TPPF COMMENTARY: "Going to Texas"

There’s a Reason People Want to "Rush" Here

by Bill Peacock

Dear Mr. Limbaugh:

I noted your evident frustration this week with the high tax policies of New York that subject you to a punitive income tax rate anytime you step foot in the state to perform your show. I was delighted that you expressed an interest in making Texas the home of your alternate studio whenever hurricanes chase you out of Florida.

If you come to Texas to do business, you wouldn’t be alone. Texas has ranked in the top five states for the last five years when it comes to attracting new and expanded facilities, according to Site Selection magazine.

In fact, our success has come at the expense of your soon-to-be-former workplace. Last year, Texas surpassed New York as home to the most Fortune 500 companies. Texas now boasts 58 Fortune 500 headquarters, ahead of New York's 55 and California's 52.

Why is Texas forging ahead of the competition? Well, you hit the nail on the head when you mentioned that Texas doesn't have a state income tax. The people of Texas still have the same spirit of independence that attracted folks from all over the U.S. to fight at the Alamo so long ago. We don't believe that the government is the solution to all the world's problems and we'd just as soon leave people’s money in their own pockets where it will be the most productive.

A recent Texas Public Policy Foundation study showed how this attitude has made Texas a better place than California to do business. California's overall tax burden is $118.33 per $1,000 of personal income. Texas' is $99.49. California government spends $9,448.26 per capita. Texas spends $6,652.11.

And the kicker: California's personal income tax progressivity is $33.58. Texas'? Try zero.

I suspect the results would be similar in a head-to-head competition with New York. And the way things are going in Florida these days, it may not be long before you start thinking about moving your studio to Texas on a permanent basis.

It is true that Florida doesn’t have an income tax. But that may not last long. Florida's ill-considered decision to get into the homeowners' insurance business has the state facing bankruptcy if a major hurricane makes landfall there this summer. With a potential liability of $32 billion, Florida will have to turn to either its citizens or the federal government to make up the shortfall. I am fairly certain, Mr. Limbaugh, you will be on the short list of those solicited to contribute.

Businesses are noticing this too. Florida bounces in and out of Site Selection's top 10 ranking and is only 11th on the Fortune 500 list.

So if you come to Texas, where should you live? While Texas is a great place, we do have our flaws like everywhere else. So let me provide you with some local knowledge that may help in your decision about where to relocate.

I'd avoid downtown El Paso at all costs. That city is prepared to use eminent domain to reshape parts of the area into a livable, workable urban utopia. Never mind the forced dislocation of the thousands of people who already live and work there.

The Metroplex is a great area, but may be getting much more expensive pretty soon. Local business and government "leaders" are proposing hundreds of millions of dollars in new taxes to fund rail and other transportation projects. This is the same group, of course, that agreed to limit transportation options in the area through restrictions on air travel through Love Field.

Houston might be a good choice for you. Though its moniker of "free market city" may be something of an anachronism, it still doesn't have zoning, so you could build your new home and studio together in the location of your choice.

Wherever you wind up, Rush, we'd welcome your entrepreneurial spirit to Texas. Let’s hope that you join with another famous Texas transplant and freedom fighter, Davy Crockett, in saying, "You can all go to hell; I am going to Texas."

Bill Peacock is the Director for the Center for Economic Freedom with the Texas Public Policy Foundation, a non-profit, free-market research institute based in Austin.

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Texas PolicyCast: The California Disaster Avoidance Plan

Last week, Rep. Ken Paxton of McKinney and Sen. Dan Patrick of Houston held a press conference to announce the filing of House Bill 994 and Senate Bill 928, both of which seek to tighten the state's expenditure limit. We caught up with Rep. Paxton after the event to get his perspective on the legislation.

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Foundation joins research, business, and taxpayer groups to deliver "Blueprint for an Effective Budget"

Guidelines on using Rainy Day Fund, improving performance measures, setting funding priorities, and increasing transparency will help legislators make responsible budget decisions

AUSTIN – The Texas Public Policy Foundation joined several other research, business, and taxpayer groups at the Texas State Capitol today to deliver "Blueprint for an Effective Budget," an agreed-upon set of guidelines for the Legislature to draft an effective state budget.

"Our legislators will have difficult budget decisions to make over the next few months," said The Honorable Talmadge Heflin, Director of the Texas Public Policy Foundation's Center for Fiscal Policy. "If they follow these guidelines, they can maintain essential services for the citizens of Texas while positioning our state for a strong economic recovery."

Heflin called for the 81st Texas Legislature to preserve a balance of at least $4.5 billion in the state’s Rainy Day Fund, and to use it only for emergency tax relief or one-time expenditures.

"Yes, we are in a rainy day, but no one knows for sure how long this storm will last," Heflin said. "Texas families have the instinct to stretch their emergency savings as long as possible, and state government needs to show that same discipline."

Heflin also urged the legislature to proceed with caution regarding the pending federal stimulus legislation.

"While we expect there will be some money, it is not guaranteed and we do not know what forms it might take," Heflin said. "This money should be treated the same as our rainy day fund – for use on one-time expenditures."

The blueprint includes several guidelines on how to responsibly establish spending priorities.

"The mathematical task of closing a budget shortfall can be straight forward – just cut everything across the board," Heflin explained. "But writing an effective budget in these times requires that you separate needs from wants, and that you prioritize your spending based on what you're required to do – first by the Texas Constitution, then by state law – and by what produces the greatest value to the taxpayers."

Heflin said that it was important for the Texas Legislature to continue the state's movement toward complete financial transparency.

"Through websites like the Comptroller's Where The Money Goes and our own TexasBudgetSource.com, we’re engaging all Texans in the effort to ferret out waste and fraud in government spending," Heflin said. "We need to ensure that all budgets, expenditures, contracts, and other relevant financial information are published online in a searchable and user-friendly format."

The nine guidelines in the "Blueprint for an Effective Budget" are:

• Limit the growth of state spending to no more than the sum of population growth plus inflation, or the growth in personal income, whichever is less.
• Prioritize state spending on the basis of constitutional mandates, followed by statutory requirements.
• Return excess fee and tax revenues to those who paid them.
• Limit the use of the Rainy Day Fund to either emergency tax relief or one-time emergency spending items.
• Maintain a Rainy Day Fund balance of at least 5 percent of the general revenue and general revenue-dedicated funds spent in the 2010-11 budget.
• Make it easy to identify and report government fraud and waste by posting all budgets, expenditures, contracts, and other relevant financial information online in a searchable and user-friendly format.
• Structure state agencies' performance measures to reflect outcomes rather than outputs.
• Fund only those programs that return a greater value to the taxpayer than the program's cost.
• Avoid duplication of services by focusing on programs that are not provided by local governments or the private sector.

"Blueprint for an Effective Budget" and the Texas Public Policy Foundation’s research on state tax and budget issues can be on the Foundation's primary website, http://www.TexasPolicy.com, and on its government spending transparency website, http://www.TexasBudgetSource.com.

The Honorable Talmadge Heflin is Director of the Center for Fiscal Policy at the Texas Public Policy Foundation, a non-profit, free-market research institute based in Austin. Heflin served 11 terms in the Texas House of Representatives and chaired the House Appropriations Committee in 2003, leading the Texas Legislature's successful efforts to close a $10 billion budget deficit without a tax increase.

The Texas Public Policy Foundation is a non-profit, non-partisan, free-market research institute based in Austin. More information can be found on the Foundation's primary website, www.TexasPolicy.com, or its government spending transparency website, www.TexasBudgetSource.com.

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Stimulus Bill Will Pass: Congress Doesn't Care What the People Want

Will Malven
1/07/2009

Have we finally reached the point of no return? Have the citizens's representatives become so arrogant, so out of touch with their voters that they feel they no longer have to listen to us? Have they finally accounted themselves so superior, so much wiser, and far more intelligent than those who elected them into office? Apparently so.

Mr. Vice President Joe Biden believes so and he said as much yesterday. In a speech to about 200 Congressional Democrats at the Democrat Party "retreat" in Virginia, he acknowledged that the voters have overwhelmingly expressed their opposition to the proposed $800 billion spending package cynically labeled by President Obama and the Democrats in Congress as the "stimulus package."

He warned that members of Congress:

"But when we do [approve it], I’m sure you’re going to be nailed in ads, ‘Well they voted on that’ 30 second ads.”

Democrats know that this bill is unpopular and they know it will fail, that is why they are so desperate to get Republicans to vote in favor of it. They need a bipartisan vote in the worst way so that when this bill fails to deliver what they have promised, they can avoid being blamed. This effort toward "bipartisanship" is a cynical attempt by our Idiot in Chief, President Barack Hussein Obama, and Congressional Democrats to insulate themselves from criticism. They have no interest in genuine bipartisan legislation.

Advocates for this bill are pushing for its passage urgently telling their fellow senators that the American people want Congress to act. In a way they are correct, taking the right action would be good, but simple action for the sake of action, passing a law simply for the sake of having it is worse than no action at all. The Washington Times reports:

"The CBO, the official scorekeepers for legislation, said the
House and Senate bills will help in the short term but result in so much government debt that within a few years they would crowd out private investment, actually leading to a lower Gross Domestic Product over the next 10 years than if the government had done nothing."

For some reason a majority of those in Congress seem to adhere to the mistaken belief that bad legislation is better than no legislation at all. This is bad legislation!

We are being told that the need for this package is urgent because Americans need jobs, but 70% of the money appropriated in this bill will not even enter the economy to create jobs for eighteen months. The only money slated to flash instantly into the economy comes from the tax cuts and from supplemental unemployment insurance.

The only reason President Obama and the Democrats in Congress are pressing so urgently for this spending package is they know that the more information the voters have about it, the more they will oppose it. They are pressing for passage before opposition reaches critical mass and even Democrats hesitate to vote for it.

We are being governed by arrogant fools being led around by the nose by the biggest fool, our Idiot in Chief, who is so far out of his depths that he is now in panic mode.

The words of Alec Guinness playing Obi-wan Kenobi come to mind when Han Solo called him a "damn fool" in their attempt to sabotage the Death Star:

"Who's the more foolish; the fool or the fool who follows him?"

The Pied Piper of Chicago is playing his fools flute and the Democ-rats are following him to our doom. Unfortunately they are being joined by the three most arrogant and foolish Republicans in the senate, Susan Collins (R-ME) who strikes me as a person who would be out of her depths in selling burgers at a McDonalds, Olympia Snowe (R-ME) who strikes me simply as one of those typical arrogant Liberals who believe they are superior to those they represent, and Arlan Specter (R-PA) who has long been one of those arrogant Liberal RINO's who believes that a law degree automatically conveys superior wisdom to its holder.

Senators, I dub thee "The Three RINO Stooges." It seems an appropriate moniker for these jokers. I'm not certain, but perhaps they lack the wisdom to hold that title. They might have more in common with these guys to the right.

Enough jocularity though, this is no laughing matter and these fools and their Democrat pals share more in common with King George the Second against whom Thomas Jefferson penned these words:

“...Governments are instituted among Men, deriving their just powers from the consent of the governed, — That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness...when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security."

For you Liberals out there, who are not prone to knowing these things, those words come from our own fundamental founding document The unanimous Declaration of the thirteen united States of America.

Taking guidance from those words, words which all Americans should hold in the highest of reverence, perhaps our current reaction to this action is too mild. We are about to become vassals of an authoritarian state with control over our banking, our corporations, and our lives. We are about to become the largest "third world nation" on the planet.

Doing nothing would be far preferable to this bill. There is a good alternative, the Republicans offered a far superior bill that would funnel more money into our economy faster and cost half as much. This bill is, to use a turn of phrase that became controversial during the last presidential campaign, the epitome of a "pig in lipstick."

The Congressional Budget Office (CBO) has passed judgment on this bill. In case you are mystified as to what is in this bill, you ain't the only one. This bill is still being written even as it is being debated and voted on. Talk about buying a pig in a poke!

This graphic is the closest I have been able to find to illustrate how insane this bill is:


courtesy of New York Times Feb. 7 2009 Economix
"Stimulus Pie Chart" by Catherine Rampell

As you can see, this is not a "stimulus" bill; this is a wish list of Democrat Party agenda items. It will not help the economy recover; it will spend us into oblivion. This bill will add $1.2 trillion to the national debt and no one not President Obama, not Nancy Pelosi, and not Harry Reid has yet explained to the American people how this spending bill will be paid for. They can't, because they don't have a clue.

Collins, Snowe, and Specter as despicable as their caving in to Democrats may be, they are not the sole targets to blame, there are 58 Democrat Senators marching lock-step with President Obama and all but eleven Democrats in the House. They bear the lion's share of the blame for this abomination.

As Democrats are all too willing to point out, under President Bush's watch the national debt grew from $5 trillion to $10 trillion. I don't know whether these numbers are accurate, but I will not argue with them, so let's just say that those assertions are accurate...then the obvious conclusion to draw from those figures is that government spending doesn't create jobs, if it did we would not be in this economic crisis. So even by their own example and thus admission, this bill will not work.

Do not let this bill go through without contacting your members of Congress and the president. Let them hear from you how you feel about this spending bill. Remember, last year we were told that congress "had to pass the $700 billion TARP package" immediately or the economy would collapse. Only half of that money has been spent-thus proving the lie of the claimed urgency and virtually all of that $350 billion that was spent has simply disappeared. No one knows where it went.

Now here we are again being told that this is an "emergency" and that it is "urgent" that it be passed. It was a lie in 2008 and it is a lie now.

"Fool me once shame on you, fool me twice shame on me."

Long Live Our American Republic!!!!

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Statement on the Legislative Leadership’s Budget Instruction Letter

Statement by The Honorable Talmadge Heflin, Director of TPPF’s Center for Fiscal Policy

"We are pleased that Lt. Gov. David Dewhurst and Speaker Joe Straus are getting out in front of our state’s budget situation by asking agencies for targeted spending reductions. This is a time for state government to prioritize needs and cut some of the least important items, and the letter from Dewhurst and Straus seeks precisely that.

"Beginning the belt tightening process in the current fiscal year gives us a head start on getting our spending in line with available revenues in the next state budget. We should not leave ourselves in the position of relying on an influx of federal funds that might not come."

The Honorable Talmadge Heflin is Director of the Center for Fiscal Policy at the Texas Public Policy Foundation, a non-profit, free-market research institute based in Austin. Heflin served 11 terms in the Texas House of Representatives and chaired the House Appropriations Committee in 2003, leading the Texas Legislature’s successful efforts to close a $10 billion budget deficit without a tax increase.

The Texas Public Policy Foundation is a non-profit, free-market research institute based in Austin. More information can be found on the Foundation’s website, www.TexasPolicy.com.

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TPPF commentary: Employment statistics highlight need for more pro-growth policies

By James Quintero

Finding a job in Texas just got harder.

Last month, the Texas Workforce Commission reported that the state’s economy shed 25,700 jobs in December 2008. Among the hardest hit industries were manufacturing and trade, transportation, and utilities which lost a combined 16,100 jobs.

The state’s unemployment rate rose to 6 percent, its highest level since July 2004, and is projected to reach 6.6 percent later this year.

December’s sour employment figures mark the second consecutive month that seasonally adjusted non-farm employment fell. The national recession and falling oil and gas prices, it seems, have finally begun to take their toll on the Texas economy with more trouble on the way.

Comptroller Susan Combs’ recent assessment of the Texas economy warns that 111,000 jobs will disappear over the first two quarters of this year before the job market begins to rebound in the fourth quarter. The economic recovery, however, hinges on whether or not businesses have the confidence to begin hiring again in the months ahead. Based on the results of one recent survey, things aren’t looking too good.

The Federal Reserve Bank of Dallas’s Texas Manufacturing Outlook Survey, which polled over 100 Texas manufacturers, found that 47 percent of business executives felt their companies faced a “dismal outlook” moving forward while 55 percent of respondents were concerned about “worsening market conditions.”

With employers skittish and unemployment certain to rise over the next few months, the need for more pro-growth policies couldn’t be more real. The economy is going to need smart public policy that frees Texas businesses, workers, and families from the costs of big government.

Fortunately, a number of promising bills are working their way through the Legislature.

Several legislators have already filed proposals to increase the exemption for the state’s new margin tax from $300,000 to $1 million, allowing more small businesses and entrepreneurs – the heart of the state’s economy – to keep more of what they had earned. The timing of this bill couldn’t be better as many small businesses are just trying to keep their doors open.

Another encouraging piece of legislation is House Bill 508, authored by Representative Lois Kolkhorst. The bill would authorize the Comptroller’s office to investigate the effects of replacing Texas’ property taxes with a broad-based sales tax. Although the bill would only authorize a study and does not guarantee any future tax relief, alternatives to the property tax system need to be reviewed.

Texas businesses and homeowners pay some of the highest property taxes in the nation – the state ranked 13th nationally in per capita property tax collections for fiscal year 2006, according to the Tax Foundation. If Texas is going to successfully attract businesses and jobs, we must address the issue of ever-escalating property taxes.

One of the most important bills in the upcoming session is House Bill 994 by Representative Ken Paxton, which would change the state’s constitutional spending limit away from the growth in personal income to the sum of population growth plus inflation.

This measure is important because it effectively caps the cost of state government per person. Growth in the state’s budget must be closely guarded to avoid higher taxes in the future, and let businesses who are looking to relocate or expand know they are welcome in Texas.

Bringing jobs back to Texas is going to require smart, forward-thinking public policy that emphasizes low taxes, fiscal discipline, and limited government. How closely lawmakers choose to follow that model will dictate much of the coming economic recovery and how quickly all of us see an improved job market.

James Quintero is a fiscal policy analyst at the Texas Public Policy Foundation, a non-profit, free-market research institute based in Austin.

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Statement on Governor Rick Perry’s State of the State Address

Statement by Justin Keener, Vice President of Policy and Communications

“We applaud Gov. Rick Perry’s focus on fiscal responsibility in his remarks today. This is the time for state government to restrain spending, not to increase taxes or expand programs. Texas must continue to lead by example, rather than to follow other large states like California down the path to bankruptcy.

“We join Gov. Perry in urging the Texas Legislature to take the next step toward full government financial transparency. Especially during difficult economic times, we need to engage all interested Texans in the battle to root out government waste and inefficiency at both the state and local levels.

“The legislature should also heed Gov. Perry’s call to finish the job of protecting Texans’ property rights from eminent domain abuse. The Legislature took a good first step shortly after the U.S. Supreme Court’s Kelo decision, but it now needs to finish the job of protecting Texas property owners.

“Gov. Perry’s support for increasing the amount of funding for incentive pay and removing the legislative cap on open-enrollment charter schools shows that he understands the importance of promoting competition within Texas public schools.”

Justin Keener is Vice President of Policy and Communications for the Texas Public Policy Foundation.

The Texas Public Policy Foundation is a non-profit, free-market research institute based in Austin. More information can be found on the Foundation’s website, www.TexasPolicy.com.

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Statement on the Legislative Budget Board’s 2010-11 Budget Estimates

Statement by The Honorable Talmadge Heflin, Director of the Center for Fiscal Policy

"The first draft of the 2010-11 Texas state budget reinforces the message from Comptroller Susan Combs' revenue estimate last week. The Texas Legislature needs to get to work on pruning the next state budget back within the available revenue.

"The legislature needs to be mindful of the hard lesson it learned in 2001, when it spent the entire accumulated surplus of the 1990s at once and dug itself a $10 billion hole in 2003. The way for the legislature to avoid setting the same trap for itself is to continue to show fiscal restraint.”

The Honorable Talmadge Heflin is Director of the Center for Fiscal Policy at the Texas Public Policy Foundation, a non-profit, free-market research institute based in Austin. Heflin served 11 terms in the Texas House of Representatives and chaired the House Appropriations Committee in 2003, leading the Texas Legislature’s successful efforts to close a $10 billion budget deficit without a tax increase.

The Texas Public Policy Foundation is a non-profit, free-market research institute based in Austin. More information can be found on the Foundation’s website, www.TexasPolicy.com.

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Statement on Comptroller Susan Combs’ 2010-11 Revenue Estimate

Statement by The Honorable Talmadge Heflin, Director of the Center for Fiscal Policy

"The comptroller's revenue estimate makes clear what we have suspected for several months: while Texas has positioned itself better than just about any other state, we will not be immune to the effects from this national recession.

"The Texas Legislature needs to demonstrate leadership this year by pruning state spending now. Already, there are calls by some groups to expand entitlement programs and raise taxes, but Texas must not follow the examples of other states that have wrecked their economies by letting their budgets spiral out of control. Restraining our spending now will give us more options in the event that this national recession is prolonged.

"In 2001, the legislature convened with a $6 billion surplus and the knowledge that the state's economy was slowing. Instead of showing fiscal restraint, the legislature increased the state’s budget by 16 percent – an increase that absorbed the entire surplus. Even worse, much of the new spending went toward new programs that would become even more costly in the next budget cycle.

"Two years later, the legislature returned to a $10 billion budget deficit. The irresponsible budget adopted in 2001 forced the 2003 Texas Legislature to make deeper, across-the-board spending cuts than would have been the case had it started off with both a smaller budget hole and some cash reserves to help cover it."

The Honorable Talmadge Heflin is Director of the Center for Fiscal Policy at the Texas Public Policy Foundation, a non-profit, free-market research institute based in Austin. Heflin served 11 terms in the Texas House of Representatives and chaired the House Appropriations Committee in 2003, leading the Texas Legislature's successful efforts to close a $10 billion budget deficit without a tax increase.

The Texas Public Policy Foundation is a non-profit, free-market research institute based in Austin. More information can be found on the Foundation's website, www.TexasPolicy.com.

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The Japanese experience with fiscal stimulus

The last couple of days I’ve been examining the muddled thinking that is driving the debate over how to get us out of our current economic funk. The solution de jure seems to be more government intervention in the economy, such as the economic stimulus package being worked on by President-elect Barack Obama.

Dr. Arthur Laffer, the author of our Thinking Economically series, recently sent me an email commending a December 16th Wall Street Journal editorial (subscription required) on the efforts to create a stimulus package as “the single best editorial I’ve ever read.” The editorial outlines stimulus package after stimulus package passed by the Japanese Kokkai, or Diet, as their parliament is called in English. Here is a brief excerpt:

“In 1992, Japanese Prime Minister Kiichi Miyazawa faced falling property prices and a stock market that had sunk 60% in three years. Mr. Miyazawa’s Liberal Democratic Party won re-election promising that Japan would spend its way to becoming a "lifestyle superpower." The country embarked on a great Keynesian experiment.”

Here is a listing of what Japan did over the decade: August 1992: 10.7 trillion yen ($85 billion); April 1993: 13.2 trillion yen ($117 billion); September 1993: 6.2 trillion yen ($59 billion); February 1994: 15.3 trillion yen; September 1995: 14.2 trillion yen ($137 billion); April 1998: 16.7 trillion yen ($128 billion); November 1998: 23.9 trillion yen ($195 billion); November 1999: 18 trillion yen.

What did Japan get for all this? Well, mainly a lot of government debt. Japan’s debt-to-GDP ratio started out this period at about 63%. By the time all this spending was through, it had reached 128.3%. It finally peaked in 2006 at 180%. Compare this to the U.S. level that has hovered between 35% and 40% for most of this decade.

What Japan didn’t get was an improved economy. Its economy grew anemically during the 1990s; all of the “stimulus” and negative interest rates didn’t help a bit. As the WSJ said, “Only in this decade, with a monetary reflation and Prime Minister Junichiro Koizumi’s decision to privatize state assets and force banks to acknowledge their bad debts, did the economy recover.”

We face the same situation today in the U.S., and may also have to deal with this in Texas if our economy starts to falter because of the drop in oil prices. Our only hope for a turnaround is turning to the market – rather than the government – to lead us back to prosperity. Our paper, The Economy, part of our Influential Issues series, offers some thoughts and ideas about how to do this in Texas.

- Bill Peacock

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Texas PolicyCast: Opening Texas' books

Texas has set the national standard for government financial transparency, thanks in large part to the leadership of the state's Comptroller of Public Accounts, Susan Combs. Her agency's "Where the Money Goes" website lets you see how state agencies are spending your money - right down to the pencil. And last week, Combs unveiled Open Book Texas, an initiative that will provide an even more comprehensive view of government spending, and she discusses it with us on this episode.

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TPPF COMMENTARY: Compassion? Not in My Book

States like Texas have drawn criticism for not expanding government health care programs during strong economic times. But now that the national economy has slipped into recession, what has happened to the states that chose the other path? As former state representative and TPPF Visiting Research Fellow Arlene Wohlgemuth points out in this week's commentary, those states (notably California) are facing substantial budget deficits – and one of the first places they're looking for budget cuts is health care.

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Compassion? Not in My Book
By The Honorable Arlene Wohlgemuth

Bailout requests by numerous states have recently been a top news item, as everyone lines up behind the financial sector with their hands out. Rather than debate the wisdom of these bailouts, it is time to look at the states’ fiscal policies and see whom they hurt.

The recession of the early 2000s saw states scrambling to balance their budgets. Texas’ watershed year was 2003, with a $10 billion budget shortfall for the biennium, but we were not alone. California faced a whopping $38 billion shortfall that same year. The way the two states responded then, set the stage for what is happening today.

Texas reduced spending to cover the deficit that represented about 15 percent of its general revenue. The commitment was made, and kept, that the shortfall would not be resolved by increasing taxes.

Today, Texas has become the nation’s top job producer, hosts more Fortune 500 companies than any other state, and was cited by the Financial Times as the state best able to weather the financial storm. Although the economic downturn will cause short-term problems, especially in retirement system investments, the state will enter the next budget cycle in the black, just as it did in 2005 and 2007.

California, on the other hand, not only raised taxes as part of its deficit plan, but also borrowed $10.7 billion – about 15 percent of its general revenue. The result has been that California has lost both jobs and population. The current budget year has a $26 billion budget gap, representing 25.7 percent of general revenue. Its solution again is to borrow much of the money rather than significantly reducing spending. But this time, there is a steep price to pay.

California now has the lowest bond rating of any state and will pay for that through a high interest rate. Stateline.org reports that the state may be the first to “nose-dive into junk bond territory.” Instead of facing the recession from a position of fiscal strength, the state is incredibly weak.

Next will come the budget cuts, not only in California but in up to 36 other states. Not surprisingly, the two areas of the budget most often cited for targets of cuts are Medicaid and education.

California, in the name of compassion, has expanded its Medicaid rolls to the highest in the nation, with 29 percent of the population enrolled. Provider rate cuts are always first on the chopping block when things get tight, and that is what California has tried to do. Its 10 percent cut to providers in Medi-Cal, the state’s Medicaid plan, was temporarily halted by a federal judge in August, further complicating their budget woes.

California has expanded its Medicaid rolls in the good times, creating a dependency on the program, and now that the economy has gone south, health care for the poor will be the first area to take a hit. Expansion of government-paid health care programs inevitably increases the cost of health care for everyone and contracts the private market, meaning that everyone suffers. If the federal government decides to bail out states like California, it will reward them for poor fiscal management and punish Texas for being responsible.

The Kaiser Family Foundation estimates that for every 1 percent increase in the national unemployment rate, there are one million new enrollees in Medicaid and State Children’s Health Insurance Program (SCHIP), costing $3.43 billion in additional program spending.

At the very time when families will need the safety net of Medicaid and SCHIP the most, states that have not exercised fiscal responsibility, particularly those that have expanded their health care programs beyond sustainability, will not be in a position to help. That is not compassion.

Careless spending hurts those it purports to help.

Arlene Wohlgemuth is a Visiting Research Fellow at the Texas Public Policy Foundation, a non-profit, free-market research institute based in Austin.

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Statement on Comptroller Susan Combs’ Transparency Initiatives

Statement by The Honorable Talmadge Heflin, Director of the Center for Fiscal Policy

“Almost 53 percent of spending by Texas governments is done at the local level. Unfortunately, detailed information on that local spending is virtually inaccessible to taxpayers, who are the true local control.

“As our new report Texas Transparency: Then and Now published earlier this week shows, Texas’ experience with spending transparency undercuts all the excuses not to provide detailed expenditure information to the public. The technology is available, powerful, and inexpensive. The state’s savings were many times the startup costs, and hundreds of local school districts have seen value in embracing spending transparency.

“Texas has set the national standard in spending transparency thanks largely to Comptroller Susan Combs’ leadership. Today’s debut of the Texas Transparency Check-Up website affirms her commitment to open government.

“Texas already has open records and open meetings. The next step toward transparent and accountable government is open checkbooks, and the 81st Texas Legislature should make that the standard for local governments as it already is for the state. Taxpayers deserve to know how all levels of government are spending their money.”

The Honorable Talmadge Heflin is Director of the Center for Fiscal Policy at the Texas Public Policy Foundation, a non-profit, free-market research institute based in Austin. Heflin served 11 terms in the Texas House of Representatives and chaired the House Appropriations Committee in 2003, leading the Texas Legislature’s successful efforts to close a $10 billion budget deficit without a tax increase.

The Texas Public Policy Foundation is a non-profit, free-market research institute based in Austin. More information can be found on the Foundation’s primary website, www.TexasPolicy.com, or its government spending transparency website, www.TexasBudgetSource.com.

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TPPF RELEASE: Foundation applauds Collin County Financial Transparency Project

Foundation applauds Collin County Financial Transparency Project
Collin is first county in U.S. to post its actual expenditures online

AUSTIN – The Texas Public Policy Foundation congratulates Collin County Judge Keith Self and his colleagues on the commissioners court for their successful launch last Friday of the Collin County Financial Transparency Project.

“While many cities and counties have their adopted budgets online, it’s refreshing to see Collin County take the initiative to become the first county in America to open its financial data to the taxpayers,” said Talmadge Heflin, Director of the Foundation’s Center for Fiscal Policy. “By creating this level of transparency, Collin County is forging a true partnership with its citizens.”

The Collin County Financial Transparency Project includes a listing of checks written by county government for all of its operations since October 2007, the beginning of the current fiscal year. Checks that involve protected privacy information about employees or private citizens receiving county services will be excluded from the register.

The project also includes the county’s financial trends for the last five fiscal years; graphs of year-to-date total revenues, tax revenues, cash, and investments for county operations; a newsletter highlighting county government financial operations and projects; and monthly utility costs and consumption for county facilities.

"This adds an important, new dimension to open government for our citizens," Self said. "Providing our taxpayers with up-to-date, easily understandable information not only brings accountability, but goes a long way to ensuring public trust in how we spend their tax dollars for local services."

“Collin County has shown the path forward to more accessible and accountable county government,” Heflin continued. “We call on the other 253 Texas counties to follow their lead and open their own financial books to the public.”

The Texas Public Policy Foundation has been a champion of spending transparency at all levels of government. Its research provided the impetus for last year’s House Bill 3430, which created the Comptroller’s “Where the Money Goes” website. The Foundation has encouraged Texas school districts to post their check registers online, and worked closely with Collin County’s leadership as they developed their initiative.

Links to the Collin County Financial Transparency Project have been added to the Collin County page on TexasBudgetSource.com, a website the Foundation launched last month as the comprehensive resource for information on state and local government budgets and spending.

About the Texas Public Policy Foundation: TPPF is a non-profit, free-market research institute based in Austin, Texas.

About Talmadge Heflin: Mr. Heflin is the Director of the Center for Fiscal Policy at the Texas Public Policy Foundation. He served 11 terms in the Texas House of Representatives, and is a former Chairman of the Texas House Appropriations Committee.

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Foundation launches TexasBudgetSource.com

AUSTIN – The Texas Public Policy Foundation debuted TexasBudgetSource.com today, a new website that will provide a comprehensive resource for information on state and local government budgets and spending.

“Texas has been a leader in the movement to increase transparency of state and local government spending,” said Foundation president Brooke Rollins. “Citizens become better informed voters when they can see how their tax dollars are being spent. Spending transparency also puts governments on notice that they can no longer get away with spending tax dollars in wasteful, duplicative, or self-serving ways.”

TexasBudgetSource.com features the following information:

* Original research and analysis on the Texas state budget produced by the Texas Public Policy Foundation;
* A “spend-o-meter” that keeps a running tab on how much Texas state government has spending during the current budget cycle;
* Links to the “Where The Money Goes Website” on state agency expenditures, as administered by Comptroller Susan Combs;
* Links to the online budget information (where available) of all 254 Texas counties and Texas’ 25 largest cities;
* Links to the online check registers of more than 150 Texas independent school districts;
* “Fast Facts” about Texas government spending;
* A glossary of key budget-related terms to help the public’s understanding of budget documents; and
* Videos featuring Combs, Rep. Mark Strama, Americans for Tax Reform president Grover Norquist, and others talking about the importance of transparency in government spending.

“Instead of having to walk into dozens of different government buildings or painstakingly search all over the Internet to find how tax dollars are being spent, you can simply go to TexasBudgetSource.com,” said Talmadge Heflin, Director of the Foundation’s Center for Fiscal Policy and a former chairman of the Texas House Appropriations Committee.

“Transparency forces government to be smarter about how it spends the taxpayers’ money,” Combs said in one of the videos to be featured on the site. “It creates a culture of transparency that guards against waste.”

“The Texas Public Policy Foundation has been a longtime champion of transparency in government spending,” Rollins said. “Not only have we shown the possibilities through the legislation that passed last year, but TexasBudgetSource.com provides a template that other states can follow to make government spending more accessible to taxpayers.”

The Texas Public Policy Foundation is a non-profit, free-market research institute based in Austin, Texas.

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