Instructor's Manual to Accompany:
The World of Texas Politics
Chapter 11: The Texas Budget and Public Policy
Outline:
I. A Tale of Jumping The Gun On Major Expenditures: Between 1980 and 1990 the state’s prison population increased dramatically. Crime rates escalated throughout the 1980s, and Texas decided that the way to deal with the problem was to get tough on crime. Beginning in 1991, the state launched prison building program and tripled the capacity of the Texas prison system at a price of $1.5 billions, giving Texas the fourth largest prison system in the world, exceeded only by China, Russia, and the United States.
II. Politics and Budgeting: The budget is the state’s master policy statement. It governs what is to be done. As a group, citizens do not understand the budget and don’t care much about it. The process responds well to organized groups, but not to the citizenry at large. The process itself is conservative and incremental, usually beginning with the previous budget as the base from which to construct the next one. While the budget process in Texas seems highly centralized if one looks only at the legislative leadership, it is in fact highly decentralized, responding to the demands of a wide range of organized groups who protect their own interests by allowing others to defend theirs.
III. Texas Constitutional and Statutory Budget Provisions
A. Pay-as-You-Go Limit: Borrowing is discouraged, but Texas does it anyway.
B. State Debt Limit: Unrealistically low.
C. Welfare Spending Limit: Let them eat cake.
D. Appropriations Growth Limit: Spending keyed to economic growth.
E. Budget Execution Limits: Oversight by the Legislative Budget Board.
IV. Important Budget Actors
A. Legislature: It taxes and spends – but not without strict limits.
B. Governor, Line-Item Veto, and Executive Budget: An important role, but confined mostly to the legislative process.
C. Lieutenant Governor, Speaker, and Legislative Budget Board: This is where the real budget power is located.
D. State Comptroller: Tells the legislature how much it can spend.
E. State Treasurer: Office abolished in 1995.
F. State Auditor: Sees that state funds are legally expended.
G. Legislative Audit Committee: Oversees work of the State Auditor.
H. Sunset Advisory Commission: Occasionally recommends abolition of a state agency, but never one that is very expensive.
I. Bond Review Board: Must approve state bond issues.
V. The Budget Process And Budget Management
A. States of the Budget Process: Requires about 18 months and is mostly controlled by the Constitution and the legislature.
B. The Budget Format: Relates expenditures to goals.
C. Budget Organization and the Fiscal Year: Provides for operating and capital budgets.
D. Types of Budgets: Operating and Capital
E. Management, Control, and State Funds: No budget execution authority except through auditing.
F. State Contingency, or Rainy Day Funds: Legislature controls constitutionally dedicated fund for emergency purposes.
VI. Overview Of Texas’s Expenditures: On a per capita basis, Texas spending is low. From 1983 until 1992, state expenditures grew faster than personal income. Revenue shortfalls were routinely treated with gimmicks that only postponed the day of reckoning. Major areas of expenditure continue to fall in the areas of education, health and human services, economic development, and public safety.
VII. Texas’s Largest Policy Expenditures
A. Education: Is the state getting its money’s worth?
B. Health Services: Demand increasing rapidly.
C. Welfare: Poorly funded because it is unpopular.
D. Prisons and Juvenile Offender Programs: Lock ‘em up and throw away the key.
VIII. Summary And Conclusion: Texas is under constant pressure to provide services and to hold down spending at the same time. Programs supported by elites do reasonably well in the budgetary process, but programs which benefit the poor are poorly funded.
IX. The End Of The Tale: By August 1995, Texas’s prison capacity exceeded the need, and the state began contracting with other states to house some of their prisoners until such time as Texas would need the surplus capacity. However, trends suggest that day will come all too soon.
Summary:
Texas is experiencing rapidly rising costs in areas that already constitute the greatest percentage of state expenditures. The state faces major demands for funding in education, health and human services, and the criminal justice system. Revenues will have to increase significantly to cover federal and court mandates in these areas. In general, most of Texas’s programs are underfunded when compared with other states. As spending for education, health and human services increases, the state spends less and less on other functions of state government such as transportation, parks and recreation, and energy development.
Texas expenditures, when controlled for population growth and inflation, have barely kept a uniform pace over the years and decreased substantially between the 1994-95 and 1996-97 bienniums. While the state’s number one expenditure is for education, the state share of the funding has decreased continuously over the years. The decrease in state funding for education has substantially increased the tax burden on local governments, and property taxes have increased significantly. The state’s conservative political culture and historical bias against taxing and spending may be the most significant variables in explaining state spending patterns.
Discussion Topics:
1. Consider what might happen to future state expenditures from an extrapolation of the current trends. Will there be any funding for parks, transportation, etc., or will the most significant areas such as education and health care take all of the state’s funds?
2. Evaluate the advantages and disadvantages of government mandates to provide certain services. What is the impact on government when a higher level mandates a certain expenditure or service that another level of government must provide? Consider why governments issue mandates in the first place.
3. Evaluate how a change in policy direction such as "getting tough on crime" rather than rehabilitation affects state costs.
4. Discuss how demographics can affect future state expenditures because of existing policies.
Individual or Small Group Projects:
1. Examine a policy area where the state has developed innovative policy approaches to try to provide essential services at lower costs such as in community care for the elderly and the immunization program for children. Prepare budget tables that show the number served and the cost per client for each type of service.
2. Extrapolate the costs of the state’s major expenditures over time and determine how long the pattern can continue without eliminating many existing state functions. A simple percentage increase/decrease computation can reveal broad general trends.
3. Have students in class prioritize areas for continued or improved state expenditure and areas where expendditures should be cut or eliminated. Discuss the advantages and disadvantages of the final ranking prepared by students. Are there implications for the population that have not been considered in the ranking and deciding what to cut and where to spend?
Essay Questions:
1. How has the state’s crackdown on crime and revision of the adult and juvenile penal codes affected state expenditures for criminal justice?
2. Evaluate the advantages and disadvantages of the way Texas funds secondary and primary education. How have these funding patterns affected local governments and equality of education across the state?
3. What is unique about the Texas budget system when compared to other states?
4. How has the Texas Constitution affected state expenditure patterns and budget responsibility?
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