Texas State Senate Shows Fiscal Cowardice


Strong words, but the budgeting ideas coming from the Texas State Senate- with UNANIMOUS consent is a case of legislative groupthink that- if it wins out- will introduce Texas to the path of fiscal insanity that California has followed.

Realize that in the last 2 year cycle, the state had $72 billion in revenue to work with, this session they have $94 billion – a 33% increase..  The oil and gas boom has been good to Texas.  But there is ALWAYS pressure to spend more- and the pressure was great this time with the lean times of the last session.  But they are STILL held to the spending cap that prevents deficit spending  (unless they get a two-thirds vote, normally difficult to do).  The problem is, everyone seems to wants to break that cap. Incredibly, even Gov. Perry went to the House to demand that they break the cap! (so much for the fiscal conservative in the Presidential primary!)

The way to break the cap is not via deficit spending but by tapping a large reserve the State maintains; a fund that is often called the Rainy Day Fund, but it’s important to know is ACTUAL name because it tells one its true function; the Economic Stabilization Fund (ESF). It is to stabilize the economy, in HARSH times, not FLUSH times.

The Texas House tried to pass a bill that would have drawn $2 billion from the ESF for a water project fund.  Conservatives opposed it because, upon analysis of the model for its use, less than $200 million in the first budget cycle, and no more than $500 million in a decade (this fund only is to  be used to lower the cost of borrowing for water projects). Democrats refused to support the effort in the House, because, once the ‘tap was open, they demanded more for eduction, even if this is a one-time fund. The bill failed to gain the needed 2/3rds vote.  It was a somewhat foolish attempt to commit a long-term amount to water projects; with that mucn money available, beyond the immediate need, the board in charge of utilizing it to fund projects would be tempted to fund the equivalent of ‘sub-prime’ water projects.  But it was fairly honest foolishness.

However, the Senate’s proposed budget is less honest, borders on political and fiscal cowardice, and sets an extremely dangerous precedent. They budgeted the entire available revenue to OTHER purposes and then put together Senate Joint Resolution – 1 . This beast proposes spending $2 billion on water projects, $2.9 billion on transportation project, and also a $800 million education afterthought (to gain factional support) from the ESF.  But, rather than actually try to get a 2/3rds to support this fiscal madness directly, they put it in as a Constitutional Amendment, to be voted on..  As such, they can say they didn’t break the budget cap; they expect the voters- to get foundational infrastructural money.

What this does is to bring Texas into the same kind of fiscal ‘pure democracy’ that has led California to the brink of insolvency through initiative and referendum. Constitutional amendments should NEVER be used for budgetary expenditures! By allowing people to vote DIRECTLY for spending, the spenders ALWAYS win  (“You CAN’T vote against WATER, TRANSPORTATION and EDUCATION! Can you??”  Note, things like The Enterprise fund, the Arts fund, and anything that doesn’t sound the least bit non-essential is not included.)  Simply put, by putting perceived essentials (even when they represent over-commitment to TRUE essentials) up for a popular vote and putting non-essentials in the normal budget, the net effect is that they get to spend like Washington Democrats while claiming to be fiscal conservatives.

The GOP free-spending ‘Powers that Be’ are not letting a crisis go to waste; that crisis is the drought.  But money cannot stop a drought, nor actually CREATE water. Any long-term operational water development plan is best covered under general revenue, as is transportation.  One-time infusions fix little, as we saw with the government ‘stimulus’ package.  But it DOES allow politicians to claim to be ‘doing something’- even when water development takes at least a decade to come online.

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4 Responses to Texas State Senate Shows Fiscal Cowardice

  1. Justin says:

    You still need 2/3rds vote for a constitutional amendment… who writes this stuff? Also, you guys have no problem being allowed to vote on bonding issues.

  2. Mike O says:

    The 2/3rds vote IS required, but it doesn’t spend the money directly, so they have a dodge that the didn’t vote to ‘break the cap’; a pledge most of them signed. It’s politics that you have to understand, which you clearly don’t.
    As for bonds, that is a different issue, but they suffer from the same stupidity of over-spending in flush times that will come back and bite in the hard times. But this is worse; this is draining an existing reserve at a time of high revenue; what on Earth will the state do in the hard times?
    It is also a matter of the priorities. This is equivalent of at city using all their operational funds for recreation and arts, then asking the citizens to pass bonds on fire and police pay and equipment. That is LIBERAL budgeting.

    • Andrew says:

      Are you saying funding water, something which we all need, is equivalent to funding the arts? Infastructure is exactly what the fund should be spent on as it will encourage economic growth for the future

      • Mike O says:

        Hardly. But it is the NON-ESSENTIALS that should be taken out of the base budget and put to a vote, NOT the essentials. They KNOW the non-essentials and pet projects would not stand up to the light of day, so they keep them in the regular budget and force us to overspend to get the critical stuff.