The Senate Finance Committee met Tuesday morning to discuss legislation that would require the adoption of the population-plus-inflation metric to calculate the state’s spending limit. This metric, which is based on gradual trends and hinders the rate of governmental growth, provides a fiscally conservative method for the calculation of the state spending cap that would benefit the Texas taxpayers and encourage economic prosperity.

SB 9 by Sen. Kelly Hancock (R-North Richland Hills) dictates that the rate of growth of appropriations for a given biennium may not exceed the combined changes of population and inflation in Texas over the previous biennium. SJR 2 would submit this legislation to Texas voters in a constitutional referendum on November 3, 2015.

Hancock argued for the necessity of this legislation, emphasizing that the population-plus-inflation metric accurately accounts for the growing needs of Texans.

“This formula would warrant a true spending limit,” said Hancock. “SB 9 also updates a 36-year old policy to reflect our modern economy and ideology. It is time to ensure that the constitutional spending limit is no longer a theory, but enacted to measure a fiscal restraint.”

Sen. Royce West then pressed Hancock on the sources of population statistics and inflation rates. Hancock responded that the Federal Reserve of Dallas would calculate a separate inflation rate for Texas rather than use the national inflation rate. “Texas performs differently from the rest of the country,” Hancock responded. “We ask that they take that into account as they calculate the inflation rate.” “The rate of population change,” said Hancock, “would be projected from current state data.”

In response to further questions from Sens. Kirk Watson and John Whitmire, Hancock explained that the spending limits imposed by SJR 2 and SB 9 apply to all funds, including those dedicated to transportation and higher education.

Committee Chair Sen. Jane Nelson opened up the floor for public testimony, after which SJR 2 and SB 9 were left pending in committee to await further consideration.


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