State Budgets

State of the State: Texas

Republicans and Democrats in the Lone Star State surely can celebrate Texas’ resilience. Governor Greg Abbott began his State of the State address acknowledging the economic toll of falling energy prices, while applauding the drive enabling Texas to “come roaring back.” He noted that even when oil prices bottomed out, Texas added 200,000 new jobs, rose to 2nd in the number of Fortune 500 companies headquartered in state. In fact, if Texas were still a sovereign country, its economy would be the 10th largest in the world—eclipsing Australia, Canada and Russia.

Despite the many successes, the governor presented a packed agenda of tackling persistent problems—including reforms of the Child Protective System and public schools, securing the southern border, improving tax policy, strengthening ethics standards and embracing further union reforms.

Citing the horrific deaths of more than 100 children in the Child Protective System, the governor called for an unspecified increase in funding to hire more workers, implement better training, create more accountability and devise smarter strategies to safeguard children.

With energy prices continuing to squeeze the state’s budget, the governor’s focus on priority and performance-based budgeting is especially prudent. To that end, Governor Abbott announced an immediate state agency hiring freeze, freeing nearly $200 million in the budget. Noting the importance of school choice and charter schools to enhance student achievement at a lower cost, the governor pushed legislators to fund these types of educational innovation rather than simply divert more taxpayer dollars to the status quo.

Moving into tax reform, Governor Abbott decried, “Texans are being crushed by property taxes… we need serious property tax reform.” With increases in property tax bills outpacing household income growth, he implored legislators to enact a real revenue cap as well as reforms that prohibit cities from raising property taxes without voter approval. These reforms are a welcomed response to the heavy property tax burden, currently ranking 14th highest nationally. Union reforms and worker freedom also took center stage, with the governor declaring, “While we are cleaning up government, we should end the practice of government deducting union dues from the paychecks of employees.” Texas is already right-to-work, so this move is likely to enhance the already fantastic job growth. The governor went on to ask legislators to pass ethics reforms that would ensure Texans know “if elected officials have government contracts paid for by taxpayers.”

In closing, Governor Abbott warned that fiscal failures at the federal level threaten Texas’ economic vibrancy. He requested that legislators call for a convention of the states, and that they demand the federal government to actually fulfill its constitutional responsibilities and to “leave us alone, and let Texans govern Texas.” The spirit of the address demonstrates why Texas ranks first place in economic performance and remains near the top in the Rich States, Poor States economic outlook measure.


In Depth: State Budgets

Smart budgeting is vital to a state’s financial health. The ALEC State Budget Reform Toolkit offers more than 20 policy ideas for addressing today’s shortfalls in a forthright manner, without resorting to budget gimmicks or damaging tax increases. One way to stabilize budgets over time is to embrace …

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