Abbott seeks new spending but wouldn’t raise tax revenue


TEXAS_GOVERNOR_ABBOTT_40638067Gov.-elect Greg Abbott has proposed some new education, border policing and social services programs, which would expand Texas’ general-purpose spending by slightly more than 1 percent.

Over the next few years, he also wants to increase highway spending by several billion dollars.

But Abbott takes a hard line against any increase in tax revenue to pay for them. He wants to fund his spending priorities from existing revenue, which is bountiful because of the state’s strong economy. Abbott also is promising to scrap wasteful programs, though he hasn’t offered details.

“We will ensure the public sector doesn’t smother the private sector,” Abbott said early in his campaign, as he unveiled eight desired changes in budgeting procedures.

Abbott smashed Democrat Wendy Davis by 20 percentage points, and in January, he’ll take over for fellow Republican Rick Perry. He’ll be Texas’ first new governor in 14 years, and his fiscal agenda and legislative plans are beginning to attract closer scrutiny.

He has offered a mix of highly specific plans for new spending, structural changes in how the state budget is crafted and incomplete proposals to cut property and business taxes. Also, he and other incoming GOP leaders are silent about how they would pay the piper if the state loses the school-finance lawsuit currently on appeal.

The Legislature writes a two-year budget that spends roughly $100 billion of state revenue for schools, colleges, health care, prisons and social services. The governor must approve the package and has authority to cut individual programs through line-item vetoes.

Abbott’s fiscal vision is relatively simple: He wants to bend the spending priorities of one of the leanest state governments in the country, even as he pressures it to become still leaner.

Abbott and Lt. Gov.-elect Dan Patrick have said they want to cut local property taxes and reduce or even eliminate the “margins tax” on state businesses. Neither has supplied details. Abbott also proposed a half-dozen state constitutional amendments to ensure frugality. Among other things, they would narrow how lawmakers can use rainy-day dollars and phase out some of legislative budget writers’ favorite accounting tricks.

‘Gigantic hole’

Advocates of increased spending on education and health care say that the amendments in particular would be a fiscal straitjacket with long-term consequences. Together with tax cuts and Abbott’s spending increases, the state would burn through “growth revenue” needed for fixing school finance, they have warned.

“We have a gigantic hole in our school finance system,” said budget analyst Eva DeLuna Castro of the center-left think tank the Center for Public Policy Priorities, referring to 2011 education cuts that lawmakers only partially eased last year.

DeLuna Castro frets that incoming leaders and the enhanced Republican majorities in the House and Senate are too eager to reduce taxes and constrain budget writers. The Texas Supreme Court could demand action to boost school funding by late next year or early 2016, she noted.

“It’s like somebody goes to look in their toolbox and they start throwing out all their tools before knowing what project they’re going to take on,” she said.

Abbott spokeswoman Amelia Chasse said this month’s midterm elections confirmed the wisdom of Abbott’s plans.

“The blue state model has failed: Voters in Illinois, Massachusetts and Maryland changed leadership due to failed fiscal and economic policies,” she said. “Less government, low taxes, smarter regulations and right-to-work laws — not government mandates and programs — are the pro-growth economic policies” that will keep Texas’ boom going.

$1.3 billion more

Abbott has proposed $1.3 billion of new spending over the next two years, including:

Giving 5 percent raises to personal attendants of elderly and disabled Texans in community care programs. The aides generally make only $7.50 an hour. (Cost: $105 million)

More funding for prekindergarten classes, provided they improve results for children ($118 million).

More teacher training, to improve reading and math instruction in the early elementary grades ($64 million).

Grants to improve technology in low-rated schools and generally encourage more online instruction in the public schools ($164 million).

Hiring 500 additional state troopers to patrol the Texas-Mexico border in new boats, planes and SUVs, with new two-way radios ($299 million).

Abbott would pay for the projects from an expected state surplus next August and continuing strong revenue growth over the next two years.

Chasse said that approach is “both conservative and responsible. By setting a spending limit, his proposals contain the growth of government and also require spending to be prioritized on critical areas.”

The state’s current spending limit increases with economic growth, as measured by Texans’ personal income. Abbott wants the limit to be inflation and percentage growth in state population. In recent cycles, that would have been a tighter cap.

The move, though, would require a constitutional amendment. So would Abbott’s proposals to rake off much if not most of the sales tax collected on cars and pickups, which would be dedicated to highways; ban lawmakers’ hoarding of special-purpose fees to help balance the budget, effective with the 2022 Legislature; and further wall off of the rainy day fund, which is flush from taxes on Texas’ oil-and-gas drilling boom.

In fact, unless Abbott and GOP leaders keep asking voters for permission to spend rainy day dollars, as they did last year for water projects and this year for roads, his stance could frustrate Democrats and education boosters by leaving as much as $14 billion off the table by the end of his term.

One of Abbott’s proposed constitutional amendments will be a tough sell: He wants lawmakers to yield him more power in budget deliberations, by agreeing to let voters decide whether to give the governor “line item reduction” authority. Currently, a governor can either veto a budget line item or let it stand.

“There’s never been a public debate on it,” said Dale Craymer, a budget aide to former Govs. Ann Richards and George W. Bush who now heads the business-backed Texas Taxpayers and Research Association. “Obviously, it is a shift of power from the legislative branch to the executive branch, and it requires the Legislature to initiate that. And we’ve just never been there before.”

Liberal budget expert DeLuna Castro said that to cover education and health care increases from inflation and a surging state population, budget writers will take $7 billion next year.

“That’s just the bare minimum to keep from imposing more cuts,” she said.

Experts expect the state’s general fund to have a balance of $5 billion or more when the current budget year ends Aug. 31. For the ensuing two years, general-purpose revenues easily could grow by as much as $10 billion.

Clay Robison, spokesman for the Texas State Teachers Association, said public schools on average receive $464 less per pupil per year than they did before the 2011 cuts. The state is 46th in per-student spending, and Abbott’s offering no relief, Robison said.

“He said he wanted to make Texas No. 1 in education, but I see no evidence of it in these proposals,” he said.

Abbott, though, has implicitly criticized recent budgets passed by the GOP-controlled Legislature. While budget writers responded to economic downturns with “necessary and sensible spending reductions” in 2003 and 2011, they were too profligate in 2005, he said in a fiscal plan on his campaign website.

“We must never forget that you know better how to spend your money than do bureaucrats in Austin or Washington,” he said a year ago as he outlined the budget proposals.

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