Good morning–

The state’s economy is faltering thanks to the dual pressures of the Chinese coronavirus and the price of oil bottoming to historic lows. Tax revenues are way down as a result.

On Thursday I asked Texas Minute subscribers in the One-Click Survey if they preferred spending cuts or tax increases to deal with a budget shortfall. The result wasn’t 100 percent... but close. Of the several thousand who participated, only six people wanted to raise taxes.

Everyone else wants to see government cut spending now, which is the subject of today's Texas Minute.

– Michael Quinn Sullivan 

Monday, April 6, 2020
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• When lawmakers met last year, they adopted a budget growing state government faster than a fiscally responsible  limit. With the economy in severe decline, that decision looks even worse today than it did a year ago.
      

• Conservatives have long maintained that government should never grow beyond the combined rate of inflation and population growth. That limitation keeps government spending steady with the ability of taxpayers to pay for it.
      

• Instead, Texas’ Republican officials – looking at record surplus revenues – chose to spend like drunken frat boys on spring break with daddy’s credit card.
   

• That bill is now coming due, and the crisis-economy cannot handle the load.

• Texas Comptroller Glen Hegar has indicated unemployment could be near 9 percent already. He has said state tax revenues are already in decline. And one only needs to see the number of “closed for business” signs to understand why sales tax revenues are drying up. 
    
• That means state officials have a choice. They can wait for 2021 and raise taxes, fees, and otherwise put a heavier burden on the economy... or they can start making cuts. If they choose to raise taxes, they will destroy the Lone Star State.
     
• There are places lawmakers could immediately cut – if Gov. Greg Abbott and Lt. Gov. Dan Patrick have the courage to allow it. 
      
• Let’s use history as a guide. In 2003 lawmakers faced a $10 billion budget shortfall. Rather than raise taxes, former Gov. Rick Perry, then-Speaker Tom Craddick (R-Midland), and the House Appropriations Committee chairman – Talmadge Heflin (R-Houston) – implemented zero-based budgeting. Every state program and agency’s budget started at zero that year, and every one of them had to justify the very first dollar they received. Agencies of government were consolidated or eliminated, wasteful spending ferreted out, and inefficiencies brought to light. That budget gap was handled, not easily, but it was handled.
      
• Where might lawmakers get started for the 2021 legislative session?

• If state and local officials can shut down businesses, state legislators should be able to shut down the corporate welfare program known as the Texas Enterprise Fund.
   
• Same goes for taxpayer-subsidies to the unsustainable “green” energy industry. It would be politically easy to end the so-called Chapter 313 program: both the Republican and Democrat parties call for its elimination. The program lets local school districts reduce the property valuation of land used for “green” energy programs, and the state then makes up 100 percent of the revenue loss to the district. It’s a scam, but one legislators have loved wasting your money on.
   
• In the same vein, Texas taxpayers shouldn’t be forced to subsidize Hollywood through the odious Texas’ Moving Image Industry Incentive Program. It subsidizes the production of commercials, video games, and straight-to-DVD movies no one has seen. Putting that money back in the taxpayers wallet should easy, even if it means fewer photo ops for politicians with young starlets.
   
•  Since 1965 the state has been doling out dollars to select companies and artists through the Texas Commission on the Arts. Nearly $30 million is spent for an agency staff of 14 employees with the sole purpose of wasting taxpayer dollars. For context, that’s enough to cover the salaries of more than 450 classroom teachers. 
     
• From higher ed to to transportation to welfare, every single aspect of state spending should be closely examined. No aspect of state government spending should escape reduction and reform. Texas Scorecard will continue to explore areas where state spending can be curtailed or eliminated, but we know we don’t have a monopoly on good ideas.
        
• Send your ideas for spending cuts to [email protected]!

• For several sessions running State Sen. Kelly Hancock (R-North Richland Hills) has worked diligently to pass legislation restricting the growth of government. While the Senate has repeatedly passed his binding “population and inflation” measure, the House has repeatedly ignored it. (Outgoing House Speaker Dennis Bonnen and his leadership team refused to even give Hancock’s measure a hearing last year.)
        

• No legislative initiative will do more to ensure the long-term stability of the state than putting a strong spending limit in place.