Constitutional spending limits are right for Texas

Constitutional spending limits are right for Texas

Constitutional spending limits are right for Texas

More conservatives are likely to be elected to the state Legislature in November. This is a historic opportunity in 2025 to enact a new budget that provides property tax relief, empowers all families with universal school choice, and puts state spending in Texas on a more sustainable trajectory in 2025.

In a nation struggling with unsustainable government spending, Texas stands out for its relative fiscal restraint and economic dynamism. Yet despite historically prudent budget policies, Texas lawmakers last year passed the largest budget increase in two years and the second-largest property tax relief measure (though many claimed it was the most important).

According to Americans for Tax Reform’s Sustainable Budget Project, Texas, unlike the federal government and the vast majority of states, has done a better job of aligning its budget growth with the average taxpayer’s ability to pay for government spending, as measured by the rate of population growth plus inflation.

Over the past decade, federal spending has increased by a staggering 81.7%, nearly quadrupling the rate of population growth plus inflation of 23.2%, according to data from Americans for Tax Reform. In stark contrast, Texas has shown fiscal restraint, ensuring its spending did not spiral out of control.

The implications of that fiscal prudence are profound. Had the federal government followed the sustainable budget approach from 2014 through 2023, it could have saved taxpayers about $2.1 trillion in 2023 alone. Texas’ measured approach during this period allowed the state to spend and collect $22 billion less than it otherwise would have, benefiting taxpayers and the broader economy.

Recent and unusual budget overruns in Texas reduce the ability for property tax relief. Deeper property tax reform is critical. Property taxes are unfair, burdensome, and keep people paying property taxes forever.

The competitive landscape is also evolving, with states like North Carolina and Florida thriving on the back of aggressive tax cuts and regulatory reforms. Texas must respond by stepping up its commitment to growth policies and fiscal conservatism if it wants to maintain its economic leadership.

A constitutional spending cap, similar to Colorado’s Taxpayer’s Bill of Rights, would help put state spending in Texas on a sustainable trajectory. Even in a Democratic state where progressives are in charge, this measure has kept state and local spending in check. Its adoption in Texas would ensure that state and local budgets grow in line with the average taxpayer’s ability to pay.

To truly distinguish itself, Texas should consider a strategic overhaul of its tax system, particularly as it relates to property taxes. With no personal income tax, Texas could relieve property owners of a significant financial burden by eliminating property taxes for the maintenance and operations of school districts. This change, funded through better controlled state and local government spending, could transform the economic landscape for homeowners and businesses.

The state could accomplish this monumental feat by using surpluses from spending restraint to reduce school districts’ property tax rates for maintenance and operating expenses, with the goal of phasing them out over the next decade. The Texas Legislature already controls school funding formulas, so this property tax is mostly “local” in name only, and lawmakers have been gradually reducing it over the past few years.

It is possible to reduce and even eliminate truly local property taxes in cities, counties, and special purpose districts by restricting spending that would produce surpluses, which can then be used to reduce property tax rates to zero over time. Some localities would take longer than others to achieve this, but as people vote with their feet in favor of places without property taxes, other local governments would look for ways to eliminate theirs.

The result would be lower government spending and little to no property taxes in Texas. This shift in a pro-growth direction would improve financial freedom for homeowners and support greater economic growth through increased personal savings and business investment.

Historically, Texas’ economic policies have positioned the state as a leader in job creation and financial freedom, helping to achieve record economic growth, job growth, and immigration. However, the path forward requires preserving and improving these policies. Texas must adapt to changing economic landscapes by fostering a more favorable business climate, reducing government interference, and revamping its tax system to maintain and strengthen its competitive status.

By prioritizing spending restraint, strategic tax relief, and universal school choice, Texas can ensure a prosperous economic future and set a standard for budget sustainability.

Grover Norquist is president of Americans for Tax Reform, a taxpayer organization founded in 1985 at the request of President Ronald Reagan. Vance Ginn is a senior fellow at ATR, president of Ginn Economic Consulting, and previously worked in the White House Office of Management and Budget.

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