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Testimony: Senate Finance - State Spending Limit

 

Texas Conservative Coalition Research Institute

Testimony to the Senate Committee on Finance

December 3, 2019

 

Regarding the Committee’s Charge: Examine options and make recommendations for strengthening restrictions on appropriations established in Article VIII, Section 22, of the Texas Constitution, including related procedures defined in statute. Consider options for ensuring available revenues above spending limit are reserved for tax relief.

 

 

Background

 

Texas' current constitutional spending limit, contained in Article VIII, Section 22 of the Texas Constitution, reads as follows:

 

                                   In no biennium shall the rate of growth of appropriations from state tax revenues not dedicated by                                                      this constitution exceed the estimated rate of growth of the state's economy. [Emphasis added].

 

The Texas Constitution grants the Legislature authority to provide statutory guidance to facilitate implementation of the spending limitation. Under this guidance, the “rate of growth of the state’s economy” is calculated by the Legislative Budget Board (LBB) by “dividing the estimated Texas total personal income for the next biennium by the estimated Texas total personal income for the current biennium,” per Government Code 316.002(b).

 

The most important factors to consider in relation to Texas’ constitutional spending limit are that:

 

  1.      The limit applies only to non-dedicated General Revenue (GR), rather than all state spending.

  2.      The limit may be overridden by a simple majority vote of the Legislature.

  3.      Perhaps most importantly, the limit is based on an estimate of future personal income growth.

 

 

Click here to read the entire testimony.

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