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The Agenda

NRO’s domestic-policy blog, by Reihan Salam.

Erica Grieder on Texas’s Biennial Budget Estimate



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Back in 2011, Texas Republicans were panned in the national press for having responded to a deep budget shortfall with spending cuts. Now it looks like the spending spigots will be turned on again. Erica Grieder reports that Texas’s state government is now flush:

By January 2011, the last time [Texas Comptroller Susan] Combs gave a biennial revenue estimate, it was apparent that Texas would end the 2010-2011 biennium in the red; the previous budget had been overly optimistic. For 2012-2013, the comptroller projected further lean times. Tax collections would still be relatively low, and the state was going to have to pay for the looming shortfall, which was going to be more than $4 billion dollars. 

As it turned out, tax receipts were higher than expected. That’s why the projections for the next biennium have rebounded. The projected tax revenue for 2014-2015, the $85.6 billion figure mentioned before, is nearly $20 billion greater than the original 2012-2013 estimate. Sales taxes in 2014-2015 are projected to be $54.9 billion; the 2012-2013 projection was $42.9 billion.

The new estimate means that when the 83rd regular session of the Texas Legislature begins, tomorrow, both Republicans and Democrats are going to be talking about what happened last session, when Republicans (who control both houses of the Lege) were determined to respond to the skimpy projections with extreme fiscal discipline. They eventually took several billion dollars out of the rainy day fund, but they whittled state spending in most areas, and decided not to pony up the expected amount of money for Texas’s growing public schools—a gap of about $5 billion, or several billion dollars less than the $8.8 surplus the comptroller just announced.

Rick Perry and David Dewhurst, the governor and lieutenant governor respectively, quickly released statements saying that the new estimate proves tightening the belt was the right approach; the state got through the worst of the recession, and is in a stronger position now. Democrats, however, will see it differently. Mike Villareal, a state representative from San Antonio, was among the first to pounce. “The report is further proof the legislature didn’t have to cut education, push schools to crowd more kids into full classrooms, and make college more expensive,” he said in a statement. 

One danger is that the new revenue estimate will lead to a surge in spending on public education, and that the new dollars will be poorly deployed. If the Texas Legislature will relax its spending restraint, it should attach new funding streams to measures that will deliver long-run efficiency gains: mandating that, or at the very least encouraging school districts to, embrace course-level instructional choice, implementing a Gold Star Teachers program that would offer additional compensation to effective teachers who choose to take on larger classes, and investing in new blended instruction models.



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