By Bill Peacock
Often this is because it is difficult to get the information needed to understand completely the maze of complex programs that make up our government. Other times it is because there is not the political will to implement our ideas; for instance, Texas Republicans in 2011 resorted to about $12 billion worth of budget gimmicks to balance the budget rather than trim the fat from government.
So as we approach the 83rd Texas Legislature, what are some specific ideas that supporters of liberty, personal responsibility and free enterprise could propose to control government growth and expand the Texas economy?
We can start by eliminating subsidies — current and proposed — in the Texas electricity market. A summer prediction of falling electricity surpluses created a panic that has led us to the edge of abandoning Texas’ world-class electricity market. Many would replace it with a system that subsidizes generators who promise to meet projected future “capacity” requirements — even if it turns out we don’t actually need the electricity when the time comes.
The subsidies in this capacity market could cost Texas consumers billions of dollars annually and result in a massive government intervention in the most competitive electricity market in the world. Fortunately, the latest forecast projects higher future reserves, suggesting we don’t need a capacity market.
Of course, challenges do exist in the Texas electricity market, but these suggest the solution to our problems is less intervention in the marketplace.
We can start down this road by encouraging Congress to allow the expiration of federal renewable energy subsidies through the production tax credit. More than anything, these subsidies are responsible for harming the prospects of reliability in the Texas electricity market.
Here at home, renewable energy and energy efficiency subsidies have added billions of dollars to consumers’ electricity bills while also impeding reliability.
Both state and federal subsidies in Texas will have cost consumers and taxpayers more than $13 billion in the 10 years ending in 2015. Eliminating these subsidies will reduce electricity bills and increase reliability.
Of course, many other industries receive government subsidies. I’d suggest that there are quite a few of these we could also do without, such as: Texas art, film, and music subsidies, the Texas Emission Reduction Program, the Skills Development Fund at the Workforce Commission, agricultural marketing programs, the Texas Enterprise and Emerging Technology funds and the Healthy Texas Program.
Eliminating these would put hundreds of millions of dollars back into taxpayers’ pockets and reduce government disruption of numerous markets.
Another way we can rein in the growth of government is by revamping the Texas sunset review process. Created to “to identify and eliminate waste, duplication, and inefficiency in government agencies,” the Sunset Advisory Commission has become yet one more cog in the machine of expanding government. For instance, in the midst of our reliability problems noted above, the Sunset Commission staff has recommended significantly increasing the ability of the Public Utility Commission to intervene in the Texas electricity market — even in the complete absence of major violations by market participants.
Unfortunately this is nothing new to the sunset review process. Over the last 20 years or so, it has become a means of growing government despite an increasingly conservative Legislature.
The reason for this is that since an agency under sunset review will be abolished without legislative action, sunset bills must pass. While this sounds like a great idea in theory, no one is going to abolish the PUC, much less the Texas Department of Transportation or the Texas Railroad Commission. Sunset bills, then, become vehicles for big government policies that advocates have failed to enact on their own.
We can solve this problem simply by eliminating the “must-pass” nature of sunset bills. Agencies will still undergo sunset review. If the sunset recommendations are worthwhile and can garner broad support, the bills will pass. If not, they won’t.
Next, paring back the regulatory state should be an important part of any conservative agenda. Nothing is riper for this than price regulation. Except in the case of government-granted monopolies, there is no need for the government to regulate prices. Competition and consumer choice can keep prices in check.
Eliminating the price-setting functions of various government agencies could also save taxpayers tens of millions of dollars. Starting in January, the Legislature should start empowering consumers by eliminating rate regulation of homeowners insurance, title insurance, auto insurance, wholesale electricity and telephone service — to name a few.
Reducing occupational restrictions and licensing is yet another way we could loosen the grip of regulators on the private sector. Why do claims adjusters, geoscientists, hair braiders and horse teeth floaters need to be regulated by the state? Similarly, many scope-of-practice restrictions on nurse practitioners simply serve as a means of protecting doctors from competition; granting nurse practitioners the flexibility to treat patients and prescribe medicine would expand access to health care and reduce public and private health care costs.
The reforms suggested to this point would go far toward creating new jobs and growing the Texas economy. However, even with the increased revenue economic growth would bring to the state, to cover the $12 billion budget hole created by the budget gimmicks we must address the big-ticket items of Medicaid and education.
In many ways, it is no surprise that Republicans shy away from tackling these issues. Who wants to be labeled as a hater of children or a lover of dirty air? But as conservatives, we realize that we must continue our efforts at reform in spite of attacks from special interests if we are ever going to help those in need escape the bondage of the welfare state and failing public schools.
So the goal here is not first to reduce spending but to increase efficiency, reduce costs and deliver improved service to those in need of assistance. Properly done, cost reductions will follow.
The only way to save Medicaid is to turn it over to the states through unrestricted block grants — federal mandates have made this program unworkable. Billions could be saved in Texas each year through innovations in providing long-term community care and competitively bidding nursing home care, and by decreasing enrollment through economic growth and declining health care costs.
The solution, though, awaits the feds relinquishing control of Medicaid to the states.
There is more hope for reform when it comes to education; since Texas more or less still controls our education system, the solutions are much closer at hand.
But before we tackle these, we need to get one thing straight: Texas did not cut public education funding by $5.4 billion this biennium. Instead, funding was reduced by about $500 million.
Advocates of increased funding derive the larger number by taking the amount they claim was needed to pay for enrollment growth and adding about $2 billion, the amount that the Legislature deferred to next biennium as part of its budget wizardry. The resulting claim of $5.4 billion in “cuts” is a bit of wizardry itself, for three reasons.
First, because the $2 billion is going to be paid to districts, only two weeks late. They won’t miss a beat. Second, because no matter how you look at it, failing to increase spending is not a cut. Third, because the idea that growth in student enrollment should always necessitate higher spending is a myth in this day of rapid innovation in education technology.
Here lies the solution to our problem. Through blended learning, virtual schools, dual credit courses and other innovative education practices, quality is on the verge of skyrocketing with costs ready to plummet.
All that is needed to unleash them is a competitive education system fostered by shifting control from the state and federal bureaucracies to parents, local educators and taxpayers. Reforms such as parental choice, parent triggers, expanded charters and enhanced home-rule districts will take us where we need to go.
We need not cut education funding at all — just keep it level for two bienniums and we’ll see increased efficiency deliver both improved educational quality and relief for taxpayers at the state and local level.
Summing it up, these reforms take decisions out of the hands of Austin politicians and regulators and put them in the hands of taxpayers, producers, and consumers who can then make decisions that benefit themselves and increase economic growth.
By reducing the scope of government and relieving pressure on the budget, these reforms leave ample funds to serve those who really need help from the government without further burdening taxpayers. The Texas Public Policy Foundation has outlined these and many other market-based reforms in its report “Keeping Texas Competitive 2013” (find it at http://bit.ly/Vzq0MV). By implementing these, the Texas Legislature could ensure a strong Texas economy for many years to come.
Bill Peacock is the vice president for research and director for the Center for Economic Freedom at the Texas Public Policy Foundation.