Building on decades of research and legislative outreach, the Texas Public Policy Foundation (TPPF) has had a historic year by leading the creation of fiscally responsible budgets in Texas, Montana, and Iowa, is advancing a fiscally sound budget in Alaska, and has laid out a groundbreaking model for a stable and sustainable federal budget.
Over the last 15 years, Texas’ state budget has often grown considerably faster than Texans’ ability to pay for it. Even while there had been a balanced budget amendment and a spending limit in the state of Texas, without proper guidance and a responsible budgetary framework, there was no guarantee that state appropriations would grow commensurate to the taxpayers’ ability to pay—largely, they did not. TPPF recognized the severity of this issue, and the need for real leadership on behalf of every Texan.
In 2015, TPPF introduced the Conservative Texas Budget (CTB). Ultimately, the CTB sets a maximum threshold for total initial appropriations for the biennial state budget based on the rate of population growth plus inflation. Prior to the CTB, the average growth rate of the biennial budget from 2004 to 2015 was 12 percent. With the CTB in place, the average growth rate was just 4.8 percent. More importantly, prior to the CTB, the average growth rate of appropriations exceeded that of population plus inflation by almost 5 percentage points, whereas, since the CTB, appropriations grew by an average of more than a full percentage point below population growth plus inflation. Since its inception, the CTB has saved Texas families hundreds of dollars in taxes per year.
With this credible and widely cited framework in full-effect, TPPF was prepared to take on the top issue for the 87th Legislative Session: economic recovery in the wake of COVID-19. For many public servants, the knee-jerk reaction in the face of a widespread crisis such as the coronavirus is profligate spending as the best way to stimulate recovery.
In addition, during the legislative session, the state learned it had a budget surplus as economic activity increased from reduced government restrictions on businesses, meaning that it was going to be difficult to rein in the budget.
In direct response to this problem, TPPF secured two monumental wins for the freedom of Texans. Firstly, TPPF conducted research to determine the appropriate biennial budget for the Texas Legislature to adopt and pass based on the CTB model. Published in September 2020, TPPF communicated directly with legislators, employed their robust communications abilities, testified before legislative committees, and authored op-eds to incorporate their recommendations in the process, well-before the budget was even drafted. This research, testimony, and complementary communications strategy made the clear case for why it is in the best interest of all Texans to adopt a CTB of $246.8 billion based on a five percent rate of population growth plus inflation for the upcoming 2022-2023 budget period. After months of hard work, Texas passed a budget that was signed by the Texas Governor which totals $241.8 billion—a number well below the CTB limit after excluding $6.1 billion to maintain property tax relief, while leaving $11.6 billion in the rainy day fund.
TPPF’s second major policy win this year comes in the form of an historic spending reform. For more than 40 years, Texas had a spending limit in place on general revenue not dedicated by the state’s Constitution (45% of the budget) based on growth in personal income. While possibly an appropriate limit when it was instituted in 1978, this threshold contributed to increasingly excessive growth in the budget, resulting in appropriations that were not within the average taxpayer’s ability to pay for it. This legislative session, lawmakers introduced a bill to strengthen the spending limit by expanding it to all general revenue (55% of the budget) based on population growth times inflation—a much more stable and relevant limit for the average taxpayer’s means. It also raised the threshold to exceed the limit to a three-fifths vote of each chamber, instead of previously a simple majority.
TPPF provided testimony, research, and communications in support of this historic measure, which was largely modeled off our work on the CTB. This critical reform places much of TPPF’s Conservative Texas Budget in state law, and is yet another way that Texas is leading nationally to support the needs of the state while removing barriers like excessive spending and providing tax relief to enhance opportunities for people to prosper.
Because of the leadership of TPPF, Texas is, in many ways, a national model for other states looking to adopt responsible budgets that restrain the growth of government and the burden borne by taxpayers. Therefore, as a direct result of TPPF’s policy win with the CTB, the states of Montana and Iowa have passed a Conservative Budget, and TPPF continues to work closely with Alaska as they actively work toward adopting the CTB parameters of budgetary modeling.
Moreover, TPPF’s work in Texas has been so successful that the organization has expanded these efforts and has produced what the have coined the Responsible American Budget. This proposal imposes TPPF’s spending growth formula for the state of Texas on a national level, creating a plan for the federal government to limit the out-of-control spending that threatens the prosperity of future generations.
For their success in bringing fiscal restraint to Texas and states across the country, the Texas Public Policy Foundation is a finalist in State Policy Network’s Bob Williams Awards for Outstanding Policy Achievement, in the Biggest Home State Win Category.