CPPP: Dedicated Fees Instead Of State Taxes

The Center for Public Policy Priorities has out an excellent position paper that discusses the issue of the state budget becoming more dependent on “earmarked” accounts as opposed to state taxes:

As the House and Senate budget-writing committees finish their “mark up” of the proposed state budget for 2008 and 2009, the fight continues between those who wish to raid dedicated funds and those who wish to protect dedicated funds. Those who wish to raid such funds have the upper hand because, by merely not spending the dedicated funds, the unappropriated revenue helps balance the budget. As a defensive tactic, proponents of dedicated funds are trying to structure the funds so that unappropriated balances may not be counted in balancing the budget. By making funds unavailable for use in balancing the general budget, defenders of dedicated funds seek to make it more likely that the legislature will spend the money for its dedicated purpose.This Policy Page explains this arcane but important budget issue, using the System Benefit Fund as an example. Of course, this issue is yet one more illustration of the true problem facing Texas: a regressive state/local tax system that does not generate enough money to meet our communities’ growing needs for education, health care, and other basic services. Moreover, while everyone agrees in principle that dedicated funds should be used for their dedicated purpose, as long as our revenue system is inadequate, in practice, the legislature will be under tremendous pressure to circumvent fund dedications to pay for other state services that may be as critical as or more critical than programs with dedicated funding.

The CPPP is one of the most visible groups in Texas that tries at every turn to point out the problems and dangers of the state’s regressive tax system.

The issue of raiding dedicated funds is an important one, too. It is a hot topic because of the Sporting Goods tax and state park funding as well. The position paper is a lengthy one, but worth your time to read. It will really help you understand this important issue.

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