That Pesky Spending Cap

Oh, that pesky spending cap. It’s a major issue before the Lege right now. The MSM has done a fairly decent job of covering it, given that it is a fairly complicated issue.

For those of you who don’t know what the spending cap is, here is a gerat explaination from the Center for Public Policy Priorities:

Article VIII, Section 22, of the Texas Constitution, which was approved by the voters in 1978, caps spending of state tax revenues that are not constitutionally dedicated. Spending that is supported by federal funds, nontax revenue such as fees, or constitutionally dedicated revenue such as state gasoline taxes does not count against the cap. Spending may not grow faster than the Legislative Budget Board’s estimate of the biennial rate of economic growth, which is measured by state personal income—the best indicator of the ability of Texans to support state services. The limit is adopted before each regular legislative session and can be exceeded only by a majority vote of the House and Senate.

To put it in laymen’s terms, the spending cap is like a college student having Daddy’s credit card. You are limited on what you can spend, but certain things don’t count. For example, if a college student has Daddy’s American Express she can put as much as she needs to for tuition and books, but has a Daddy-set limit of, say, a thousand bucks a month for designer clothes.  And, that level of spending for designer clothes can’t grow faster than Daddy says.

Now that it is probably only slightly more clear than mud to you, let’s discuss what is happening right now.
Some lawmakers want to exempt property tax cuts for seniors from the constitutional spending limits. In other words, using the example above, it’s like the Daddy saying, “Prada purses don’t count toward the $1,000 a month cap on fashion clothes.” The spending-cap fix is linked to the property tax cuts.
According to the DMN:

The Senate’s longest-serving member said Tuesday that there were enough unhappy senators to block consideration of a proposed constitutional amendment that would link a spending-cap fix to tax cuts for senior citizens.

And in the House, a veteran Democrat said he had faced down GOP leaders with the threat of an embarrassing floor defeat this week if they don’t separate the thorny spending-limit issue and the popular cause of granting tax cuts to elderly homeowners.

Most interesting about this debate is that the spending for property tax cuts, while tax cuts (though bogus in my opinion) still counts against the spending limit.

“Only in Washington and Austin would some people think it’s spending,” Sen. Kyle Janek, R-Houston, said of the two-year, $14 billion cut that passed last spring.

Uh, yeah, because it is spending.

So, what happens next? Two options are under debate.

First, a resolution that would lift the cap could be approved. Second, a constitutional amendment could be put before voters in may to exclude tax cuts from the formulas used for calculating the cap.

The resolution takes only a majority vote in each chamber. The latter requires a two thirds vote and an expensive statewide constitutional amendment.

One or the other must be done. I favor option one. But, if nothing is done, check this out:

If they don’t pass one or the other, lawmakers would have to either enact severe budget cuts or abandon the tax relief.

Personally, I wouldn’t have a problem with abandoning that tax relief, which I believe to be a bogus concept. However, I would with the budget cuts.

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