In our weekly Austin American-Statesman column, our executive director F. Scott McCown lays out why the proposed constitutional limit on spending would handcuff our future investments –
By F. Scott McCown
Gov. Rick Perry is right that the state should budget like a family — which is why he is wrong that state spending should increase no more than the growth of population and inflation. A prudent family would never accept such a limitation.
Texas already has two sensible spending limits. Under our constitution, we can’t spend more money than we have, and we can’t increase spending faster than our economy grows as measured by total personal income. We limit spending by income because for a state, just as in a family, income is the best measure of the ability to pay for goods and services.
The governor proposes that instead of looking at our ability to pay, we look instead to population growth and household inflation, allowing our budget to grow no more than the two combined.
If a family budgeted this way, no matter how much money the family made, it could never improve its life. Imagine sitting down to write your first family budget. Naturally it is lean, but you have dreams of a better future — a safer neighborhood, a graduate degree. Under the governor’s proposal, though, even as your income increased, you would be stuck living under that lean budget adjusted only by family growth and household inflation. You could never make your life better.
Not being able to make things better would be a big problem for Texas. However you measure it, Texas ranks low in spending. Our systems for education, water, transportation, mental health, child protection, and many others are struggling. If we could adjust our current lean budget only for population and inflation, we could never make major new investments to improve our state.
The governor’s proposal has another big problem: Not only could a family not improve its life, periodically things would actually get worse. As the Great Recession reminded us, income doesn’t always go up. Sometimes breadwinners suffer a pay cut or lose a job, and a family has to cut its budget. Under the governor’s proposal, this lower level of spending would become the new base.
For a family, that would mean if it made $35,000 last year, but only $30,000 this year, its budget for next year would have to be based on the lower figure even if it made $40,000. Yes, even after the family’s income recovered, it couldn’t increase spending. No family would budget in a way that prevented recovering from a setback, and no state should, either.
The governor’s formula also uses the wrong measures of population and inflation. A family budget isn’t based merely on family size, but on family composition — whether the family is budgeting for a baby, for a child in college, or to care for grandma matters a lot to the bottom line. Likewise, a state can’t merely consider growth in total population; a state must consider who it is actually serving. For example, in Texas the rate of elderly who potentially need assisted living through Medicaid is projected to grow twice as fast as our total population between now and 2040.
And just as a family wouldn’t base its budget on government inflation, a state shouldn’t base its budget on household inflation. Families and governments buy different “baskets” of goods and services. A much higher portion of the state budget, for example, goes to buy health care, which is increasing in cost faster than household inflation. By using the wrong measures of population and inflation, year after year, the governor’s proposal would force Texas to do less and less for fewer and fewer.
Of course, a family would always leave itself the ability to override a spending limit if needed, and the Legislature can do that now by majority vote. What is proposed, though, is a constitutional amendment requiring a two-thirds vote to override the spending limit.
Why do we need this new two-thirds rule when the Legislature has produced lean budgets for years? In fact, adjusted for population and inflation, general revenue spending is lower than a decade ago. Perhaps proponents of this new rule fear that eventually the majority will want to increase spending to meet our state’s needs.
If so, the majority should have the right, and today’s majority should not try to secure for itself a special constitutional veto on future spending in case it becomes tomorrow’s minority. Spending decisions are the ordinary business of democracy. When it comes to making decisions in a democracy, every Texas citizen should count equally, and the majority should rule.
