Foundation: Texas economy will benefit from business tax relief

AUSTIN – The Texas Public Policy Foundation applauds the leadership of Gov. Rick Perry, Sen. Dan Patrick, Rep. Rene Oliveira, and all of the legislators whose efforts led to today’s signing of House Bill 4765, which increases the exemption for the state’s gross margins tax.

“Small businesses are responsible for most of the jobs in our modern economy,” said Talmadge Heflin, Director of TPPF’s Center for Fiscal Policy. “This period of economic difficulty makes it all the more important to support them, and we applaud Gov. Perry and our legislators for rising to the challenge.”

During the last several years, Texas has led the nation in job creation, exports, and business climate. Recent analyses indicate that Texas was one of the last states in the country to enter the national recession and will be one of the first states to emerge from it.

“Our research indicates that low taxes are vital to a vibrant private sector,” Heflin said. “Texas’ economy is the envy of the nation because our state leaders have kept taxes and spending low, which has enabled businesses to use more of their resources for job creation.”

The Honorable Talmadge Heflin is Director of the Center for Fiscal Policy at the Texas Public Policy Foundation. 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, Texas.

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Foundation: Taxpayers fared well in 2009 legislative session

Key wins are adoption of conservative budget and defeat of higher taxes

Taxpayers fared well this legislative session, according to the post-session assessment of the Texas Public Policy Foundation.

“The Legislature adopted a relatively conservative budget, needed eminent domain reform, and improved public school accountability, while cutting taxes for small businesses,” said Justin Keener, the Foundation’s vice president of policy and communications. “To taxpayers’ relief, they defeated the expansion of government-run health insurance and several tax increases. Texas remains poised for a bounce back from the global recession thanks to lawmakers’ actions to maintain our state’s competitive edge of low taxes and a reasonable regulatory environment.”

Keener praised the Legislature’s action to reduce the bite of the gross margins tax on small businesses. “While we would have preferred a rate reduction for all businesses, increasing the exemption to $1 million for the next two years and to $600,000 permanently will be a great benefit to the small and startup enterprises that are the backbone of the modern Texas economy,” he said.

While there was not much forward movement on taxpayer protections such as improving the state’s expenditure limit and building upon Texas’ position as a leader in financial transparency, taxpayers dodged several bullets in the forms of billions of dollars in proposed new taxes and fees. The Foundation cited the failure of local-option transportation taxes and the unemployment stimulus legislation as the two biggest bullets that taxpayers dodged.

“During difficult times, Texas families expect their governments to scrutinize their budgets and set priorities in the same way that they have to,” Keener said. “This is not the time to ask citizens to raise taxes and fees, especially when other alternatives are available. The House showed true statesmanship in vetting the tax plans and rejecting them.”

The Foundation also cited the defeat of legislation that would have expanded unemployment eligibility, thereby accepting federal stimulus dollars in return for a likely permanent business tax increase.

“Our research has shown that one-time federal unemployment funds often come with conditions that permanently increase employer taxes,” said Talmadge Heflin, Director of the Foundation’s Center for Fiscal Policy. “Gov. Perry was right to reject these funds, and thankfully the Legislature ran out of time before it could overrule him.”

Heflin praised the Legislature for adopting a budget that stayed within population growth plus inflation, and for not tapping the Economic Stabilization Fund. “The state should have almost $9 billion set aside next session to pay for any emergency situations or tax relief initiatives,” he said.

According to the Foundation’s Bill Peacock, director of the Center for Economic Freedom, eminent domain reform moved forward for the first time since 2005 with passage of HJR 14.

“If adopted by Texas voters, this constitutional amendment will stop local governments from using blight designations to condemn blocks of perfectly good homes and businesses for economic development projects,” Peacock said. “While work still remains to fully address the ramifications from the Kelo Supreme Court decision, private property owners came out ahead this session.”

Texas public school students and taxpayers saw improvements. “The Legislature made considerable strides in education by preserving and expanding Texas’ teacher merit pay program, as well as providing for a meaningful accountability program to better prepare children for work or college,” according to Foundation education policy analyst Brooke Terry.

Despite these advances, Terry said many public school children will suffer due to the Legislature’s inability to lift the arbitrary cap on charter schools.

“More than 17,000 Texas children are on a waiting list to enter a charter school and we are very disappointed that the Legislature failed to lift the cap,” Terry said. “Texas charter schools have demonstrated amazing results by inventing new models to educate students and prepare them for success in college and the workplace.”

Charter schools are public schools supported by legislators in both parties. However, legislation to raise the arbitrary cap on charter schools and to help effective open-enrollment charter schools expand was vehemently opposed by the teacher unions.

"Major bills fail every session leaving work unfinished, yet industrious Texans still go about their business. This session will be no different," Keener said of the sunset legislation for the Texas Department of Insurance and the Texas Department of Transportation. "The governor and the Legislature have several options before them and we encourage them to take a measured approach when evaluating them."

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

The Honorable Talmadge Heflin is Director of the Center for Fiscal Policy at the Texas Public Policy Foundation. 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.

Bill Peacock is Director of the Center for Economic Freedom at the Texas Public Policy Foundation.

Brooke Terry is an education policy analyst at 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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Local option transportation taxes -- TPPF testimony and research

Yesterday, the House Transportation Committee took public testimony on HB 9, the House's local-option transportation tax bill. (The Senate version, SB 855, passed last week.) The Foundation presented the following two documents at the hearing:

* Written testimony submitted by TPPF's Justin Keener (VP of Policy and Communications) and Talmadge Heflin (Director, Center for Fiscal Policy).

* TPPF's new report, "The Existing Local Option for Transportation: An Analysis of Existing Local Transportation Funding Tools."

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Foundation study: Federal stimulus will cost Texas additional jobs

Research shows temporary federal funds for unemployment insurance lead to permanent higher taxes on employers and lower economic output

AUSTIN – The recently passed federal stimulus package increases overall government spending to a level that will hinder Texas’ private sector growth and cost the state at least 131,400 jobs, according to research findings released today by the Texas Public Policy Foundation.

“These findings show clearly that growth in government crowds out growth in the private sector,” said Talmadge Heflin, Director of the Foundation’s Center for Fiscal Policy and former chairman of the Texas House Appropriations Committee. “Texas taxpayers and workers will pay a high price if our legislators use this supposedly free, one-time federal money to expand state government programs.”

The Foundation released the report, “The Economic Impact of Federal Spending on State Economic Performance – A Texas Perspective,” at a press conference in the Texas State Capitol. The Foundation commissioned Arduin, Laffer & Moore Econometrics – the research firm of internationally renowned economist Dr. Arthur Laffer – to produce the report.

The research looks at historical patterns of economic growth and spending by federal, state, and local governments; implications for Texas unemployment payments and taxes; and estimated effects that the recently passed federal stimulus package will have on Texas private sector economic activity and employment.

The report highlighted that the federal government’s short-term assistance with unemployment benefits has historically increased federal control over program eligibility and benefits. Because of that, the taxes paid by Texas businesses to support the unemployment program increase substantially once the federal money runs out.

“The Texas data shows significant increases in tax collections in the years that followed the infusions of short-term federal funds,” said Foundation Senior Fellow Donna Arduin. “Such surges are consistent with the need to build an adequate revenue reserve to pay for the higher costs that were mandated by the federal government in return for the extra revenues during the recessions.”

Heflin pointed to the report data showing a clear negative correlation between increased government spending and reduced private sector output. The report concluded that the federal stimulus package would reduce net business output by 2.5%, which would translate into between 131,400 and 171,900 additional job losses in Texas.

“The federal stimulus package was bad policy and the wrong direction for America,” Heflin said. “These findings show how important it is that the Texas Legislature reject the unemployment stimulus funds, as well as all others that would lead to permanent increases in state government spending.”

“The best way to reduce unemployment is to create jobs, and the best way to create jobs is to allow businesses to keep a greater share of their revenues so they can invest and expand,” Heflin said. “Expanding unemployment eligibility would take Texas in the wrong direction, reducing the ability of businesses to invest and expand and keeping more Texans out of work and for longer periods of time.”

Joining the Foundation for the release were numerous state legislators, as well as leaders representing the Texas Association of Business, the National Federation of Independent Business – Texas chapter, the Texas Conservative Coalition, and the Texas Conservative Coalition Research Institute.

The report is available on the Texas Public Policy Foundation’s website, www.TexasPolicy.com.

Donna Arduin is a Senior Fellow at the Texas Public Policy Foundation, and a partner with Arduin, Laffer & Moore Econometrics, which provides economic, fiscal, and policy advice to governors, legislatures, think tanks, and corporate clients throughout the country. She served as California Gov. Arnold Schwarzenegger’s Director of Finance from November 2003 until October 2004, and has served as a top budget advisor to former Florida Gov. Jeb Bush, former New York Gov. George Pataki, and former Michigan Gov. John Engler.

The Honorable Talmadge Heflin is Director of the Center for Fiscal Policy at the Texas Public Policy Foundation. 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, Texas.

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Foundation praises Gov. Perry’s decision to decline stimulus funds

Taking federal unemployment insurance money would mean higher taxes on Texas employers

AUSTIN – The Texas Public Policy Foundation praised Gov. Rick Perry’s announcement today that he would formally reject the $555 million offered by the federal government in exchange for Texas loosening its eligibility requirements and increasing payments for unemployment benefits.

“Legislators must keep in mind that every additional dollar that Texas employers have to pay for people who aren't working is one less dollar available for job creation and economic recovery,” said Talmadge Heflin, Director of the Foundation’s Center for Fiscal Policy. “We are glad that Gov. Perry has chosen to keep our state’s focus on those goals, as they are the best path forward for the people of Texas.”

Heflin debunked the popular misconception that the federal funds would cover the cost of these changes for the next several years.

“Employers will likely see an increase in their unemployment taxes even if we were to accept these funds to shore up our unemployment trust fund balance,” Heflin said. “The issue is whether Texas employers should continue to pay these higher unemployment taxes long after our economy has recovered. We agree with Gov. Perry that they should not.”

According to estimates presented Monday by the Texas Workforce Commission, the five-year cost to Texas employers of changing the alternative base period – the pre-requisite for receiving any of the federal unemployment insurance funds – would be more than $212 million. The five-year cost to Texas employers of imposing the other federally mandated changes range from $23 million for the “quit-to-move” and “quit-for-family-reasons” eligibility expansion to $1.43 billion for the dependent allowance benefits.

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: No margin for error

By The Honorable Talmadge Heflin

Just how much money should Texas businesses pay under the newly revised franchise tax? That is the question many legislators are trying to answer and one that will soon be up for serious debate.

Calls for re-examining the revised franchise tax (a/k/a the margin tax) have been growing in number as the economy retracts and more Texans lose their jobs. But the economic decline is only part of the reason people are taking a second look at the new business tax.

According to the Comptroller’s latest revenue estimate, the margin tax collected $4.5 billion from Texans after only its first full year – a whopping 46 percent increase over the amount collected from the old tax the year before – making it the second costliest tax in the state.

And while an increase in business taxes was expected to some degree, the higher taxes were supposed to be offset by lower property taxes. While school district property taxes did decline by $2.3 billion from 2005 to 2007, according to the Texas Taxpayers and Research Association, Texans’ total property tax bills still increased by $1.7 billion – making for higher taxes on two fronts.

Making matters even worse is that all businesses with at least $300,000 in total revenue are subject to the margin tax, whether or not a business made money. Since the tax is based on gross receipts rather than profitability, many businesses above the $300,000 threshold that were unable to turn a profit have been forced to make an impossible choice: close up shop, or take out a loan to pay their tax bill and hope that their business improves.

Hit with a gigantic first year tax increase, continually rising property taxes, and an added “do-or-die” pressure, it’s no surprise that many Texas businesses are crying foul.

Fortunately, a number of lawmakers from both sides of the political aisle seem to have taken notice of the issue and have made it a top priority this session. Among some of the more promising proposals that have been filed:

* Four legislators have filed identical bills that would exempt businesses with $1 million or less in total revenues from the margin tax. Presently, only businesses with $300,000 or less in total revenue are exempt.

* Another proposal would amend the constitution to require a three-fourths super-majority vote from each house to increase the margin tax rate any further.

* The boldest proposal would move the business tax exemption threshold from $300,000 to $600,000 starting in 2010; $1 million in 2011; and repeal the tax altogether in 2014.

Reforming the margin tax is the first major step the Legislature can take to help businesses and consumers weather the ongoing economic storm, but it is only the first step.

Beyond lowering taxes, the Legislature needs to tighten its belt and rein in spending. Remember, if legislators can’t keep budget growth in check today, then taxes will have to be raised tomorrow.

As the margin tax debate grows to a climax over the next three months, you can be sure that businesses everywhere are watching closely – not because businesses are greedy or don’t want to pay their fair share. They are watching because their very livelihoods depend on it. They are watching because for them, there is no margin for error.

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. He is a former Chairman of the Texas House Appropriations Committee.

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Texas PolicyCast: A blueprint for an effective state budget

On Wednesday, the Texas Public Policy Foundation joined with several other research, business and taxpayer organizations to issue "Blueprint for an Effective State Budget," a statement intended to guide legislators through the difficult budget decisions they will have to make during the next few months. This week, we discuss the blueprint with one of its primary architects, The Honorable Talmadge Heflin, Director of the Center for Fiscal Policy at the Texas Public Policy Foundation and former Chairman of the Texas House Appropriations Committee.

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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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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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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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Texas PolicyCast: 2008 in review

This week, we are pleased to bring you a roundtable discussion featuring the policy team at the Texas Public Policy Foundation looking back at 2008 and previewing the 81st Texas Legislature.

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TPPF COMMENTARY: Courage in the face of adversity

We are not living in ordinary times. Our current troubles are many – the global financial mess, the credit crunch, the Wall Street bailout, threats of a recession, and the mortgage meltdown, just to name a few.

And yet, while the trials ahead may test our strength and challenge our will, we must, nevertheless, approach them with a steely resolve knowing that rash action and a panicked mindset will only worsen our present condition.

Rudyard Kipling said it best:

“If you can keep your head when all about you
Are losing theirs and blaming it on you;
If you can trust yourself when all men doubt you,
But make allowance for their doubting too;
…
“If you can meet with Triumph and Disaster
And treat those two imposters just the same
…
“Yours is the Earth and everything that’s in it.”

Now, that’s not to say that the headlines in the near future won’t continue to be scary – they almost certainly will. Markets will remain volatile, unemployment may rise, and the nation could enter a legitimate recession.

But we, and our nation’s leaders, in particular, should remember that what our country needs most right now is a steady hand to guide us through the storm and return us back to the principles that built this country – truly free markets, limited government, freedom, liberty, and personal responsibility.

Holding fast to these principles has not only made us a great country, it has made us the greatest country and we would do well to remember that. But the need for strong leadership guided by these core principles extends beyond just Washington, D.C. The movement to begin rebuilding our fragile economy begins at the state and local level, and there is no better example of these principles in action than Texas.

Even today as the world’s economies spastically react to the ongoing crises and threaten to implode under the stress, Texas’ robust economy remains remarkably strong.

The state’s September 2008 unemployment estimate came in well below the national average, 5 percent versus 6.1 percent, respectively. Texas’ gross state product – a figure used to measure the state’s economic productivity – swelled in comparison to the national economy, 4.1 percent vs. 1.5 percent during fiscal year 2008. And most importantly, Texas continues to add jobs to its economy – 250,000 over the last 12 months and 1.3 million in the last five years.

It’s no coincidence that Texas’ uninterrupted prosperity in the face of a national economic emergency comes at a time when Texas government is moving toward greater fiscal responsibility and becoming increasingly transparent.

As we move forward, Texas’ continued commitment to limited government, fiscal conservatism, and low taxation, both in times of excess and shortage, will only strengthen what is, arguably, the nation’s strongest economy.

While the global crisis remains a tremendous external threat to the Lone Star State, the fact of the matter is Texas’ economic fundamentals are in place to weather this financial storm. Other states, not as fortunate, need not strain themselves to understand the formula behind Texas’ success: low taxes plus limited government plus fiscal responsibility equals a stronger economy.

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. He is a former chairman of the Texas House Appropriations Committee.

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Texas PolicyCast: The Dallas ISD debacle

The problems afflicting our public schools are well chronicled - dropout rates are staggering and much higher than officially reported, and of the students who do get their diplomas, a growing number of them require remedial education before they can start their college coursework. Unfortunately, there's another problem you can add to the list - financial mismanagement of taxpayer dollars. The latest and highest profile example is Dallas ISD, which is struggling to remedy a $64 million cost overrun from last year and an $84 million budget deficit this year - both of which were just discovered. To talk about the situation and what needs to be done to fix it and prevent it from happening in other districts, we have James Quintero and The Honorable Talmadge Heflin from the Center for Fiscal Policy at the Texas Public Policy Foundation.

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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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Statement by The Honorable Talmadge Heflin, Director of the Texas Public Policy Foundation's Center for Fiscal Policy

“The recent estimates of a $10.7 billion to $15 billion state budget surplus vindicate the limited government policies Texas has pursued during the last five years. By holding the line on spending, we have been able to keep taxes low, encouraging businesses to locate and expand here. While other states hemorrhage jobs and red ink, Texas leads the nation in job creation and is one of the few states with an improving revenue picture.

“We are pleased that the Governor and the Legislative Budget Board understand the importance of instructing state agencies to continually scrutinize their priorities. While the budget process we went through in 2003 was ultimately beneficial, it is better to exercise fiscal discipline up front rather than to scramble for billions of dollars in budget cuts later.

“Regardless what the surplus amount winds up being come January, the two iron-clad priorities for those funds are to fund the continuation of the 2006 property tax cut and to preserve the balance in the Rainy Day Fund. Whatever of the taxpayers’ money remains after that should go back to them rather than toward bloated government spending.”

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NOTE: The Honorable Talmadge Heflin is a former Chairman of the Texas House Appropriations Committee.

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Heflin named Director of Foundation’s Center for Fiscal Policy

AUSTIN – The Texas Public Policy Foundation announced today that former House Appropriations Chairman Talmadge Heflin will become Director of the Foundation’s Center for Fiscal Policy, effective March 15, 2008.

“There are few people in Austin with Talmadge’s knowledge of the state budget and a reputation as a committed fiscal conservative and leader,” said Foundation president Brooke Rollins. “We are honored by his decision to work more closely with the Foundation in this capacity. His practical experience with the state budget and taxes makes him a great asset to our organization.”

Heflin originally joined the Foundation in November 2005 as a Visiting Research Fellow. In that capacity, he supervised a comprehensive study of the Texas state budget. As the Center’s Director, Heflin will join the Foundation on a full-time basis.

“The Foundation’s board of directors and entire staff has enjoyed working with Talmadge in his capacity as a visiting fellow over the last several years,” Rollins continued. “I am ecstatic that he will be working with us on a daily basis.”

Heflin served in the Texas House of Representatives from 1983 through 2005. For much of his career, he was the only House member to serve on both the Ways & Means and Appropriations committees. During the 78th Texas Legislature, Heflin chaired the Appropriations committee, closing a $10 billion state budget shortfall through targeted spending cuts that allowed Texans to avoid a tax increase.

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

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