By Brooke L. Rollins TPPF President & CEO
Texas Insider Report: AUSTIN Texas Thanks to Texas relatively sound fiscal policies our economy is booming and our state coffers are flush with cash. As is always the case in good times there are a lot of ideas out there about what to do with all that money.
The Foundation favors returning the money to taxpayers by cutting taxesthrough a reduction in the sales and/or margin taxes. Lawmakers however are coming up with all kinds of creative ways to spend the money pouring into Austin. This includes tapping the states rainy day fund" to pay for new spending.
The fund was designed for use in dire fiscal situations not for spending in times of plenty; thats why it takes a two-thirds vote in both houses to approve new spending. We have long opposed raiding the states rainy day money when the sun is shining bright.
Due to the states good stewardship and strong economy the rainy day balance is expected to reach $11.8 billion by August 2015. But if the state raids the fund for new spending during good times we wont be able to enjoy this safety net in hard timeswhich might not be as far off as we might imagine.
In 2005 Texas coffers were flush with cash after facing a shortfall in 2003. The Legislature abandoned the fiscal restraint of 2003 and went on a spending spree. This put into place a high trend line of spending that set the stage for the budget shortfall only six years later.
The same thing could happen today as lawmakers face spending pressure from Medicaid the school finance lawsuit calls for new transportation and water spending and state agencies clamoring for more money.
The only way forward is the Texas Modellow spending and taxes a predictable low level of regulation coupled with strong property rights protection and a sound civil justice systemwhich has made Texas the nations leading economic engine witnessed by the fact that Texas had four of the five top growth metro areas in the nation from 2010 to 2012.
There is only one legitimate way in the present circumstances to dispose of the funds accumulating in Austin: cut taxes and return taxpayer money to whom it belongsthe people of Texas.
