increased personal savings and business investment. Texas’ economic policies have historically positioned the state as a leader in job creation and financial freedom, helping to achieve record economic growth, job growth and in-migration. However, the path forward requires conserving and enhancing these policies. Texas must adapt to the changing economic landscapes by fostering a more favorable business climate, reducing governmental interference, and revamping its tax system to maintain and strengthen its competitive status. By prioritizing spending restraint, strategic tax relief and universal school choice, Texas can secure a prosperous economic future and set a standard for budgetary sustainability. Grover Norquist is president of Americans for Tax Reform, a taxpayer organization founded in 1985 at the request of President Ronald Reagan. Vance Ginn is a senior fellow at ATR, president of Ginn Economic Consulting, and previously served in the White House’s Office of Management and Budget. |
Vance Ginn, Ph.D.
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