That pesky spending cap

Well, the Legislative Budget Board has done its thing, and the spending cap is set at a little more than $7 billion above was was allocated in the last biennium. As that's barely half of what's needed to pay for the property tax reductions, something has to give. The Lege is now considering whether it should be up to them, or up to the voters via a constitutional amendment.

Legislative leaders adopted a constitutionally required spending cap Thursday and immediately entertained a new idea for getting around it so they can provide local property tax relief without slashing key services.

The idea: Let the voters decide whether to exempt property tax relief from the spending cap through a constitutional amendment. Voter approval could take some heat off of GOP lawmakers who might be reluctant to directly vote to break the cap even for tax relief.

The idea of an amendment met with approval from Republican Gov. Rick Perry.

"I think that's probably the way to do it," he said.

Rep. Jim Keffer, an Eastland Republican who heads the tax-writing House Ways and Means Committee, said he expects lawmakers to take the amendment route. If legislators approve a ballot proposal quickly, the election could occur while they are still in session.

But Sen. Steve Ogden, a Bryan Republican who heads the budget-and-tax Senate Finance Committee, said a direct vote by lawmakers would be simpler because it only would require majority support. A constitutional amendment would require a two-thirds vote.

The spending problem facing lawmakers is that they have promised school property tax relief that -- according to the latest estimate -- will cost the state $14.2 billion to provide over the next two years, since the state must replace dollars that otherwise would come from local taxes.

But spending for property tax relief counts against the spending cap, just as any other expenditure does, a fact that Perry called "counter to common sense."

Actually, I think it makes perfect sense. What the Lege did in the last special session was order every county to lower its maximum property tax rate, by seventeen cents for this year and (they hope) by a total of fifty cents this year. In doing so, they promised to cover the revenue shortfall. In effect, the Lege is funding a mandate. I don't see how that differs from any other kind of spending.

As for what course the Lege should take to avoid the spending cap, I say they should take the responsibility for it rather than pass it on to the voters, even if it might be easier for them to muster 76 votes than 100. What kind of turnout do you think this emergency election might get? Not enough to be worth the effort and expense, I think. I for one don't want to see a kludge like this enshrined into the Constitution - that poor document is already groaning under the weight of too much superfluous junk. I say we shouldn't let any future legislatures off the hook for when this situation arises. Issues like this should call for tough decisions.

If lawmakers choose to go around the cap with a proposed constitutional amendment, [Lt. Gov. David] Dewhurst raised the possibility that the proposal also could ensure that those over age 65 would get the full benefit of property tax relief. Because people's school taxes are frozen at age 65, whether they get relief depends on the level at which their taxes were frozen.

Rep. Garnet Coleman, D-Houston, said the senior-citizen proposal "obviously needs to be done." He expressed concern, however, that tying the effort to break the cap to tax relief would elevate that issue over other priorities of some lawmakers, such as health coverage for lower-income children and lowering tuition rates.

I think the issue is already elevated over everything else. Have you seen anyone suggest maybe not going full monty on the property tax cuts as a possible alternative? That's all you need to know.

I'm not sure how Dems are going to play this. I think they'd have enough support to block the consitutional amendment, which frankly would be good enough for me. I'm not too worried about the specter of spending cuts across the board because that would conflict with some things like teacher pay that even the Republicans campaigned on. I also think there's going to be some strange bedfellows on this one, as the Dan Patrick wing of the GOP may refuse to support raising the cap under any circumstance. This has all kinds of potential, so stay tuned.

UPDATE: Governor Perry has declared an emergency on the spending cap, so a bill/resolution could be passed and signed immediately, with an election if needed to follow.

Posted by Charles Kuffner on January 12, 2007 to Budget ballyhoo