The Case for Prosperity: Less Government, More Growth in Texas (Updated)

Similar version originally published at Texans for Fiscal Responsibility. ​

As Texas faces rising property taxes and record-high government spending, it’s time to reassess the path toward long-term prosperity. Recent data illustrates Texas’ strengths and challenges. In August 2024, Texas maintained a 4.1% unemployment rate, while the state’s GDP grew by 3.5% in Q2 2024, outpacing national averages. However, the last legislative session resulted in unprecedented government spending increases, threatening Texas’ fiscal stability. 

The solution is clear: spending cuts, lower taxes, and imposing the strongest possible spending limits on state and local governments. This can be done by ending excessive spending of at least $30 billion, which is a 15% cut in state funds.

Corporate Welfare: A Drain on Taxpayers of $10 billion
New constitutionally-dedicated funds like the $5 billion to Texas Energy Loan Fund, $1 billion to Texas Water Fund, and $1.5 billion to Texas Broadband Infrastructure Fund create even more opportunities for contractors and financial firms to benefit at the taxpayer’s expense. Expanding these programs is already being discussed, adding to concerns about unchecked government spending. Not spending these funds and instead redirecting them toward broad-based tax relief would benefit all Texans, not just a select few private entities. Other corporate welfare programs like the Texas Enterprise Fund (TEF) and Chapter 403, the newly revamped property tax abatement program that replaced the expired Chapter 313, continue to burden taxpayers. 

Overfunding the Government School System by $17 billion Annually
Texas is overfunding its monopoly government school system, spending billions of dollars annually on a system that lacks competition and efficiency. A transition to universal Education Savings Accounts (ESAs) would inject competition into the education sector, allowing parents to choose the best educational options for their children. Moving to universal ESAs could save the state an estimated $17 billion per year by allowing the state to spend $12,000 per 6.3 million school-age kids instead of $16,792 per 5.5 million enrolled at government schools. These savings could be used to eliminate school property taxes, providing meaningful relief for homeowners and fostering a more dynamic, competitive education system.

Medicaid Reform: Lowering Costs with HSAs for Savings of At Least $3 billion Annually
Healthcare spending, especially through Medicaid, is another area where Texas can find significant savings. Shifting Medicaid recipients to work requirements and Health Savings Accounts (HSAs) would encourage more cost-effective healthcare decisions, saving the state at least $3 billion annually. These savings could then be applied toward property tax relief, allowing Texans to benefit from lower overall taxes while promoting personal responsibility in healthcare. 

Achieving Property Tax Elimination Through Fiscal Discipline
By combining savings from eliminating corporate welfare, passing school choice, and reforming Medicaid, Texas could save at least $30 billion per year. These funds could eliminate most, if not all, school district M&O property taxes, providing substantial relief for homeowners. It is also critical to enact the strongest possible constitutional spending limit, tying state and local government spending growth to a maximum of population growth plus inflation. But with record spending increases in the most recent legislative session, including the creation of the Texas Water Fund and Texas Broadband Fund, it’s crucial to cut government spending, pass Frozen Texas Budgets, and provide fiscal responsibility.

Securing Texas’ Economic Future
Texas is at a crossroads. While the state’s economy remains relatively strong, with low unemployment and impressive GDP growth, the rapid rise in government spending, corporate welfare, and property taxes pose significant risks to its long-term success. Texas can secure a prosperous future by embracing a strategy of lower taxes, spending restraint, and market-driven reforms. Eliminating corporate welfare, expanding school choice, and adopting Medicaid reform will unleash the opportunity to eliminate school district M&O property taxes, allowing Texans to keep more of their income and ensuring that the state remains a beacon of economic freedom.