Chairman Meyer and Members of the Committee,

Thank you for the opportunity to submit written testimony. I am Dr. Vance Ginn, president of Ginn Economic Consulting, a citizen and economist concerned about Texas's high and rising burden of property taxes. 

Over the last decade, the Texas Legislature has made some progress in providing property tax relief, but the housing affordability crisis demands more action. Moreover, property taxes are not just a financial burden but are fundamentally immoral as 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 many families to build or pass on a legacy. Property taxes have risen too fast for too long, as noted in the following three charts. ​

Last session, despite a $32.7 billion surplus, the Texas Legislature allocated just $12.7 billion to new property tax relief. Meanwhile, the state budget increased by a record 32% in state funds from GAA appropriations to appropriations, which is unsustainable. ​

Although this was the second-largest tax relief amount in Texas history, property taxes barely changed last year because of excessive spending and debt increases by local governments. ​

The property tax data in the chart above were presented by the Texas Comptroller’s Office during the Texas Senate Committee on Finance hearing on September 4, 2024. In my testimony that day, I included data showing an increase of $165 million in total property taxes collected because my calculations were based on what the Comptroller had on their website then. However, the Comptroller’s Office has since updated its website with the latest data. I should note there are 12 ISDs without final property tax data in its spreadsheet because of court cases to finalize valuations and property tax amounts due. This means the amount of property taxes collected in 2023 could be higher than the Comptroller’s Office estimates, likely negating the decline estimate.

How did this relief happen?

We should note that school district property taxes did not go down by $12.7 billion. Last year, the Texas Legislature allocated this amount toward reducing school district maintenance and operations (M&O) property tax rates by 10.7 cents per $100 valuation and raising the homestead exemption by $60,000 to $100,000 in 2023. Based on the latest available data, these measures reduced total school district property taxes, which includes M&O and I&S for debt, by nearly $4.3 billion because school districts raised their property taxes levied by increasing M&O spending and I&S debt. 

While about $6.4 billion of the $12.7 billion was allocated to accomplish this relief, the other $6.3 billion is reserved to maintain the relief in the next fiscal year. Texans receive only about 33% of the total from their surplus dollars in relief. This is not a good return for taxpayers because the relief was not directed toward helping everyone, and local governments continued to tax too much so they could spend more. 

Rather than allocating all $12.7 billion to reduce school district M&O property tax rates to help everyone with a homestead, rental, or business property, the Legislature chose to pick winners as those with a homestead and losers as those without. In addition to the fact that school districts and other local governments increased spending and taxes excessively, total property taxes levied across the state may have declined slightly by -0.42%. This is the second-best relief since 1998, after a decline of 1.03% in 2007. 

But this could have been the largest relief had the Texas Legislature used more of the $32.7 billion surplus toward compressing school district M&O property tax rates, freezing school district property taxes so that when they are cut, they go down by the full amount, imposing a spending limit on local governments, and capped all other property taxes at the no-new-revenue rate for voters to approve any tax increase.     

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 because it drives property tax rates higher than otherwise. Texas can eliminate property taxes with three simple cap, pass, and allocate (CPA) steps:

1. Cap property taxes to the no-new-revenue rate and freeze school district M&O taxes.
2. Pass sustainable budgets that limit government spending, with a strong spending limit based on a maximum rate of population growth plus inflation at the state and local levels, like Colorado’s TABOR, but better is a Frozen Texas Budget of no growth or less spending by at least 10%. 
3. Allocate at least 90% of surplus revenue by the state to compress school district M&O property tax rates to eliminate them in about a decade, ending Robin Hood and having taxpayers pay 100% of these taxes through the state. This should include less spending on public education with more efficient universal education savings accounts. Local governments should allocate their surpluses to reduce their property tax rates to zero.

This CPA 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.

Vance Ginn, Ph.D., is president of Ginn Economic Consulting and contributor to more than 15 think tanks, including Americans for Tax Reform, Texans for Fiscal Responsibility, and Texas Policy Research Initiative. 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.

• Had the federal government limited the growth in spending to the rate of population growth plus inflation during that decade, the federal government would’ve spent $2.1 trillion less in 2023 than the $6.47 trillion. 

• If the federal government had done this over the entire decade, the national debt would have increased by $1.8 trillion instead of the actual $12.8 trillion.
• And if this had been done over the last two decades since 2003, the cumulative national debt would have increased by less than $700 billion instead of $20.2 trillion.
• This means that following a sustainable budget would help leave more money in Americans’ pockets so that they can flourish. 

Aggregate state spending, excluding funds received from the federal government, by the 50 state governments increased by 59.0% during that decade. 

• Had their spending grown by no more than the rate of population growth plus inflation from 2014 to 2023, state governments would’ve spent $1.44 trillion in 2023, which is $430 billion less than the $1.87 trillion that all state governments spent. 
• If the states had done this over the entire decade, cumulative spending would have been $1.4 trillion less than what was actually spent, resulting in more money in people’s pockets across the country.

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. 

I update these periodically, successful versus not successful budgeting attempts being 25-9 so far.

1. Americans for Tax Reform released the Sustainable Budget Project with every state's spending compared with population growth plus inflation and valuable comparisons and data for each state.
2. Alaska: Alaska Policy Forum released its third Responsible Alaska Budget, with the first two unsuccessful but the most recent being successful as it helped define the narrative about sound budgeting.
3. Colorado: Independence Institute recently released the first Sustainable Colorado Budget.
4. Florida: James Madison Institute released its first successful Conservative Florida Budget.
5. Iowa: Iowans for Tax Relief Foundation released its fourth Conservative Iowa Budget; the first four have been mostly successful.
6. Kansas: Kansas Policy Institute released its third Responsible Kansas Budget; the first three weren't successful but improvements are being made to help rein in even more spending.
7. Louisiana: Pelican Institute recently released its second Responsible Louisiana Budget, which the first was unsuccessful. Here is a comparison of the RLB with ATR's Sustainable Budget project.
8. Michigan: Mackinac Center released its second Sustainable Michigan Budget, with the first not being successful but the second one being successful in reining in excessive spending in a tough political situation.
9. Mississippi: Mississippi Center for Public Policy recently released its first Responsible Mississippi Budget and was successful.
10. Montana: Frontier Institute released one Conservative Montana Budget and one report on Responsible Local budgets, which has resulted in two successful CMBs and improved local budgets.
11. South Carolina: SC Policy Council released its third South Carolina Sustainable Budget, with the first being successful and the second being unsuccessful. Oconee County Council in South Carolina used the SC Sustainable Budget approach and filed their own sustainable budget. 
12. Tennessee: Beacon Center released its third Conservative Tennessee Budget, with the first three being successful.
13. Texas: Texas Public Policy Foundation released its fifth Conservative Texas Budget, with the first four of five (2024-25 budget wasn't) being mostly successful, and the recent release of Responsible Local Budgets.
14. Federal: The Let Americans Prosper Project along with the Responsible American Budget to rein in federal government spending to support fiscal sanity in D.C., which is essential for the future of our country.

​
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 KTRH News Houston.

State budget officials believe Texas would have to spend about $81.5 billion a year to end property taxes.

Reducing or even eliminating the state’s high property taxes has been something on the minds of Texas lawmakers for a handful of years now.

The Texas Senate Finance Committee were presented the costs from the Legislative Budget Board recently. Just over half ($42 billion) would go to cover the property taxes collected by cities, counties and special taxing districts from last year.

Economist Vance Ginn calls property taxes "fundamentally immoral."

"I believe that they should be eliminated at the end of the day but of course with any sort of policy change nothing is free," he said.

School property taxes make up a large portion of the figure too. Budget officials say that getting rid of all property taxes collected by school districts would cost the state $39.5 billion.

"That's really where the focus is is the state eliminating the school portion first," Ginn said, who believes would take about a decade if state spending is seriously limited.

Ginn also suggested using surplus money to buy down the school maintenance and property tax over time wouldn't be a bad idea either in eliminating nearly half of the state's property taxes.

"There are ways to do this in a fiscally conservative way that can allow for Texas to get rid of property taxes within about a decade, certainly about half the property taxes, but they could even do all the property taxes if local governments would also limit their spending," Ginn said.

According to Ginn, state lawmakers have put around $18 billion towards property tax relief with $12.7 billion in new relief approved during the last legislative session. However, there has not been much change overall in Texas property taxes.

"There's more that needs to be done to reign in government spending at the local levels and the state level," said Ginn. "Reducing property taxes for Texans would be a huge relief for them."

​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.

Don't miss it!

​Read the full testimony with charts and data here: https://www.vanceginn.com/letpeopleprosper/testimony-before-the-texas-senate-committee-on-finance-presented-by-vance-ginn-phd-on-september-4-2024

​Unlock the Secrets of Housing Market Regulations and Real Estate Growth!
​
Discover how housing market regulations are reshaping real estate growth and affordability in 2024. Join Mike Mills and economist Vance Ginn, Ph.D., as they dive deep into the key policies, economic strategies, and insider insights every real estate professional needs to know.

In this episode, you'll learn about the critical changes in housing market regulations and how they impact real estate growth and home affordability. Understand how fiscal policy, zoning laws, and commission structures are influencing market dynamics. Vance Ginn provides expert analysis on navigating these challenges to help Realtors and real estate professionals thrive in today's evolving landscape.

Key Takeaways:

Housing Market Regulations Explained: Learn how recent policy changes affect home prices, market competition, and Realtor strategies.

Impact of Economic Policies: Understand how inflation, interest rates, and government spending shape the real estate market and what it means for your business.

Navigating Property Tax Reforms: Discover actionable strategies to adapt to changes in property tax policies and maintain your competitive edge.

Leveraging Knowledge for Growth: Get expert tips on using economic insights to drive real estate growth and stay ahead of market shifts.

Don't miss out on these game-changing insights that could redefine your approach to real estate. Watch now to stay informed and ahead of the curve in 2024!

🔔 Like, Comment, and Subscribe for more in-depth discussions on real estate trends and strategies. Share your thoughts on the episode in the comments below and let us know which topic you'd like to see next!

Links and Social Media:

🌐 Podcast Website: https://www.thetexasrealestateandfina...
🏠 Mike Mills Mortgage Website: www.millsteammortgage.com
📊 Vance Ginn's Website: https://www.vanceginn.com/

​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

​Check out episode 76 of This Week's Economy. I discuss whether the Fed will cut interest rates, the anti-growth message by Harris-Walz, problems with tariffs by Trump-Vance, support by RFK, Jr. of Trump, school choice in Texas, and a boom in cities in red states, and much more. Get the show notes at vanceginn.substack.com.

Parents rightfully demand transparency from their school districts, and too often schools hide how much they're spending and what they're spending taxpayer dollars on. Join Mandy Drogin as she sits down with Vance Ginn, dad of 3, founder of Ginn Economic Consulting, and formerly an economist in the Trump administration, as they break down school finance and dive into how much our schools are spending and what they're spending it on. ​

Originally published at American Institute for Economic Research.

​The school choice revolution shines a bright light on an otherwise dire situation caused by COVID and draconian government efforts, including shutting down schools with little to no sound reason. But it woke a sleeping giant in parents across the country: their kids were learning little at public schools and it was time for them to stand up. Since then, parents have spoken loudly and clearly, with more than 30 states now having a school choice program, including 12 states with a universal or near-universal education savings account (ESA) program.

But Texas is not yet on that list.

Texas is the largest red state and has more than six million school-age kids but has yet to follow the lead of other states with school choice, even when there is overwhelming support for it. Given the recent primary election victories for school choice proponents against incumbents, which rarely happens, there is an opportunity for a big win in the Lone Star State for students, parents, teachers, and taxpayers.

According to the NAEP test, only 24 percent of eighth graders are proficient in math and 23 percent in reading. Texas’s public education system is failing kids. The time for bold action is now: Texas must embrace universal education savings accounts (ESAs) to reclaim its position as a leader in educational excellence.

As states like Arizona, Florida, and ten other states with universal or near-universal ESAs demonstrate the transformative power of school choice, Texas’s delay in adopting ESAs is becoming increasingly urgent. Amid the heated debate over school choice legislation in Texas, the stark reality is that while these states are witnessing improved student outcomes and a more competitive educational landscape, Texas continues to lag despite pouring billions into public education. 

Despite a $20.3 billion increase in the latest two-year state budget for public education — a 33.3 percent boost — student performance in Texas has stagnated. Less than 20 percent of classroom expenditures reach teachers, with much of the budget consumed by bloated administrative costs. The average classroom receives about $340,000 annually, yet teachers, the backbone of our education system, see only a fraction of this amount in their paychecks. 

This inefficiency is a clear sign that the current system is broken.

Economist Milton Friedman’s vision of school choice as a means to dismantle the government’s monopoly on education is more relevant than ever. States that have implemented ESAs are seeing better student outcomes and improvements in public schools due to the competitive pressure of school choice. 

In contrast, Texas remains stuck in a system that fails to deliver its promises, leaving students underperforming, teachers underpaid, and taxpayers questioning where their money is going. As I recently highlighted in my testimony before the Texas House Committee, this stagnation is untenable.

The economic case for universal ESAs in Texas is equally compelling. 

By moving to an ESA model, Texas could reduce its per-student spending from $17,000 for 5.5 million students at public schools to $12,000 for all 6.3 million school-age kids, potentially saving taxpayers $18 billion annually. These substantial savings could then be returned to Texans through lower property taxes, providing much-needed relief as the cost of living rises. 

Moreover, a competitive education system would compel schools to pay quality teachers more, with estimates suggesting salary increases of up to $28,000 annually. The benefits of ESAs extend beyond education; they represent a broader commitment to economic freedom and efficient use of taxpayer dollars.

Recent primary election results show that public support for school choice is overwhelming. 

Yet, despite this mandate, Texas lawmakers have not acted. The path forward is for Texas to pass a universal ESA bill that gives every parent the freedom to choose the best educational environment for their children. This is about more than just improving education — it’s about empowering parents, raising teacher salaries, and ensuring that our taxpayer dollars are spent wisely.

Beyond education, the benefits of ESAs would reverberate throughout the Texas economy. 

A well-educated, adaptable workforce is essential for maintaining Texas’s competitive edge in attracting businesses and fostering innovation. By providing students with the education that best suits their needs, ESAs prepare them for success in a rapidly changing job market, support higher property values, and spur job creation.

Having grown up in a low-income, single-mother household in South Houston, attending private, public, and home schools, I understand firsthand the transformative power of educational choice. Texas has always been a leader, but the state is falling behind in education. 

​Texas must stop following and join the school choice journey across the country to ensure every child has access to a high-quality education tailored to their unique needs. The future of our children, teachers, and economy depends on it. It’s time for lawmakers in every state to act, so universal ESAs become not just a revolution but the norm, empowering Americans for generations to come.

Originally published at Austin American-Statesman. ​

Texas remains a magnet for people and businesses, attracting more newcomers than most states. To sustain this influx and support a growing economy, the state must strengthen the infrastructure required to meet Texas’ expanding energy needs.

The Electric Reliability Council of Texas (ERCOT) projections indicate that Texas’ energy demand will nearly double by 2030, increasing from 85 to 150 gigawatts in just six years. This revelation has sparked significant concern among state policymakers and industry leaders.

The expansion of cryptocurrency mining, data centers, and the burgeoning artificial intelligence industry drives a significant portion of this anticipated growth. These sectors, often viewed skeptically, are integral to the modern economy and are poised to drive the next economic revolution.

With the right free-market policies, Texas can maintain its leadership in technological advancement and ensure abundant energy for Texans. By removing barriers that impede energy production and disincentivize entrepreneurs from investing in Texas, the state can look forward to a bright future.

Even former skeptics recognize these industries' importance, as seen in President Trump's recent emphasis on Truth Social: "We want all the remaining Bitcoin to be MADE IN THE USA!!! It will help us be ENERGY DOMINANT!!!”

Texas has the potential to lead in this arena. The state’s abundant land and natural resources support the technology sector's growth. However, this growth necessitates a reliable, abundant energy supply, a potential that Texas is well-positioned to fulfill.

Texas is already a national leader in renewable energy production, with significant contributions from wind and solar. However, reliable natural gas remains the cornerstone of the state’s energy supply, providing power regardless of weather conditions. Furthermore, Texas has a bright path forward with the potential for expanding nuclear energy, providing a solid energy mix through market forces, not government planning.

Texas must leverage the free market's incentives to foster an environment conducive to building new power plants, including nuclear power. Policymakers should signal that Texas is open for business and ready to meet its rising energy demands efficiently.

Discouraging capital investment in power generation through increased government intervention or propping up some generation over others is counterproductive. Rather than picking winners and losers, Texas should let market competition drive the provision of abundant, reliable energy.

By embracing free-market policies, Texas sets a powerful example for other states. As states experiment with different approaches, the best ideas can emerge, fostering a competitive environment that drives progress and prosperity.

For starters, Texas needs to show free-market leadership by fighting back against onerous federal regulations that impede the energy industry's growth. The state should remove itself from the bondage of the Biden administration’s flawed green energy agenda items from the so-called “Inflation Reduction Act.” This could be done by rejecting federal funds, tax breaks, and other measures while pushing for Congress to end the IRA.

The Biden administration’s industrial policy distorts the market. Texas should not fall into the trap of picking another industrial policy and instead provide a level playing field where all forms of energy can compete.

Texas has a bright future, likely leading the nation in economic and technological advancement. By adhering to free-market principles, reducing unnecessary spending, taxes and regulations, and fostering a competitive energy market, Texas can continue to attract people to open businesses, work and raise families.

See Full Research on the Texas Budget.

Introduction
The Texas Legislative Budget Board (LBB) publishes the "Fiscal Size-Up" report after every session to comprehensively review the state's budget and fiscal actions for the biennium. The latest report, covering the 2024-25 budget period, offers crucial insights into how tax dollars are allocated following the 88th Texas Legislature's regular and special sessions in 2023. The following are key highlights.

Budget Inconsistencies and Excesses

• Appropriations vs. Expenditures: The report inconsistently compares the budget with estimated, budgeted amounts in 2022-23 and appropriated amounts in 2024-25. This means that the 2022-23 budget includes initial appropriations, supplemental appropriations, and other expenditures, while 2024-25 includes only initial appropriations. The report’s comparisons are informative but incomplete. The discrepancy makes it challenging to accurately assess the state's fiscal health, so only initial appropriations should be used for a consistent comparison. 

• Largest Budget Increase: The 2024-25 biennium saw the largest budget increase in Texas history, driven by a significant rise in appropriations across various areas. The initial appropriations for 2024-25 were $321.7 billion in all funds, a 21.5% increase in state and federal funds from the previous biennium. State funds were $219.4 billion, a 32% increase.

Tax Revenue, Economic Situation, and Spending Cap

• Tax Revenue Collection: The report details how much tax revenue was collected, showing a robust revenue performance driven by strong economic growth and higher tax receipts in various categories, including sales tax, oil and gas production taxes, and motor vehicle sales taxes​.
• Economic Indicators: Texas' economy showed strong growth indicators, with rising employment rates and increased personal income levels, although inflationary pressures and supply chain disruptions posed challenges​.

• Spending Growth Cap: The LBB set the spending growth cap at 12.33%, based on the average rate of population growth and inflation. This cap aims to control excessive government spending and ensure fiscal sustainability​.

Funding by Major Categories

• Public Education:
  • Foundation School Program: Received substantial increases, including $5.3 billion to maintain past property tax relief efforts and $12.3 billion in new property tax relief to reduce school district M&O property tax rates by 10.7 cents per $100 valuation and raise the homestead exemption from $40,00 to $100,000. There was also a nearly $7 billion increase in new funding for public education despite poor student outcomes.
• Health and Human Services:
  • Medicaid: The main driver of healthcare costs at the state level. There were changes in how much the federal government provided, and the state expanded the program by allowing mothers to receive benefits for up to 12 months after giving birth.
• Infrastructure and Transportation:
  • Transportation Projects: Significant expenditures on transportation infrastructure to help address the state’s growing need for improved roadways and systems.

Corporate Welfare and New Constitutional Funds

• Texas Energy Fund: Allocated $5 billion for low-interest loans in this voter-approved fund, primarily for natural gas projects, marking a significant increase in corporate welfare​.
• Property Tax Abatement Program: After the old program rightfully expired, a new program was unfortunately created, continuing incentives for local government property tax abatements​.
• Texas Water Fund: Established with $1 billion to address water infrastructure needs through a voter-approved fund, reflecting the state's attempt to improve water shortages.

Specific Budget Insights

• State Employee Retirement and Health Benefits: Funding for state employee retirement and health benefits was increased to ensure the sustainability of these programs​.
• Debt Service: Increased to cover the state’s obligations and maintain its credit rating​.

• Tax Relief: The budget included measures for the second-largest property tax relief in Texas history, $12.3 billion, using part of the $33 billion in surplus money, and $600 million to raise the franchise tax exemption level for businesses with income below $2.47 million.
• Economic Stabilization Fund: Expected to reach nearly $24 billion by the end of FY 2025​.

Fiscal Challenges and Recommendations

• Frozen Budget Approach: Texans for Fiscal Responsibility proposed a "Frozen Texas Budget" to curb unsustainable spending by maintaining the current budget levels and returning surplus funds to taxpayers, which would eliminate property taxes over time and promote fiscal responsibility.

• 2025 Legislative Session: The 89th Texas Legislature is encouraged to adopt stricter budgetary controls to sustain property tax relief efforts and reduce the overall spending burden. Recommendations include freezing the budget, cutting unnecessary expenditures, and continuing property tax reductions​.

Conclusion
The Fiscal Size-Up for the 2024-25 biennium provides a detailed snapshot of Texas' budgetary landscape, highlighting significant increases in appropriations and strategic investments in key areas. While the budget reflects robust growth and substantial investments, it also underscores the need for continued fiscal discipline to ensure sustainable economic prosperity for all Texans. As the state navigates these fiscal challenges, adopting prudent budgetary practices and prioritizing taxpayer relief will be crucial for maintaining Texas' economic vitality.

​

Overview

• The 2024-25 Frozen Texas Budget would have kept the state’s budget from growing as it is already too big, thereby excessively burdening taxpayers. This also helps quickly achieve the three-step process to eliminate all property taxes over the next decade by limiting government spending at the state and local levels and returning surplus collected taxpayer dollars to taxpayers.

 

• The 88th Texas Legislature passed the 2024-25 budget in 2023, which resulted in the largest budget increase and second-largest property tax relief in Texas history after a regular and four special sessions. The 89th Texas Legislature in 2025 must practice better budget restraint to reduce the growing spending burden, sustain past property tax relief efforts, and provide more tax relief.

 

• Freezing the Texas budget and returning “surplus” money to taxpayers by reducing school district maintenance and operations property tax rates will provide a path to eliminate nearly half of property taxes in Texas. Combining this with spending restraint by local governments and returning “surplus” money to taxpayers by reducing property tax rates will provide a reasonable path to eliminating immoral property taxes that tax unrealized gains in Texas so Texans can have their right to own property.
• See an Overview of the Texas Budget.

 
Introduction
​Recently, the Texas Legislative Budget Board released the Fiscal Size-Up 2024-25 Biennium report with the latest estimated or budgeted amounts in the prior 2022-23 budget and the appropriated 2024-25 budget. The results from the 88th Texas Legislature’s efforts after a regular and four special sessions resulted in the largest budget increase, the largest corporate welfare increase, the largest social safety net increase, and the second largest property tax relief in Texas history.
 
These results are not what one expects in the red state of Texas, but the appropriate ways to evaluate the latest budget data provided here show much room for fiscal improvements in the Lone Star State. If these efforts last session continue, Texas will not have sustainable budgeting, nor will Texans be as prosperous because of higher taxes, less economic growth, and fewer well-paid jobs. Fortunately, the path forward to achieve fiscal sustainability can happen by at least passing a frozen budget for the next biennium and returning excess collected taxes, called a “surplus,” to taxpayers by reducing school district maintenance and operations (M&O) property tax rates.
 
The genius of America’s republic with federalism provides laboratories of competition among the states that Texas will not lead if this recent trend of excessive spending continues. Texas can overcome these challenges and provide the fiscally conservative path forward for Texans to benefit and other states, countries, and local governments to follow for maximum human flourishing.
 
Texas Budget as Reported by the Legislative Budget Board

The Legislative Budget Board comprises elected state officials and staff who evaluate, report, and determine key components of the state’s budget. These components include determining the growth rate of the constitutional spending limit, budget totals for each period to report to the public, and other factors. Unfortunately, the LBB reported the budget figures relatively late, giving the author and other Texans less time to evaluate the budget before the next session, which begins in January 2025.
 
The amounts in the LBB’s latest report for the 2024-25 budget provide appropriated amounts for that period and expended or budgeted amounts for the previous 2022-23 budget. While the LBB uses these amounts and shares them with legislators to help evaluate budgeting decisions, the amounts have problems.
 
Problems with Comparisons in the LBB’s Fiscal Size-Up

The primary issue is that the amounts in the 2022-23 budget are not comparable with those in the 2024-25 budget. This is because the 2022-23 budget includes initially appropriated amounts passed in 2021, supplemental appropriated amounts in 2023 to backfill any underfunded programs, and other expenditures during the budget period. However, the 2024-25 budget includes only initially appropriated amounts during 2023 until any supplemental appropriated amounts in 2025 and other expenditures later. This paper addresses this by considering the calculations in the Conservative Texas Budget and Frozen Texas Budget approaches below.
 
While this is an issue for appropriately comparing the budget over time, the LBB’s approach is useful because it determines the amounts for the constitutional and statutory spending caps when the LBB meets the fall before a regular session. The constitutional spending limit is on certain general revenue not dedicated by the constitution (about 40% of the total budget), and the statutory spending limit covers consolidated general revenue (about 50% of the total budget). The spending growth cap determined by the LBB for the 2024-25 budget was 12.33% based on the average rate of population growth times inflation over the last two fiscal years and the upcoming two fiscal years.
 
Given this information, we can better understand the LBB’s report, which compares spending to appropriations, which is like comparing apples with oranges and not appropriate accounting. Table 1 provides the budget information from Figures 1 to 14 in the LBB’s report that state officials can claim shows the budget is well below the spending limit. Still, these comparisons are incomplete and need further evaluation.

​Even with these calculations, Figure 24 of the LBB’s report shows the available amounts of $16.8 billion under the Constitutional pay-as-you-go limit, $5.1 billion under the Constitutional and statutory tax and spending limit, and $13.8 billion under the statutory consolidated general revenue limit. Given that the data in Table 1 provides an inconsistent apples-to-oranges budget comparison, the tables below are more accurate ways for an apples-to-apples comparison from initial appropriations to initial appropriations.

Consistent Comparisons of the Texas Budget

Any growth in a government’s budget is an expansion of the role of government in our lives, potentially reducing our liberty. But there can be legitimate reasons for the growth of limited government if it preserves liberty by not overburdening taxpayers with funding excessive spending with costly taxes.

Conservative Texas Budget

The first comparison is based on a long-held view of fiscal conservatism that the budget should not grow by more than the average taxpayer’s ability to pay for it, as measured by the rate of population growth plus inflation. Limiting a government’s budget growth to this metric essentially freezes the budget in inflation-adjusted per capita terms. This approach has been considered in my research for the Conservative Texas Budget, Sustainable Budget Project, and responsible budget approaches in other states. The Conservative Texas Budget approach uses the rate of population growth plus inflation in the two prior years before 2023 for a biennial spending limit of 16%. This rate is not a target but a maximum, especially considering elevated inflation rates created by the Federal Reserve. excludes tax relief that does not grow the government, including the $6.2 billion in general revenue for the 2022-23 appropriations and $18.2 billion in general revenue for the 2024-25 budget. The property tax relief amount for the 2024-25 budget period is in the budget, SB 2, and HJR 2. This included $5.3 billion to maintain past property tax relief efforts in the budget. It also includes more than $12 billion in new property tax relief through reducing the school district M&O property tax rates by an additional 10.7 cents per $100 valuation, raising the homestead exemption from $40,000 to $100,000, and excluding property tax relief amounts from the Constitutional spending limit. Finally, it includes $600 million to raise the income exemption for businesses to pay franchise taxes to $2.47 million. This approach also excludes $13.3 billion in federal funding for COVID-related relief efforts, as these were one-time funding sources that should not go into ongoing budget items.
 
Table 2 shows what the Conservative Texas Budget looks like when excluding tax relief and one-time federal funding amounts in initial appropriations in both budget periods.

​Using the CTB approach above, Figure 1 highlights how the budget has improved since the implementation of the CTB started with the 2016-17 budget. This looked much better before the 2024-25 budget, but the massive growth of the current budget raised the growth of initial appropriations even as the rate of population growth plus inflation rose slightly during the latter five budget period. If the growth of the budget is not controlled, it will soon surpass the rate of population growth plus inflation like it did during the prior six budget periods, which is unsustainable.

​While the state’s budget has improved over the last decade compared with rates of population growth plus inflation, the state’s budget is up well above the rates since the 2004-05 budget. The cumulative annual difference above these rates since then is $262.5 billion, meaning a family of four owes, on average, $17,300 more in taxes than otherwise.
 
Frozen Texas Budget
​
The CTB is an important approach but has limitations because Texas taxpayers are already paying too much for their government. This is a good reason to freeze or even cut the Texas budget. Considering the initial appropriations in 2022-23 and 2024-25, with tax relief and COVID-related funding included in both periods, Table 3 compares the budget with a Frozen Texas Budget.

​These increases in initial appropriations to initial appropriations for general funds, general-revenue-related funds, state funds, and all funds are substantial and likely the largest in Texas history, as not all years of Texas history are available. The Legislature provided more than $12 billion in new property tax relief, $600 million in new franchise tax relief, and $5.3 billion to maintain old relief for the 2024-25 budget. This $18.2 billion in tax relief did not grow the government so that it could be removed from these figures, but the $6.2 billion in tax relief in 2022-23 must also be removed for consistency. After removing these tax relief amounts in both budget periods, the increases remained excessive at 25.7% in state funds, like for the CTB above, and 17.4% in all funds, which is different than the CTB because the CTB excludes the $13.3 billion amount for COVID-related federal funds in 2022-23.
 
Budget Increases by Article, Including Public Education
​
With these unsustainable budget increases, it is important to consider where these appropriations are throughout the budget. While some consider declines in funding for public education, also known as government schooling, the amount is up substantially when appropriately considering the Frozen Texas Budget approach. Table 4 shows the increases in initial appropriations for general revenue, state funds, and all funds, respectively, from 2022-23 to 2024-25.

​Conclusion

The comparisons above highlight how the LBB’s report is informative but incomplete and misleading as it provides an inconsistent comparison of spending-to-appropriations. By appropriately accounting for appropriations-to-appropriations like the above for the Conservative Texas Budget and Frozen Texas Budget, the increase in the budget is far greater than the average taxpayer can afford to pay for and is well above what is needed to correct past budget excesses. While the LBB shows that general revenue-related funds increased by 8.8% and all funds increased by 2.7%, this inconsistent approach finds that state funds increased by 17.2%. However, the consistent approaches prove that the budget increased by 25.7% in state funds for the CTB, excluding the amounts for tax relief and COVID-related funding, or by 32% for the Frozen Texas Budget, including those amounts. Moreover, the budget increased by 23.7% in all funds for the CTB or by 21.5% for the FTB. Therefore, it is highly likely that when the supplemental appropriations and other expenditures happen during the 2024-25 budget, there can be a consistent spending-to-spending comparison, showing much larger increases in the LBB’s figures that look more similar to the CTB or FTB.

​Digging into these budget amounts provides a better understanding that the latest Texas budget is unsustainable and must be corrected in 2025. This is why the Frozen Texas Budget should be the maximum for the 2026-27 budget in 2025, making the maximum amounts appropriated be $219.4 billion in state funds and $321.7 billion in all funds. However, the Texas Legislature should strongly consider substantial cuts in appropriations, given the historic budget increases in the last session. The starting point should be 10% cuts across the board, but 20% cuts should not be out of the question. Recall that the government has no money; every dollar it spends comes from taxpayers. If the government is going to spend more than 20% each biennium like it did last session, Texans have less liberty and less opportunity to flourish.

 Places to start cutting would be massive increases in corporate handouts and safety net programs expanded last session. In addition to getting rid of pork, there should be no increases in public education after record increases in the last session, and the Legislature should consider replacing the arcane school finance system with funding through universal education savings accounts (ESAs). This approach could substantially reduce expenditures on K-12 schooling from about $17,000 for each of the 5.5 million students in public education to about $12,000 for each of the 6.3 million school-age kids in Texas. This could bring spending on K-12 schooling down from about $93 billion to $75.6 billion per year. These savings should reduce school district maintenance and operations property tax rates to put them on a fast path to elimination. This approach would also better empower every parent with the opportunity to school their kids in a way that best meets their unique needs. It would also help keep more money in their pocket for transportation to schooling, tutoring, books, and more, whether they choose public, private, home, co-op, or other types of schooling. School choice helps empower parents, improve student outcomes, increase teacher pay, and expand economic output.
 
Finally, instead of passing the second largest property tax relief last session, property taxes remained essentially unchanged in 2023 despite the state appropriating more than $12 billion to reduce school district M&O property taxes to reduce the property tax rate by an additional 10.7 cents per $100 valuation and raise the homestead exemption to $100,000. There was about $6.5 billion for the 2023 relief and the rest to maintain the relief in 2024. In the next session, the Legislature should better limit government spending, reform school finance, and use the “surplus” to reduce school district M&O property tax rates as much as possible. Add to this spending restraint by local governments so they can use “surplus” funds to return to taxpayers by reducing their property tax rates until they are zero. This process of passing a frozen state budget, using 90% of surplus dollars to compress school district M&O property tax rates until they are zero, and having local governments eliminate the rest of their property taxes with surplus dollars above a new local spending limit will eliminate property taxes in Texas soon. This will help Texans own their property and have more liberty so that they have opportunities to prosper. ​

​Tune in to hear my entire testimony and Q&A session from the Texas House public education hearing on August 12th, 2024.

​Hear from me and Texas House Representative Brian Harrison on the importance of school choice during the Texas House Committee hearing on public education on August 12th, 2024.

​Don't miss Dr. Vance Ginn's testimony before the Texas House Committee on Public Ed on August 12, 2024. Taxpayers are already spending too much on a failing monopoly government school system, and universal school choice is needed now!

Read my research for more information on this here. This is the notice of the public hearing.

Chairman Buckley and Members of the Texas House Committee on Public Education:

My name is Dr. Vance Ginn, president of Ginn Economic Consulting. I'm a proud Texan, an economist, a husband, and a father of three. I grew up in a low-income, single-mother household in South Houston. I attended private, public, and home schools before becoming the first in my family to graduate from college, where I earned my doctorate in economics at Texas Tech University. I've dedicated my career to the calling to let people prosper, including more than a decade of working to understand and improve education, school finance, and other policies in Texas and nationwide. Today, I urge you to please consider Texas's critical need for universal Education Savings Accounts (ESAs). 

Despite historic increases in public education funding recently and over time, student performance in Texas is flat or declining. Our state needs to catch up, as many states have educational opportunities that are not available here. Economist Milton Friedman once said about improving education, "The only solution is to break the monopoly, introduce competition and give the customers alternatives." The time is now for Texas to follow this vision with a “Texas approach” for improved education, more pay for quality teachers, and a better economy.

Here are questions to consider during your deliberations:

1. Why are Students and Texas Falling Behind in Education?

• Standardized test outcomes, such as STAAR and NAEP (though flawed as the ultimate accountability factor is parents), indicate that performance remains stagnant or worse over time. For example, only 24% of Texas 8th graders are proficient in math and 23% in reading—the lowest in decades.
• Texas is trailing behind 12 states with universal or near-universal ESAs. If Texas does not act swiftly, we risk falling further behind as other states empower parents, students, and teachers. 

2. Why are Taxpayers Spending So Much on Public Education?

• Texas Legislature increased the total budget from 2022-23 initial appropriations to 2024-25 initial appropriations (for a consistent comparison) by record amounts of $53.2 billion, or 32%, to $219.4 billion in state funds and $56.9 billion, or 21.5%, to $321.7 billion in all funds, includes state and federal funds. 
• The Legislature increased funding to public education by historic amounts of $20.3 billion, or 33.3%, to $80.6 billion in state funds and by $20.7 billion, or 28.6%, to $93.1 billion in all funds. 
  • Despite these historic increases in public education, which brought state funding up to about 50%, the monopoly government school system lacks efficiency. For example, less than 20% of classroom expenditures directly fund teachers; the rest is for administrative and other costs. Moreover, there is no positive correlation between increased funding and improved outcomes, so funding is excessive with exaggerated arguments for more.

3. What is the Path Forward to Meet Texans’ Support for School Choice?

• Multiple surveys show strong public support for school choice, reflecting the widespread desire for educational reform. The path forward should include the Texas Legislature passing a universal ESA bill in the next session and establishing universal ESAs for all Texas families for any schooling parents choose for their kids. 
• This program should use what has worked well in other states to streamline and ensure quick implementation for every student. Public schools would receive less funding under ESAs only if they failed to compete and parents chose better alternatives for their kids. 
  • Ultimately, Texas should shift from spending about $93 billion for $17,000 per student on public education for 5.5 million kids today to a fully-funded ESA model of about $75 billion with $12,000 per student for 6.3 million school-age kids. This reform could save Texans about $18 billion annually, with savings returned to taxpayers by reducing school district M&O property tax rates, putting us on a faster path to elimination.

4. What Does the Research Show on the Benefits of School Choice?

• Studies consistently find that outcomes improve when parents can choose the best educational environment for their children. For example, out of 18 academic studies on school choice, 12 found positive outcomes, including improvements in public schools due to the competitive pressure of school choice. 
• Additionally, universal ESAs could significantly increase teacher pay. Some teachers could see salary increases of up to $28,000 per year. 
• Moreover, increasing school choice has been shown to improve labor market outcomes, support higher property values, and spur job creation.

Conclusion

Texas must lead in the race for educational excellence. The evidence shows that universal education savings accounts will help provide this. Texas should pass a universal ESA bill to ensure every child in Texas has access to a high-quality education tailored to their unique needs. Thank you for your time and consideration. I am glad to be a resource on these issues throughout your deliberation and am happy to answer your questions.

Vance Ginn, Ph.D., is president of Ginn Economic Consulting, affiliate at more than 15 think tanks across the country, and host of the Let People Prosper Show. Dr. Ginn was previously a lecturer at multiple institutions of higher education, 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. 

This research provides support for my testimony on August 12, 2024 before the Texas House Committee on Public Education on advancing educational opportunities in Texas.

Overview

Despite increases in public education expenditures with taxpayer money in Texas, student performance is flat or declining. Texas is falling behind thriving states that offer educational choice as part of the school choice revolution, in which more than ten states have or nearly have universal ESAs. 
​
Economist Milton Friedman, who championed school choice well before it became popular, famously said, "The only solution is to break the monopoly, introduce competition, and give the customers alternatives." Texas can follow this optimistic vision to improve student learning and outcomes, increase teacher pay, and advance parent empowerment from universal ESAs by passing the “Texas approach,” as said by Public Education Chairman Brad Buckley, in the next session. This approach should build on what has worked well in other states rather than starting from scratch to make it universal for every child now. 

Why Universal ESAs?

1. Students and Texas are Falling Behind

• While Texas has historically been a leader in many areas, we are now trailing behind 12 other states that have complete or near-universal school choice with ESAs. These states, including Arizona, Arkansas, Florida, Louisiana, West Virginia, and more, have recognized the power of school choice in driving educational improvement. If Texas does not act swiftly, we risk falling further behind as other states benefit from a competitive education system that empowers parents, students, and teachers. 
• The outcomes of standardized tests (STAAR and NAEP), though flawed in many ways, indicate that performance over time either stays the same or worsens.
  • Despite large increases in funding (see below), student performance is flat or declining, according to the Texas Education Agency’s (TEA) STAAR scores in Texas (see Table 1).
  • The National Assessment of Educational Progress (NAEP) scores show that only 24% of Texas 8th graders are at or above proficient for grade level in mathematics (the lowest since 2000) and 23% in reading (the lowest since at least 1999).
  • The current system is failing our students and placing an unnecessary financial burden on taxpayers. However, the ultimate accountability factor is parents, who should be in charge instead of politicians and unelected bureaucrats.

2. Excessive and Inefficient Funding of Public Education

• Regarding the total budget, Texas increased appropriations from major funding sources by a record amount in the last session. Unlike the LBB’s reporting in the Fiscal Size-Up, this results from my consistent two-year budget comparison of 2022-23 initial appropriations to 2024-25 initial appropriations. 
  • Comparing estimated/budgeted in 2022-23 to appropriated in 2024-25, as the LBB does, is informative but incomplete. The 2022-23 total amounts include initial appropriations in the General Appropriations Act in 2021, supplemental appropriations in 2023, and other expenditures, whereas the latter two amounts are yet to be available for 2024-25 and will likely increase. 
  • Table 2 shows general revenue funds increased by 21.2%, state funds by 32%, and all funds (including state and federal funds that are all taxpayer money) by 21.5% from the previous budget cycle, which are all historic increases. 
• Regarding public education, the Legislature increased taxpayer funding by $20.3 billion or 33.3% in state funds and by $20.7 billion or 28.6% in all funds (see Table 3). While $12.7 billion in state funds was used to provide new tax relief from school district property taxes, the state provided about $7 billion more to public education. 
  • Despite this historic budget increase for public education, the monopoly government school system remains riddled with inefficiencies, and the return on these expenditures is highly questionable. For example, less than 20% of classroom expenditures directly fund teachers. 
  • Specifically, the average of roughly $17,000 per student going into a classroom of 20 students is $340,000, but teachers receive less than 20% of it for a 10-month $60,000 salary, on average. The rest goes to the non-teaching administrative staff surge primarily to deal with federal, state, and local requirements, including taking standardized tests with questionable results because the ultimate accountability factor of a child’s education is parents. 

3. Public Support for School Choice and Fiscal Responsibility

• Public support for school choice is robust across multiple surveys. Also, consider the results of the Republican primary elections. The time to act is now. 
• The path forward should include the Texas Legislature passing a universal ESA bill next session, establishing universal ESAs for all Texas families. 
  • The approach should use what works well in other states to streamline and start the program quickly for every student. 
  • More taxpayer money should not be spent on public education unless outcomes improve, school district debt should be reduced, more money should go to teachers over administrators, and superintendent pay and other excesses should be changed.
  • Public schools would not get less funding unless they are not competitive and parents choose to send their kids elsewhere. Why would some assume public schools cannot compete and thus get less funding?
• The path forward should include a simplified school finance system based on ESAs funding public, private, home, co-op, charter, and other schooling options. 
  • Texas could move from spending about $17,000 for each of the 5.5 million students, or $93 billion per year, on public education today to a fully funded ESA model with $12,000 for each of the 6.3 million school-age kids, or $75 billion per year.
  • This improved school finance system could save Texans $18 billion annually. The excessive taxpayer money collected should be returned to taxpayers by reducing school district M&O property tax rates for a path to elimination. 

4. Overwhelming Evidence of Success

• The evidence favoring universal school choice is compelling. Studies consistently find outcomes improve when parents can choose the best educational environment for their children. Table 3 from the University of Arkansas shows how this includes improvements at public schools from competitive pressure. 

• Better Outcomes: Out of 18 academic publications then, 12 (67%) found all or some students had improved outcomes, four found no effects, and two found negative effects (based on a limited choice program in Louisiana–but the Louisiana Legislature passed universal school choice this year so should have improvements soon). 
• Better Teacher Pay: While public school districts employ about 90% of Texas teachers, teachers have little bargaining power under the current monopsony system. The introduction of ESAs would create a more competitive labor market, allowing teachers to negotiate better salaries and working conditions. ESAs could lead to an average salary increase of $14,000 per year more for teachers, with some seeing as much as $28,000 per year more.
• Better Economy: Research indicates that increasing school choice improves educational quality, reduces dropout rates, and improves labor market outcomes. School choice supports higher property values, spurs job creation, and provides better matches between students and their educational needs, leading to a more robust and adaptable workforce.

Conclusion

Texas must lead in the race for educational excellence. The evidence is clear: universal Education Savings Accounts will improve educational outcomes, increase economic opportunity, and provide the competitive edge that our state needs. Texas should pass a universal ESA bill so kids in Texas can access a high-quality education tailored to their unique needs. This is an educational reform and a commitment to Texas's future. We can fully fund students with ESAs, who can use them to attend public or other types of schooling, spend less money and pay lower taxes, and improve outcomes and teacher pay through universal school choice.

​
Vance Ginn, Ph.D., is a leading economist and advocate for free-market principles and fiscal conservatism, shaping policies across the U.S. through his work with 15 think tanks. As the founder and president of Ginn Economic Consulting and host of the Let People Prosper Show podcast, Dr. Ginn provides high-impact economic consulting and dives deep into pressing issues with top influencers. With experience as the associate director for economic policy at the White House’s Office of Management and Budget and chief economist at the Texas Public Policy Foundation, his insights are frequently featured in major media outlets. Residing with his family in Round Rock, Texas, Dr. Ginn champions policies promoting economic freedom and prosperity. Find out more about Dr. Ginn at vanceginn.com, subscribe to his newsletter at vanceginn.substack.com, and follow him on X.com at @vanceginn.

Originally published at Texans for Fiscal Responsibility. 

​Introduction
The Texas Legislative Budget Board (LBB) publishes the “Fiscal Size-Up” report after every session to comprehensively review the state’s budget and fiscal actions for the biennium. The latest report, covering the 2024-25 budget period, offers crucial insights into how tax dollars are allocated following the 88th Texas Legislature’s regular and special sessions in 2023. The following are key highlights.

Budget Inconsistencies and Excesses
The report inconsistently compares the budget with estimated, budgeted amounts in 2022-23 and appropriated amounts in 2024-25. This means that the 2022-23 budget includes initial appropriations, supplemental appropriations, and other expenditures, while 2024-25 includes only initial appropriations. The report’s comparisons are informative but incomplete. The discrepancy makes it challenging to accurately assess the state’s fiscal health, so only initial appropriations should be used for a consistent comparison. 

The 2024-25 biennium saw the largest budget increase in Texas history, driven by a significant rise in appropriations across various areas. The initial appropriations for 2024-25 were $321.7 billion in all funds, a 21.5% increase in state and federal funds from the previous biennium. When excluding federal funds and looking at State funds only, appropriations were $219.4 billion, a 32% increase. 

Tax Revenue, Economic Situation, and Spending Cap
The report also details how much tax revenue was collected, showing a robust revenue performance driven by strong economic growth and higher tax receipts in various categories, including sales tax, oil and gas production taxes, and motor vehicle sales taxes​.

Texas’ economy showed strong growth indicators, with rising employment rates and increased personal income levels, although inflationary pressures and supply chain disruptions posed significant challenges​.

The LBB set the spending growth cap at 12.33%, based on the average rate of population growth and inflation. This cap aims to control excessive government spending and ensure fiscal sustainability​.

Funding by Major Categories
The Foundation School Program received substantial increases, including $5.3 billion to maintain past property tax relief efforts and $12.3 billion in new property tax relief to reduce school district M&O property tax rates by 10.7 cents per $100 valuation and raise the homestead exemption from $40,000 to $100,000. There was also a nearly $7 billion increase in new funding for public education despite continued poor student outcomes.

In Health and Human Services, Medicaid was the main driver of healthcare costs at the state level. There were changes in how much the federal government provided, and the state expanded the program by allowing mothers to receive benefits for up to 12 months after giving birth.

Overall, the two categories of Public Education and Health and Human Services accounted for an astounding 70% of all State appropriations. 

On the infrastructure and transportation side, significant expenditures on transportation infrastructure were made to help address the state’s growing need for improved roadways and systems.

Corporate Welfare and New Constitutional Funds
Much of the budget also included funding for corporate welfare, including: 

• The Texas Energy Fund, which allocated $5 billion for low-interest loans in this voter-approved fund, primarily for natural gas projects, marking a significant increase in corporate welfare​.
• A new property tax abatement program: After the old program rightfully expired, a new program was unfortunately created, continuing incentives for local government property tax abatements​.
• The Texas Water Fund was established with $1 billion to address water infrastructure needs through a voter-approved fund for likely questionable projects that should be done privately. 

Additional Budget Insights

• State Employee Retirement and Health Benefits: Funding for state employee retirement and health benefits was increased. 
• Debt Service: Increased to cover the state’s obligations and maintain its credit rating​.
• Tax Relief: The budget included measures for the second-largest property tax relief in Texas history, $12.3 billion, using part of the $33 billion in surplus money (over-collected taxpayer money), and $600 million to raise the franchise tax exemption level for businesses with income below $2.47 million. Unfortunately, data has proven that the tax relief still resulted in an overall property tax increase across the State, intensifying the need for reforms. 
• Economic Stabilization Fund: Also known as the “Rainy Day Fund,”  is Expected to reach nearly $24 billion by the end of FY 2025​.
• Surplus: There could be at least $16 billion in surplus available for next session under the pay-as-you-go limit.

Fiscal Challenges and Recommendations
Despite Texas’ economic success and renown, the State faces some challenging headwinds, mostly self-created. A major headwind is the unsustainable increases in government spending and property tax burdens. A better approach is a “Frozen Texas Budget” to curb irresponsible spending by maintaining the current budget levels and returning surplus funds to taxpayers, which would eliminate property taxes over time and promote fiscal responsibility.
Going forward, the 89th Texas Legislature is encouraged to adopt stricter budgetary controls to sustain property tax relief efforts and reduce the overall spending burden. Recommendations include freezing the budget, cutting unnecessary expenditures, and continuing property tax reductions​ through rate compression. 

Conclusion
The Fiscal Size-Up for the 2024-25 biennium provides a detailed snapshot of Texas’ budgetary landscape, which, when examined properly, highlights significant increases in government appropriations, at the expense of taxpayers. While the budget reflects robust growth and substantial investments, it also underscores the need for continued fiscal discipline to ensure sustainable economic prosperity for all Texans. As the state navigates these fiscal challenges, adopting prudent budgetary practices and prioritizing taxpayer relief will be crucial for maintaining Texas’ economic vitality.

Originally published at Texas Policy Research Institute. 

The Texas Legislative Budget Board (LBB) has released its Fiscal Size-Up (FSU) for the 2024-25 biennium, providing a comprehensive overview of the state’s budget. This document is essential for understanding how Texas allocates its financial resources and highlights significant fiscal actions taken by the 88th Texas Legislature. Here’s a breakdown of the key points from the FSU and additional insights to provide clarity and context.
The DelayIt is important to note that there was a significant delay in the publication of the FSU this cycle, for reasons unknown. For comparative purposes, here are the release dates of the past few Fiscal Size-Up publications:

• 2024-25: July 2024
• 2022-23: March 2022
• 2020-21: May 2020
• 2018-19: September 2018
• 2016-17: May 2016
• 2014-15: February 2014
• 2012-13: January 2012

Overview of the 2024-25 Biennial BudgetFor reference, we have cataloged the Texas State Budget by Biennium from 1996 to 2025 based on information previously published by the LBB. You can also see that information broken down by Article of the State Budget for the same time period.
Here are the key takeaways from how state lawmakers appropriated taxpayer money in the most recent legislative session:

• Historical Budget Increase:
  • The Texas Legislature passed the largest budget increase in the state’s history in the 88th Legislative Session (2023), with general revenue funds growing by 21.2%, state funds by 32%, and all funds by 21.5%.
  • Though the budget includes a substantial $12.7 billion for new property tax relief (making it the second-largest property tax relief effort in Texas history), property taxes still increased by $165 million.
  • All of this happened with the backdrop of an over $32 billion budget surplus (i.e. over-collected taxpayer money)

• Public Education Funding:
  • State spending on public education increased significantly, with a 33.3% rise in state funds and a 28.6% rise in all funds.
  • This increase elevates the state’s share of public education funding to approximately 50%, though this figure might be slightly inflated due to federal COVID-related funding in the previous biennium.
  • Funding for school administration and support staff outpaces funding for teachers themselves, despite dismal testing results.

Detailed Analysis and RecommendationsVance Ginn, a Ph.D. economist, Founder and President of Ginn Economic Consulting, former Chief Economist at the White House’s Office of Management and Budget (OMB) from 2019 to 2020 in the Trump Administration, and board member of Texas Policy Research, recently shared his initial thoughts on the FSU on Twitter/X.
“You’ll notice that the increase in All Funds, which includes all funding sources, is 21.5% when consistently calculated from initial appropriations to initial appropriations. At the same time, the LBB reports it to be just a 2.7% increase from an inconsistent comparison, which tells us very little about how much our tyaxpayer dollars are being used. This is because the 2024-25 amounts don’t include any supplemental appropriations or other spending that will happen by the Texas Legislature, so it is incomplete and incorrect to compare the two amounts in the FSU without this context.”
Vance Ginn, Ph.D. Twitter/X post, 7.31.2024 @VanceGinnDr. Ginn highlighted several broader points about the FSU, including what it includes, what it excludes, and his concerns leading into the next legislative session in January 2025:

• Budget Comparisons:
  • The FSU documents budget allocations across various articles and funding sources, but comparisons between biennial periods can be misleading. The initial appropriations for 2022-23 include supplemental appropriations and other budget changes, while the 2024-25 figures are based solely on initial appropriations. This apples-to-oranges comparison needs to be understood in context.
  • Consistent comparisons show a 21.5% increase in all funds from initial appropriations to initial appropriations, contrasting with the LBB’s reported 2.7% increase based on an inconsistent comparison. This discrepancy underlines the need for a more accurate representation of budget changes.

• Public Education Concerns:
  • Despite increased funding, there are ongoing concerns about declining student outcomes and stagnant teacher pay. Significant portions of the funding are directed toward facilities, athletics, and administrative costs rather than directly impacting student performance.
  • Future funding should consider these factors, and there is a possibility of reduced spending in the next session due to the recent rapid increases and poor outcomes.

• School Choice and Finance Reform:
  • Universal Education Savings Accounts (ESAs) are proposed as a means to provide school choice without harming public education funding. ESAs could help reduce overall expenditures and lower school district property taxes, aligning with the state’s goal of fully funding education as per the Texas Constitution.

• Spending Excesses and Recommendations:
  • The current budget’s excess spending is seen as unsustainable, necessitating budget cuts in the next legislative session. The Governor is urged to call for a 10% across-the-board cut to prioritize limited government roles and substantial tax relief.
  • Specific recommendations include reducing school district property tax rates and the business margins tax rates incrementally until they reach zero.

ConclusionThe Texas Legislative Budget Board’s Fiscal Size-Up for the 2024-25 biennium reveals significant increases in the state budget, particularly in public education funding. However, a review of the document highlights the need for careful consideration of budget comparisons, the impact of increased funding on education outcomes, and the sustainability of current spending levels. The proposed reforms aim to optimize the allocation of taxpayer dollars, improve public education outcomes, and provide substantial tax relief to Texans.

Originally published by AIER. 

​The latest employment data from the Bureau of Labor Statistics for June 2024 offers a compelling snapshot of the divergent economic fortunes of red and blue states. The national unemployment rate remained steady at 4.1 percent, a modest increase of 0.5 percentage points from June 2023. Yet, beneath these headline figures lie significant contrasts between states, particularly economically vibrant red and struggling blue states, with Texas and California as prime examples.

Texas: A Beacon of Prosperity
Texas continues to exemplify the benefits of more free-market policies, evidenced by its impressive employment growth and relatively low unemployment rate. Over the past year, Texas added 267,400 nonfarm jobs in a pro-growth environment and favorable regulatory climate.

According to the Texas Workforce Commission, the state’s civilian labor force now exceeds 15.3 million, highlighting the ongoing expansion of job opportunities. This growth is supported by a diverse economy encompassing technology, energy, and healthcare industries. The unemployment rate in Texas stood at 4.1 percent in June, mirroring the national average but significantly lower than California’s 5.2 percent rate.

Texas’ economic model emphasizes fiscal responsibility, including adopting more sustainable budgeting practices. This has helped the Lone Star State claim the 7th best fiscal freedom according to the Cato Institute’s Freedom in the 50 States. The state also ranks 20th in regulatory freedom and 17th overall when considering economic and personal freedoms. Texas ensures that its budget remains manageable by limiting government spending growth to less than the rate of population growth plus inflation over much of the last decade. This approach keeps taxes low and promotes long-term economic stability and growth. However, the current irresponsible budget, which increased by more than 20 percent, challenges past budget successes in Texas and should be addressed in the next session in 2025.

California: A Contrast in Economic Management
California, on the other hand, presents a stark contrast. Despite adding 223,600 jobs over the year, California’s unemployment rate rose to 5.2 percent, the second highest in the nation, just behind the District of Columbia at 5.4 percent. This increase underscores the state’s challenges, including high taxes, stringent regulations, and a high cost of living, which collectively stifle business growth and job creation.

According to the Freedom in the 50 States report, California ranks 48th in fiscal freedom, 49th in regulatory freedom, and 48th in overall freedom. The Golden State ranks poorly compared with Texas and all but two states, New York and Hawaii, regarding overall economic freedom. California’s economic struggles are not a recent phenomenon. Over the years, the state’s policies have created an environment less conducive to business investment and innovation. High-profile businesses and individuals have been leaving the state, seeking more favorable conditions in states like Texas, further exacerbating the economic divide. The Wall Street Journal recently reported the Internal Revenue Service’s latest migration data for net adjusted gross income by state in 2022 showed California had the largest net loss of $23.8 billion while Texas had the second largest net gain of $21 billion, next to Florida of $36 billion. This is yet another example of how people and businesses move from high-tax to lower-tax states.

Unemployment Trends Across the States
The broader employment trends in the June 2024 report revealed that eight states saw an increase in unemployment rates while only one state experienced a decrease. The majority of states, however, saw no significant change in their jobless rates. South Dakota boasted the lowest unemployment rate at 2.0 percent, followed closely by North Dakota and Vermont at 2.1 percent.

In contrast, states with more interventionist economic policies, like California and Nevada, struggled with higher unemployment rates of 5.2 percent. This trend highlights the broader pattern where states with more market-friendly policies enjoy better employment outcomes.

Job Growth and Economic Policies
The BLS data also shows that nonfarm payroll employment increased in eight states in June 2024, with North Carolina, Massachusetts, and Virginia leading in job gains. Over the year, 27 states saw employment increases, with Texas, California, and Florida posting the largest gains in absolute numbers. These large job gains often reflect the fact that these states have the largest populations, but what’s revealing is that the percent increases over that year were just 1.3 percent in California while a more robust 1.9 percent in Texas and 2.0 percent in Florida. 

The nuances become clear when considering these states’ economic policies and environments. States like Texas and Florida, prioritizing low taxes and minimal regulation, have created environments where businesses can thrive. This is reflected in their strong job growth and relatively low unemployment rates. In contrast, states with higher taxes and more regulatory burdens, such as California, face more significant economic challenges despite adding jobs.

The Flat Tax Revolution
A significant aspect of the economic success seen in many red states, including Texas, is their embrace of the state flat tax revolution. This movement, which simplifies tax codes and lowers rates, has been crucial in attracting businesses and encouraging investment. By moving toward flat taxes, states can reduce the complexity and burden of taxation, making them more competitive and appealing to businesses and workers.

This revolution is part of a broader trend towards sustainable budgeting, where states aim to maintain fiscal discipline while ensuring they do not overburden their citizens with high taxes. The success of states like Texas in implementing these policies demonstrates the potential for other states to achieve similar economic prosperity by adopting these principles.

Policy Implications and Recommendations
The stark differences in economic outcomes between red and blue states underscore the importance of policy choices. Red states like Texas continue demonstrating that free-market principles lead to more robust economic growth and better employment outcomes. For policymakers, the lessons are clear:

1. Reduce Regulatory Burdens: Streamlining and eliminating regulations can make it easier for businesses to operate and expand, fostering job creation.
2. Pass Sustainable Budgets and Lower Taxes: Implementing sustainable budgeting practices and reducing the tax burden on businesses and individuals support more economic activity and attract investments.
3. Promote Economic Freedom: Ensuring a business-friendly environment that supports entrepreneurship and innovation is key to sustainable growth.

As we look to the future, it is crucial that states learn from these examples. By adopting policies prioritizing economic freedom and reducing government intervention, states can create environments where businesses flourish, and jobs are plentiful for widespread prosperity. The contrasting fortunes of Texas and California serve as a powerful reminder that policy decisions have real-world consequences.

States can pave the way for a prosperous future by examining these trends and implementing effective policies.

Originally published at American Energy Institute.

It's a pleasure to speak with the Texas Aggregates and Concrete Association again and enjoy the great resort here with my wife and three young kids. While aggregates and concrete may not always be in the spotlight, they are the bedrock of our infrastructure, forming the foundation upon which we build our homes, businesses, and communities.

Reflecting on my journey, I realize how essential the right direction and strong institutions are in shaping our paths. Much like the solid foundation of concrete, institutions give us the stability to build and grow. Like the economy, my life has been a series of peaks and troughs. In my younger years, I grew up in a low-income, single-mother household in South Houston as my dad had epilepsy, and they divorced when I was five years old. I went to private school from K-2 grades, public school from 3-6 grades, and home school from 7-12. Unlike many of you, I took many risks during my teenage years and began playing drums in a band called "Sindrome," living the rockstar life. But a near-fatal car accident in 2002 was my wake-up call, one of several but the one that turned me toward a brighter path. Through this experience, a month in bed with many bumps and bruises, and a lot of prayer, I found my purpose: to help others through my calling to let people prosper.

We find ourselves at a pivotal point in our country and in Texas. The recent elections tell us that there is a clear call for change in the Lone Star State. The upcoming November elections will be another opportunity for the country to steer towards a path of prosperity or continue down a troubling road. As an optimist, I believe in our potential, but I also recognize our country and state's many economic, political, and cultural issues.

Policy Uncertainty and Economic Volatility

At the national level, we face several economic challenges. The Biden administration has been keen on infrastructure spending, which includes the $1.2 trillion Infrastructure Investment and Jobs Act. While this aims to rejuvenate our infrastructure, it also raises concerns about efficiency and the role of government in these projects, and the fact that we are running deficits higher than that per year with the national debt at nearly $35 trillion and net interest payments of $1 trillion exceeding national defense expenditures of about $860 billion. Excessive government spending, increased regulation, and interventionist policies often lead to inefficiencies and distortions in the market. Milton Friedman, my favorite economist, warned about the dangers of heavy government involvement, advocating instead for free-market solutions that empower individuals and businesses.

Election years heighten policy uncertainty, which can drive economic volatility. Businesses and investors become cautious, waiting to see which policies will prevail. This hesitation can slow economic activity, affecting everything from job creation to investment in new projects. For the aggregates and concrete industry, this means potential delays in infrastructure projects and fluctuations in demand.

Milton Friedman once said, "If you put the federal government in charge of the Sahara Desert, in five years, there’d be a shortage of sand." This sharp but insightful remark underscores the inefficiency that often accompanies government intervention. In his view, infrastructure projects should be managed by private entities with a direct stake in the outcome and can respond more agilely to changes and needs.

Here in Texas, we are not immune to these challenges. Our state is known for its robust economy and low taxes, but we're grappling with excessive government spending and high property taxes. The Texas Comptroller's report highlights how our spending on transportation is around $10 billion annually. While infrastructure is crucial, we must be mindful of how these funds are used to ensure they generate real value for taxpayers.

Weak Labor Market Amid Headlines of Strength

Despite headlines showing strength, the U.S. labor market reveals underlying weaknesses. Nearly half of Americans think we are in a recession, reflecting a disconnect between reported statistics and personal experiences. Real average weekly earnings have declined by nearly 4% since January 2021, squeezing household budgets and diminishing purchasing power. The labor force participation rate remains low at 62.5%, significantly below the February 2020 level. If participation were the same as it was then, the unemployment rate would be closer to 6% rather than the reported 4% today.

Texas, however, leads in job gains, which is a testament to our state's resilient economy. Yet, we must acknowledge that the 25% increase in the two-year state budget last year was excessive. This surge in spending did not provide sufficient property tax relief, which is critical for maintaining economic vitality and keeping Texas attractive for businesses and residents alike. Moreover, we must prioritize universal school choice next year to ensure educational opportunities that meet diverse needs and drive future economic growth.

Election Year Volatility

During election years, the stakes are even higher. Uncertainty about future policies can cause volatility in markets and economic performance. For instance, debates over infrastructure funding, environmental regulations, and tax policies can create an unstable business environment. Companies may delay or cancel projects, affecting the demand for aggregates and concrete. This uncertainty trickles down, impacting jobs, investments, and overall economic health.

Aggregates and concrete are essential for the development and maintenance of our infrastructure. These materials for things like highways and homes are our physical landscape's backbone. However, it's crucial to approach their use smartly. We don't need to resort to industrial policies with high costs and trade-offs, burdening taxpayers. Instead of a top-down approach, which often fails due to bureaucratic inefficiencies, we should consider a bottom-up approach to transportation projects. This includes government projects, public-private partnerships, and private projects.

A significant portion of infrastructure could be managed through private toll roads. While my ideal vision leans heavily on privatization and tax cuts, I recognize that a balanced approach is more realistic in the current environment. Public-private partnerships can bring innovation and efficiency, reducing the burden on taxpayers while still delivering essential infrastructure.

Let me share an example from my work. My research finds that private toll roads can often be built faster and cheaper than public projects. Private companies are directly incentivized to minimize costs and maximize efficiency. For instance, the LBJ Express project in Dallas, a public-private partnership, was completed ahead of schedule and under budget, demonstrating the potential benefits of such collaborations. There is also a need to move to design-build for projects in Texas rather than today's more costly and time-consuming design-bid-build approach.

Additionally, Texas is experiencing significant population growth, with more people moving to the state, increasing the demand for our infrastructure. The Texas Department of Transportation (TxDOT) is investing in expanding highways and improving ports to accommodate this growth. Projects like the $7.5 billion North Houston Highway Improvement Project aim to address these demands. However, we must ensure that these investments are managed efficiently and effectively.

Role of Institutions and Central Planning

Another key aspect is the role of institutions. Friedrich Hayek, in his book "The Road to Serfdom," cautioned against the overreach of central planning. He emphasized that central planning often leads to inefficiencies and a loss of individual freedoms. His insights are particularly relevant today as we navigate the complexities of modern infrastructure development.

To truly flourish, Texas needs to embrace more free-market capitalism and resist the creeping influence of socialism in our economy. This applies to transportation and beyond. By focusing on the efficient use of resources, reducing regulatory burdens, and fostering competition, we can build a more prosperous future. The bottom-up approach not only ensures better utilization of resources but also empowers local communities to take charge of their development, aligning projects more closely with the actual needs and priorities of the people.

Consider the example of toll roads in other states. Using private toll roads in Virginia has significantly improved traffic flow and reduced congestion in previously bottleneck areas. This model can be replicated in Texas, where traffic congestion is growing, especially in urban areas. By allowing private companies to manage and maintain these roads, we can ensure they are kept in optimal condition without continuously draining public funds.

Furthermore, private toll roads can be a source of innovation. Companies can introduce advanced technologies for traffic management and toll collection, making the entire system more efficient. For example, using electronic toll collection systems in Florida has greatly reduced vehicles' time at toll booths, enhancing the overall travel experience.

However, this doesn't mean we should eliminate public involvement in infrastructure projects. There are instances where government intervention is necessary, especially in projects that may not be immediately profitable but are crucial for public access and economic activity. This is where public-private partnerships come into play, allowing us to leverage the strengths of both sectors.

The government should act as a facilitator rather than a direct manager of projects. By setting clear regulations and standards, it can ensure that private companies operate fairly and efficiently while also protecting the interests of the public. This approach can help us avoid the pitfalls of excessive government control while still reaping the benefits of private sector efficiency.

Paul Krugman and other progressives might argue that significant government intervention is necessary to address market failures and ensure equitable outcomes. They believe that without government oversight, critical infrastructure could suffer from underinvestment, and social inequalities could worsen. While these points are worth considering, history has shown us that excessive government control often leads to inefficiencies, higher costs, and reduced innovation.

Learning from Failures and Future Outlook

My journey from poverty to rockstar to entrepreneurial economist taught me the value of strong institutions and the importance of aligning personal purpose with societal needs. This principle applies to our infrastructure as well. Just as a solid foundation is critical for a stable building, a robust institutional framework is essential for a thriving economy. We must ensure that our policies and investments in infrastructure reflect this understanding.

As we look toward the future, we must remain vigilant against the encroachment of socialist policies that threaten to undermine the free-market principles that have made Texas a beacon of prosperity. Instead, we should champion policies that promote individual liberty, economic freedom, and responsible stewardship of resources.

Failure provides us with valuable lessons, and too often, people want to mitigate this by expanding government intervention, which can be detrimental to our learning and growth.

We are at a critical juncture in our state's history. The recent elections have shown us that Texans are ready for a change. The upcoming November elections present another opportunity to reaffirm our commitment to the principles that have made Texas great. While I am optimistic about our future, we must address the economic, political, and cultural challenges that threaten our way of life.

Election Year Volatility and Policy Uncertainty

One of the most pressing issues is the rise of big government. Across the political spectrum, there is a growing tendency to rely on government intervention to solve problems. This trend is particularly concerning in Texas, where we have traditionally prided ourselves on independence and self-reliance. Many of you might be demanding the government give you handouts or reap the benefits of federal, state, or local spending, but all this comes from taxpayers' pockets. We must try a different approach.

Election year volatility adds another layer of complexity. Businesses and investors are left guessing about the future as policies swing with the political tide. This uncertainty can stall projects, delay investments, and increase costs. The aggregates and concrete industry, heavily reliant on long-term planning and stability, feels these effects acutely.

Conclusion

In conclusion, aggregates and concrete are vital for Texas's growth, but their smart use is paramount. Let's leverage the strengths of the free market, prioritize efficiency, and ensure that our infrastructure investments truly benefit Texans. As we progress, I am eager to collaborate with any of you on projects aligning with these principles. Together, we can build a stronger, more prosperous Texas.

For those interested in further discussions on economic policy and free-market solutions, I invite you to check out my podcast, the Let People Prosper Show on all major platforms, and my Substack newsletter at vanceginn.substack.com, where I delve into these topics in greater detail. You can also visit my website, VanceGinn.com, for more information and resources.

​Thank you for your time and attention. Let's work together to build a future where smart infrastructure investment and strong institutions pave the way for a prosperous Texas.

Originally published at TFR. ​

Texas at the Forefront: Leading the Charge but Facing New Challenges

Texas continues to blaze trails in the labor market, with recent data from the Texas Workforce Commission showing a robust addition of over 42,000 jobs and an unemployment rate of 4% in April. This included 41,000 jobs in the productive private sector and 1,100 in the government sector. Coupled with an impressive gain of 306,000 jobs (+2.2%)since last April, these figures underscore Texas’ economic vitality and its role as a leader in the national economy. 

However, as other states ramp up their economic policies, especially in red states, and the burdens of federal missteps weigh heavily on Americans, Texas must renew its commitment to pro-growth, limited government principles to maintain its leadership position.

In April, the Lone Star State’s labor force expanded and demonstrated resilience in several key sectors, contributing significantly to the state’s economic dynamism. Employment grew the most in percentage terms over the last year in other services (+6%) and professional and business services (+3.3%), but government (+3.3%) grew too much. This private sector growth is a testament to Texas’ business-friendly environment and its ability to attract and retain top-tier talent and enterprises. 

Despite these achievements, there is an emerging need for vigilance as other states begin to adopt reforms that could rival Texas’ appeal.

Nationally, the labor market shows varying degrees of recovery, with some states quickly catching up by implementing aggressive tax cuts and regulatory reforms to support economic growth. Red states like South Carolina (+3.4%), Florida (+2.5%), and Missouri (+2.5%) are thriving, with job growth rates that challenge Texas’ dominance.

Texas has long been a bastion of economic freedom, which has fostered an environment where businesses and individuals can thrive. However, the state now faces the dual challenge of maintaining its competitive edge while also addressing the economic pressures exerted by federal policies and economic management—or mismanagement—by the Biden administration, Congress, and the Federal Reserve. These challenges include inflationary pressures, federal spending levels, and monetary policies that have left many Texans feeling the pinch.

Policy adjustments are essential to address these challenges and keep Texas at the forefront of job creation. 

First, Texas must return to limited government. Reinforcing and expanding upon policies that have proven successful, such as reducing regulatory burdens and further limiting state and local government spending, should be a priority. 

As other states enhance their economic policies, Texas must not rest on its laurels but should strive for even bolder reforms to sustain its economic leadership. This includes strengthening the state’s constitutional and statutory spending limits consistent with the average taxpayer’s ability to pay for government spending. 

The best path would be to limit the entire budget or at least all state funds, excluding federal funds, with a maximum rate of population growth plus inflation and a two-thirds vote to exceed it. This limitation should also cover local governments, which has helped keep Colorado’s state and local spending in check, even in a blue state, with its Taxpayer’s Bill of Rights.

Additionally, the state’s approach to taxation needs a radical rethink. The overwhelming support for eliminating property taxes reflects a broader dissatisfaction with traditional tax structures that penalize success and deter investment. 

A bold approach would be to transition from property taxes to a more equitable tax system by limiting state and local government spending and using surpluses to lower property taxes until they are eliminated in about a decade. The state would use its surpluses to buy down the school district M&O property tax rates, and local governments would use their surpluses to reduce their property tax rates. 

This approach would support substantial economic growth and a path for people to finally own their home instead of renting from the government forever by being forced to pay these taxes whether the mortgage is paid off. 

Moreover, as Texas navigates these fiscal reforms, there should be key reforms and reductions where necessary to wasteful government programs and agencies. Given the excessive spending by the state legislature during the last session, with more than a 20% increase in appropriations–the largest in Texas history- there is a need to cut government spending in the next session rather than just limit the growth. 

This should include providing universal school choice with education savings accounts that should replace the state’s school finance formulas. Doing so would help to empower parents to do what’s best for their kids’ education while reducing the burden on taxpayers because this could dramatically reduce spending. 

While Texas continues to lead in job growth and reach record highs, the path forward requires adherence to tried-and-tested economic principles and a willingness to innovate and adapt to changing economic landscapes. Texas can maintain and strengthen its position as an economic powerhouse by fostering a more favorable business climate, eliminating corporate welfare, reducing unnecessary governmental interference, and revamping its tax system. 

​As other states accelerate their economic reforms, Texas must lead by example, championing policies that ensure prosperity and freedom. The call to action is clear: Texas must stop passing progressive fiscal policies and ensure its policies promote growth and provide a bulwark against the economic challenges of our times.

​Texas stands as one of the most vibrant and attractive states in the United States, celebrated not only for its robust job market but also as a top destination for new residents. Its economic success and allure are largely due to the free-market model, which has fueled growth and innovation. However, even in such a thriving environment, the electricity market presents significant challenges that must be addressed to ensure continued prosperity. To keep up with its growth, Texas must refine its energy strategies, emphasizing market-driven solutions rather than increased government intervention.

Texas is rich in natural resources, capable of meeting the energy demands of its growing population if managed wisely. Among these, natural gas stands out as a particularly reliable source. In contrast to the intermittent nature of wind and solar power, natural gas provides consistent and robust energy supply, rain or shine, making it a cornerstone of Texas’ energy infrastructure.

Despite these natural advantages, there has been a worrying shift towards greater government involvement in the energy sector, potentially undermining the very free-market principles that have driven Texas’ growth. This trend was exemplified by the recent legislative decision to pass SB 2627, establishing the Texas Energy Fund. While intended to support the state’s energy infrastructure, this initiative opens the door for problematic state interventions in the market.

Approved by voters last November, the fund is slated to allocate $10 billion, with a substantial portion earmarked for state-controlled power projects and infrastructure developments outside the purview of the Energy Reliability Council of Texas (ERCOT). Such strategies risk taxpayer dollars and discourage the private sector investment crucial for spurring innovation and efficiency in the energy sector.

Further compounding the issue is the engagement of large investment firms like BlackRock, which has expressed interest in exploiting the Texas Energy Fund. Historically detached from Texas’ core energy industries, these firms stand to benefit from state-directed initiatives at taxpayer expense. This involvement will centralize power, stifle competition, and suppress the innovation that is vital for a healthy market economy.

Instead of continuing down this path, Texas needs a light-touch regulatory framework that promotes competition and fosters innovation through market forces. State policies should remove obstacles for private investment in energy production and distribution, ensuring a competitive market that drives down costs, improves service quality, and encourages technological advancements.

The limitations of unreliable energy sources have been made starkly apparent each time Texans receive a conservation notice from ERCOT, with more likely coming this summer. A free-market approach, which minimizes government intervention and allows energy prices to reflect supply and demand, offers the best solution for managing Texas' energy resources efficiently.

This strategy is about more than just maintaining an efficient energy grid; it’s about preserving the entrepreneurial spirit that defines Texas. By reducing government overreach and enhancing market dynamics, Texas can ensure that its energy sector remains as dynamic and resilient as its economy.

Looking forward, Texas policymakers face a clear choice. They can embrace the principles of free-market capitalism and minimal government intervention across all sectors, not just energy. This path will secure Texas' leadership in economic growth and innovation, ensuring a reliable and affordable energy supply for future generations, which ought to include nuclear energy.

By championing policies that reduce government involvement and promote market functionality, Texas can strengthen its infrastructure to support its growing population and sustain its status as a beacon of prosperity and freedom. Emphasizing market-driven solutions will enable Texas to meet the challenges of today and tomorrow, ensuring that the state remains a fantastic place to live, work, and raise a family.

Texas has always been a leader, not a follower. By adhering to the principles that have shaped its past successes, Texas can ensure a bright and prosperous future, powered by innovation, competition, and the indomitable Texan spirit.