At a press conference Tuesday, State Sen. Kelly Hancock (R-North Richland Hills) and Lt. Gov. Dan Patrick unveiled new legislation that would dramatically improve Texas’ constitutional spending cap.
Under the Texas Constitution, the current cap constrains the spending growth rate of non-dedicated General Revenue only; it does not cap spending on any federal funds spent, or other revenue sources such as the gas tax. Currently, spending may not exceed the official estimate of the “growth rate of the state’s economy,” an ambiguous term that is defined statutorily and set by the Legislative Budget Board (LBB). (The LBB is led by the Lt. Governor, the Speaker of the House, and respectively appointed legislators.)
Though the spending cap is a great shield for Texans, a serious flaw in its current design prevents it from being as effective as it could be. The flaw lies in the fact that it grants the LBB the ability to choose the cap from projected rates of personal income — something akin to placing the foxes in charge of the henhouse.
Hancock’s bill would dramatically improve that. If passed, SB 9 would expand the scope of the cap to include all spending, not just that of General Revenue. The legislation would also more specifically define “growth of the state’s economy” as the rate of population plus inflation, though SB 9’s current version would still give the LBB latitude to choose which rate of population and inflation growth the state follows.
SB 9 would also change the voting threshold required to exceed the spending cap to a three-fifths majority of both chambers. Under current law, only a majority of legislators in both the House and Senate are needed to bust the state’s spending cap.
“To protect taxpayers from government growing too big, we need a constitutional amendment that limits the growth of the state budget to population growth plus inflation,” Gov. Greg Abbott said in his January address. “The more we restrain the growth of government, the more we will empower hardworking Texans. These budget cuts will make our budget even leaner while helping us prioritize spending that will make our state even stronger.”
“The people of Texas have made it clear that they want fiscally responsible government,” said Hancock. “Under this legislation, the spending cap will be no longer just a theory, but an enacted measure of fiscal restraint.”
Indeed, 94 percent of Republican Primary voters endorsed that measure in a non-binding ballot question in 2012. The premise behind Hancock’s legislation has also garnered the support of the Texas Public Policy Foundation, Texans for Fiscal Responsibility, and other members of the Conservative Texas Budget coalition.
In his remarks Tuesday, Hancock noted that the spending cap has not been truly updated since it was approved by Texas voters in the 1970s. Making these changes now would be a victory for taxpayers.