Abbott Draws Line in the Sand on Budget Surplus Use for Property Tax Relief
On Wednesday, Texas Governor Greg Abbott reportedly opined on the projected budget surplus and its partial use for the purposes of providing a property tax cut.
“Texas is sitting on a record budget surplus of $27 billion… Because this is your money, I want to return at least HALF of that money to you with the largest property tax cut ever in the history of Texas.” – Gov. @GregAbbott_TX in Fairview
In mid-July, Texas Comptroller Glenn Hegar announced an additional revision to his projected budget surplus before state lawmakers convene in January of 2023. He projected that lawmakers would have a budget surplus of nearly $27 billion to potentially allocate as they consider the next biennial state budget.
Using “at least half” of the projected surplus is more than what Texas Lieutenant Governor Dan Patrick previously indicated he was comfortable using, amounting to a paltry $4 billion.
The Austin political class is already making plans on how to allocate the projected surplus, but many of those plans do not include using a significant portion, if any, of the surplus to provide property tax relief or put Texas on a path toward property tax elimination. Whether those plans change based on Abbott’s sentiments moving forward has yet to be seen.
Texans for Fiscal Responsibility has written extensively on the projected budget surplus and the ongoing conversation by elected officials on what to do with it. We take the position that the surplus represents an over-collection of Texas taxpayer dollars and should be returned to them in the form of true property tax relief while simultaneously setting Texas on a path to the ultimate elimination of such a tax, considering it immoral and a form of perpetual rent to the government.
Though, admittedly, some portion of the projected surplus must be used to do things like maintaining funding requirements under previously passed school finance legislation, taxpayers should demand that as much as feasibly possible gets used for the purposes of property tax relief, as the current strategy of merely “slowing the growth” is unsustainable.
The next legislative session is set to begin in January of 2023. Your elected officials need to hear from you.
How can you help? Go read the Texas Prosperity Plan for yourself and voice your support for banning taxpayer-funded lobbying, eliminating the property tax, and freezing state spending by signing up to support the TPP. Sign up for The Fiscal Note to stay up to date on all fiscal issues that affect Texans, especially our broken property tax system. We CAN put Texas on a path to fiscal sanity and future prosperity if we amplify our voices loud enough.
Deceptive Duncanville: Status Quo for Local Politics
As we have begun to report on cities adopting new tax rates and many failing to adopt the no-new-revenue rate, a number of folks have reached out to us at Texans for Fiscal Responsibility about the deceptive practices reducing transparency in these cities.
The deception typically takes place when cities use their tax notices to promote that they are “lowering rates,” giving taxpayers the impression that their bills will be going down with the new budgets. But nothing could be further from the truth; if your city adopts a tax rate higher than the no-new-revenue rate, your rate will be going up.
Enter Erika Browning, a previous mayoral candidate who fell short in the May 2022 election but continues to engage the city. I had the honor of speaking with Erika and hearing her story on this very issue. Erika told me she has attended many council meetings, sharing her opinions in the time allotted for citizen comments.
(In Duncanville’s case, the city is proposing a rate so high it is only .000002 away from triggering an election to approve it.)
Unless a local government announces it is adopting the no-new-revenue rate, tax bills will increase. This is mainly due to rising property values resulting in a massive amount of revenue for cities, counties, and ISDs.
Instead of providing taxpayers with transparency and disclosing that bills will actually go up, they promote a lower rate and hope the average voter is not smart enough to do research and call them out. This is precisely what Erika did, according to our conversation. Below is a document Erika shared with us, in which the City of Duncanville promotes its tax rate “reduction”!
On August 16, 2022, Erika offered comments speaking against the deception, but she was muted. It is unsure whether this was a technical difficulty or not. Erika has provided her comments here.
On August 25, 2022, she offered further comments and called out the deceptive practices of the council in heroic fashion. (Her comments begin at 2:27:00.) Councilman Patrick Harvey responded to the criticism by not dealing with the issue of deception at all, but rather saying the city needs extra money for a project and stating he “thinks the document is a good document.” (His response can be seen at 2:46:36.)
After the meeting, Erika says she approached Councilman Harvey and said, “You completely mischaracterized my comments, and I don’t appreciate it.”
According to Erika, Harvey responded, “Ask me if I care.”
This kind of attitude is all too common from politicians and lawmakers everywhere, and I certainly have seen my fair share of this in my time. TFR will take Erika at her word, and we encourage all taxpayers to do the same. Thank you, Erika, for standing up to corrupt local governments. If more citizens engaged local governments, we would not be in the mess we are in.
Cities like Duncanville are not the exception, but rather the norm. The bigger a city is, the less likely they will do the fiscally responsible thing; this is why we need taxpayers to engage and call out these practices and encourage our neighbors to do the same. It is worth noting that quite a few cities have adopted or proposed to adopt the no-new-revenue rate, including Colleyville, Keller, and Southlake.
How can you help? Go read the Texas Prosperity Plan for yourself and voice your support for REAL property tax relief by signing up to support the TPP. You can also sign up for The Fiscal Note to stay updated on all fiscal issues that affect Texans, especially our broken property tax system. We CAN get real tax relief if we amplify our voices loudly enough.
Polling Suggests Most Texans Want True Property Tax Relief
This week, the Defend Texas Liberty PAC released polling that suggested a majority of Texans, from both major political parties, support using a majority of the projected budget surplus to lower their property tax burdens.
Polling Results
Among several other questions, respondents were asked:
“When the Texas Legislature returns to Austin, they will have an estimated $27 billion surplus. Do you believe the majority of that surplus should be used to lower property taxes?”
Of those polled, 66% responded yes, 15% responded no, and the remaining 19% were unsure.
Broken down by political party affiliation, 78% of Republicans and 44% of Democrat respondents said yes, compared to the 6% and 32% that responded no, respectively.
What Does It All Mean?
In mid-July, Texas Comptroller Glenn Hegar announced an additional revision to his projected budget surplus before state lawmakers convene in January of 2023. He projected that lawmakers would have a budget surplus of nearly $27 billion to potentially allocate as they consider the next biennial state budget.
Earlier this month, Texas Governor Greg Abbott forecasted the biggest property tax cut in Texas history would come in the upcoming legislative session, though he did not give any specific details. Upon Hegar’s announcement, Texas Lieutenant Governor Dan Patrick indicated that he supported using $4 billion of the projected $27 billion surplus for the purpose of additional property tax relief.
The Austin political class is already making plans on how to allocate the projected surplus, but many of those plans do not include using a significant portion, if any, of the surplus to provide property tax relief or put Texas on a path toward property tax elimination.
In March, Republican primary voters overwhelmingly supported eliminating the property tax altogether. A few months later, the Republican Party of Texas adopted a plank in their platform that supports eliminating the property tax, as well. The plank reads as follows:
Plank 90. Axe the Property Tax: We support replacing the property tax system for businesses and individuals with an alternative other than the income tax and requiring voter approval to increase the overall tax burden. We urge the Legislature to immediately develop a transition plan that is a net tax cut.
With the projected surplus, lawmakers have the opportunity to provide true relief to Texas taxpayers reeling from ever-increasing property tax burdens, historic inflation, and a growing cost of living. They could simultaneously put Texas on a path toward property tax elimination and allow Texans to actually own the property they reside on without paying perpetual rent to the government.
What Is Next?
Republicans have controlled the Texas Legislature and every statewide elected office for nearly two decades, and the track record of these same elected officials with regard to consideration of their own party’s platform has been spotty at best.
The next legislative session is set to begin in January of 2023. Your elected officials need to hear from you.
How can you help? Go read the Texas Prosperity Plan for yourself and voice your support for banning taxpayer-funded lobbying, eliminating the property tax, and freezing state spending by signing up to support the TPP. Sign up for The Fiscal Note to stay up to date on all fiscal issues that affect Texans, especially our broken property tax system. We CAN put Texas on a path to fiscal sanity and future prosperity if we amplify our voices loud enough.
Higher Education Escapes Culpability in Student Loan Debt Forgiveness Debate
Last week, the Biden administration announced plans to eliminate a portion of student loan debt for Americans who qualify under a certain income threshold. To be clear, the plan collectivizes the debt incurred by individuals and further burdens U.S. taxpayers.
Notably, the plan does nothing to address one of the key drivers of this growing issue in the first place, separate from the government itself: the higher education institutions. Instead, the plan will only exacerbate the student loan debt problem.
Students will take out even more debt under the belief that they will not have to pay it back, and higher education institutions will respond by raising tuition and fees since the students are likely to be less conscious of the prices. It is a mix that will inevitably create additional student loan debt in the long run at the cost of short-term political favorability.
U.S. Congressman Lance Gooden (R-TX) provides a summary here:
13% of Americans are eligible for Joe Biden's student loan bailout.
Most modern institutions of higher education are incentivized to operate with reckless abandon, routinely offering programs and recreational activities less focused on market-driven earning potential and more focused on leisure.
A report provided by The Heritage Foundation reads:
“Open-ended federal subsidies have distorted the market for higher education, enabling colleges to raise tuition beyond what students and their parents otherwise would have been able to afford. The tuition bonanza has financed a “facilities arms race” replete with lazy rivers, climbing walls, and other campus extravagances. It has enabled colleges to amass large swaths of real estate in an increasingly digital age, including many classroom buildings that are largely vacant large parts of the week. And it has lined the pockets of the endowments of woke institutions.”
Moreover, trends in prices for college show that with increases in subsidies from the government come increases in the costs charged to students.
“The possibility of future bailouts will drive more students to take on higher debt burdens, which many colleges will gladly encourage for the sake of increased tuition. History demonstrates that federal subsidies have enabled colleges to raise prices with abandon. Since the 1991-1992 academic year, total federal aid (including student loans and grants) increased by 295 percent. In response, universities more than doubled their tuition and fees in real terms.”
With regard to endowments, institutions like Harvard and Yale boast more than $53.2 billion and $42.3 billion in endowments, respectively. The University of Texas (currently ranked second) is on track to overtake Harvard with respect to the size of its endowment.
Endowments, a collection of investments for the distinct purposes of supporting higher education institutions’ educational and research missions, continue to grow nationwide—as do the costs to attend those institutions.
Offered Solutions
What are some solutions to the higher education piece of the student loan debt puzzle?
According to Andrew Gillen, a senior policy analyst at the Texas Public Policy Foundation (TPPF), policymakers could enact new accountability metrics to hold higher education institutions accountable when they impose excessive student loan debt on their students.
Put plainly, “new data from the Department of Education help students, parents, college administrators, and policymakers distinguish between worthwhile and excessive student loan debt by revealing the typical earnings and student loan debt of recent college graduates.”
That data and the aforementioned accountability metrics could be used to hold higher education institutions accountable for their role in the burgeoning student loan debt problem.
Additionally, lawmakers can prioritize the existing REPAYE (Revised Pay as You Earn) plan, which includes a loan-forgiveness mechanism.
Of course, there is always the solution of simply requiring individuals who took out a loan to pay off the loan. Though painful in the short term, the long-term effects would prove beneficial for everyone, including U.S. taxpayers.
💰 In this episode of 𝗧𝗔𝗫𝗣𝗔𝗬𝗘𝗥 𝗧𝗔𝗟𝗞𝗦, we discuss the recently announced student debt ‘cancelation’ plan from the Biden Administration and the fact that none of the five largest cities in Texas are adopting the ‘No-New-Revenue’ tax rate when it comes to property taxes.
Student Loan Forgiveness: Potential Fuel to the Inflation Fire
Why pay off your debt if you can get your fellow Americans to pick up the tab?
Traditionally, if an individual takes out a loan, it is with the promise that it will be paid back. But evidently, that dynamic changes if the loan is taken out from the federal government (or taxpayers) for the purpose of student loans, and it comes with an astronomical cost to U.S. taxpayers.
On Wednesday, the Biden administration announced a plan that effectively “cancels” or “forgives” $10,000 of federal student loans for individuals who did not receive Pell Grants and $20,000 for individuals who did and also have an income of less than $125,000 per year. He also announced that you can “cap repayment at 5% of your monthly income” if you have undergraduate loans. Though there are questions of legality, including from elected officials within his own political party, it is a move many see as purely political ahead of the November midterm elections.
Some variation of student loan forgiveness has been central to any would-be Democrat platform for some time, with nuanced differences in approach and amount.
While on the presidential campaign trail, Biden backed the idea of some student loan forgiveness. At a campaign event in Miami, Florida, he said:
“I’m going to make sure that everybody in this generation gets $10,000 knocked off of their student debt as we try to get out of this God-awful pandemic.”
Many Democrat elected officials in Congress have continued to pressure the administration to act alone, as they have been unable to address the issue through Congress itself.
“We estimate that forgiving federal college student loan debt will cost between $300 billion and $980 billion over the 10-year budget window, depending on program details. About 70 percent of debt relief accrues to borrowers in the top 60 percent of the income distribution.”
In other words, the plan would cost the average U.S. taxpayer more than $2,085.59.
Similarly, an analysis provided in April by the Federal Reserve Bank of New York estimated it would cost nearly $321 billion.
Some supporters of the policy dispute that the plan would come at the expense of taxpayers, but this position ignores the reality that the estimated $300 billion cost was previously borrowed from the federal government (i.e. taxpayers) and will not be returning to the U.S. Treasury. This means lawmakers will have to make up for that difference in the future with either government spending cuts (which seems unlikely) or tax increases and more debt obligations (which seems likely based on recent history).
Of note is that the cost of this plan would effectively wipe out any savings (which are disputed) that would come from the recently passed Inflation Reduction Act, essentially making that effort moot except for the “green-energy” companies that benefited from the subsidies included in the legislation. Meanwhile, record inflation continues and the U.S. debt continues to increase, at the expense of future generations of Americans.
It is also highly likely that this forgiveness will continue in perpetuity, effectively becoming a quasi-college UBI (Universal Basic Income), and cost taxpayers more money in the future.
How Bad Is the Problem?
Thus far, Congress has been reluctant to act on this issue, not having a majority of Senate Democrats in favor of such a policy change. This reluctance has led many on the regressive left to call for Biden to provide supposed relief through executive action, something even elected officials within his own party dispute he has the power or legal authority to do.
Americans owe more than $1.56 trillion in student loans. Nearly 90 percent of all student loans are issued by the government, where the U.S. Department of Education oversees more than $1.3 trillion in debt. The amount of debt, the inability or reluctance of beneficiaries of those loans to pay them back, and the increased cost of tuition at higher education institutions continue to make the problem much worse.
Is it Legal?
If you ask U.S. House Speaker Nancy Pelosi, the president does not have the authority to cancel debt obligations—or at least she felt that way in July of 2021. Has her attitude changed since then, or just the politics behind it?
Perpetual ‘Can-kicking’ and Political Inconvenience
The Wall Street Journalreported that in July, the U.S. Department of Education directed loan servicers to not issue billing statements to borrowers, all but ensuring that repayments of loans would not resume after the August 31 deadline (after being delayed several times already).
The current “freeze” was originally instituted under the Trump administration at the onset of the COVID-19 pandemic. To make matters worse, not only are the payments frozen, but so is the interest on those payments, meaning the government has given up revenue and accrued additional debt.
Amid the ongoing “freeze” of student loan repayments, there is growing concern over the fiscal reality and implications of delay on top of the cost of “cancelation.”
According to a recent CNBC poll, nearly six in 10 Americans are concerned that forgiving student loan debt could worsen the current inflation crisis.
The Texas Republican Party platform says the following when it comes to federal student loans:
“We oppose mass cancellation of student loan obligations but support tax credits and interest rate reductions to ease the burden of students deeply in debt.”
In somewhat of contrast, the Texas Democrat Party platform says the following when it comes to federal student loans:
“Cancel student loan debt for low-income Texas residents and provide interest-free student loans.”
How Did We Get Here?
To put it simply, political cowardice.
Federal student loan programs were created in 1965 as a part of then-President Lyndon B. Johnson’s “Great Society,” with the passage of the Higher Education Act. This legislation essentially flipped the idea of traditional lending on its head, becoming yet another example of Congress deciding it knew better than the markets did, allowing lending to take place with anyone regardless of creditworthiness and financial literacy. The program started small but, as with almost any government program, exponentially grew at an alarming rate.
If you peruse the U.S. Constitution, you will not find authorities given to the executive branch to cancel debt obligations, such as student loans. But in a time where the U.S. Congress has essentially abdicated any responsibility in actually legislating or using its “power of the purse,” much of the policy change in the U.S. has come from rule-making authorities granted to bureaucracies and executive actions.
Who Would it Benefit the Most?
Contrary to popular belief, the individuals who benefit the most from student loan forgiveness are generally those who are already well off, because they primarily consume more expensive education, according to an analysis done by the Brookings Institution.
Another beneficiary of such subsidization of loan forgiveness is the higher education apparatus itself. This plan does nothing to address what many consider one of the primary drivers of the overall problem: the education institutions themselves. It is highly likely that colleges and universities will respond to this plan by raising tuition commensurate with the loan “cancelation.”
When does the subsidization—or, to perhaps put it more honestly, collectivization—end? Will the government “cancel” mortgages next?
Fuel to the Fiscal Fire
The U.S. national debt currently sits at nearly $31 trillion, a number that is difficult to truly comprehend. Ultimately, it is a number that represents runaway spending and fiscal irresponsibility on behalf of both major political parties in the United States over the course of the last few decades, creating an unsustainable financial path that only continues to ensure less and less prosperity for future generations of Americans.
The Biden administration potentially adding to the ongoing fiscal insanity just for the potential of support going into the midterm elections is a terrible trade-off for U.S. taxpayers.
It should be simple. If someone takes out a loan, they should pay it back. It is the right thing to do on behalf of the taxpayers.
Despite Promises From Appropriators, No Major Cities Are Adopting the No-New-Revenue Rate
It’s that time of year again: local governments across Texas are considering their budgets for the next fiscal year and setting their tax rates to support such spending.
This year is special for Texas taxpayers because it is a year where most Texans will likely see their property tax bills skyrocket (yet again), despite state lawmakers’ promises that the “historic property tax reform legislation” passed in 2019 should provide relief any day now.
In that same hearing, Chairman Joan Huffman (R-Houston) said she “wanted to remind everyone, as we see these appraisals rising, that homeowners should see a decrease in the overall tax burden because of the ‘historic property tax relief’ [from] bills HB 3 and SB 2, which allows cities the option to lower rates to match the no-new-revenue rate in October, when final bills actually come in.”
The sales pitch from our appropriators was that despite taxpayers seeing sky-high property tax bills in the past—and high appraisals this spring—we shouldn’t worry! They fixed everything in 2019, remember? The cities and local governments are going to lower the property tax rates to the no-new-revenue rate, and everything is going to be rainbows and butterflies after that!
TFR previously expressed doubt in this “out-of-touch positive spin,” and we finally have some municipalities showing their hands with newly proposed budgets. TFR reviewed the proposed budgets and rates of Texas’ five most populous cities, and here is what we found:
Fort Worth– The no-new-revenue rate (NNRR) was calculated at .66. Instead of lowering it to the NNRR, they are proposing.71 (7.5% higher than the NNRR).
Dallas– The no-new-revenue rate (NNRR) was calculated at .64. Instead of lowering it to the NNRR, they are proposing.74 (15.6% higher than the NNRR).
Austin– The no-new-revenue rate (NNRR) was calculated at .45. Instead of lowering it to the NNRR, they are proposing.462 (3.5% higher than the NNRR).
San Antonio – The no-new-revenue rate (NNRR) was calculated at .48. Instead of lowering it to the NNRR, they are proposing.54 (12.5% higher than the NNRR).
Houston has made its tax disclosures incredibly hard to find. TFR reached out to Councilwoman Peck’s office but did not receive a response.
As things begin to heat up and local governments continue to set their new rates and budgets, it is becoming more and more obvious that TFR’s prediction that most of these jurisdictions would NOT adopt the NNRR is coming true.
What does this mean for taxpayers? It means the “historic property tax relief” our lawmakers keep celebrating has yet to lower anyone’s bills, nor will it in the coming year unless there is a major shift in local government fiscal responsibility in the next few months. It is safe to say that without local governments adopting the NNRR, your property tax bill WILL GO UP.
So, what can you do?
If local governments refuse to lower to the no-new-revenue rate, they must hold a hearing for taxpayers to give feedback. It is imperative that you protest these local governments and demand they lower our rates! If they refuse, we must vote every single one out of office.
The same, of course, goes for our state lawmakers, who have been trumpeting property tax relief that no one has seen for years now. TFR has proposed the Texas Prosperity Plan, which would actually provide relief by using the $27 billion surplus to help drowning taxpayers.
How can you help? Go read the Texas Prosperity Plan for yourself and voice your support for REAL property tax relief by signing up to support the TPP. You can also sign up for The Fiscal Note to stay updated on all fiscal issues that affect Texans, especially our broken property tax system. We CAN get real tax relief if we amplify our voices loudly enough.
Upcoming Opportunity for Texas Taxpayers to Opine on Growing Property Tax Problem
As state lawmakers prepare for the 2023 legislative session in the coming weeks, Texas taxpayers have an opportunity to address them on issues like their ever-increasing property tax burdens.
Texas House Ways & Means Committee
The Texas House Ways & Means Committee, or the committee primarily charged with the jurisdiction of raising state revenue and levying taxes, has scheduled an interim public hearing for Thursday, September 8 to consider two of their interim charges, as issued by Texas House Speaker Dade Phelan.
Among the charges to be discussed and available for public input are those related to the implementation of Senate Bill 2, or the Texas Property Tax Reform and Transparency Act of 2019; the Texas Property Tax Appraisal System; and the expiring Chapter 313 tax abatement corporate welfare program. On multiple occasions, Phelan himself has expressed interest in reviving the Chapter 313 program under the guise of economic development.
Texas taxpayers and the public at large may testify in person at the Texas Capitol or electronically submit their comments ahead of the scheduled hearing.
Property Taxes in the Upcoming 88th Legislative Session
The Texas Legislature is set to convene in January of 2023 for the next regular legislative session.
In early August, Texas Governor Greg Abbott forecasted the “biggest property tax cut in the history of the State of Texas,” but he stopped short of providing specifics when discussing his plans for the upcoming legislative session.
A few weeks earlier, upon news from the Texas comptroller of an even larger projected $27 billion budget surplus, Texas Lt. Governor Dan Patrick released a statement indicating he supported using a paltry $4 billion for the purposes of property tax relief.
Republicans have controlled every statewide elected office and the majority in the state Legislature for nearly two decades. Their own party platform explicitly calls for the elimination of the property tax and opposition to reintroducing school property tax abatements, formerly known as Chapter 313. Will they abide?
Despite promises of tax relief from elected officials at both state and local levels, the property tax burden continues to grow for Texas taxpayers. The current “slow the growth” strategy has done little to nothing to curb the exponential growth, and though the potential effects of recent reform legislation will truly be coming into the fold this next cycle, taxpayers are reeling right now from an ever-growing burden, while also dealing with record inflation and an increasing cost of everyday goods and services.
Texans for Fiscal Responsibility (TFR) has long held that Texas does not have a revenue problem; it has a spending problem. To help address many of the economic challenges facing the state, TFR recently released the Texas Prosperity Plan.
We invite you to read the Texas Prosperity Plan for yourself and voice your support for banning taxpayer-funded lobbying, eliminating the property tax, and freezing state spending by signing up to support the TPP. While you are there, sign up for The Fiscal Note to stay up to date on all fiscal issues that affect Texans, especially our broken property tax system. We CAN put Texas on a path to fiscal sanity and future prosperity if we amplify our voices loudly enough.
💰 In our premiere episode of 𝗧𝗔𝗫𝗣𝗔𝗬𝗘𝗥 𝗧𝗔𝗟𝗞𝗦, we discuss the recently projected $27 billion budget surplus that Texas state lawmakers will have the ability to allocate in the upcoming legislative session, the recently passed Inflation Reduction Act and its lack of actually addressing Inflation and the ongoing Border Security stunt by Texas Governor Greg Abbott related to busing migrants caught crossing the Texas-Mexico border illegally further into the United States and its cost to Texas Taxpayers.
Abbott Spends $1,400 per Bus Rider to Help Biden Keep Illegal Immigrants in America
Currently in Texas, immigrants caught crossing the border illegally can volunteer to be put on charter buses, which are primarily paid for by Texas taxpayers. These immigrants are then securely bused to either Washington, D.C., or New York City.
This is the reality for Texas taxpayers caught in the political gamesmanship between Republican Texas Governor Greg Abbott and the Biden administration.
How Did We Get Here?
In April, in response to a rapidly growing number of illegal crossings and the federal government’s reluctance to curb such activity, Texas Governor Greg Abbott announced a controversial plan that included chartering buses to send immigrants caught crossing the border illegally to Washington, D.C. This plan was later expanded to include New York City, once what has come to be known as “Title 42” or the “Remain in Mexico Policy” was officially ended by the Biden administration.
The federal government's refusal to address the border crisis is what's truly "horrific."
Texas will send buses to Washington D.C. & New York City until Biden does his constitutional duty & secures our border.https://t.co/yhmlaF74UQ
On the surface, this stunt makes it appear as though the State of Texas is taking the lead in the absence of action by the federal government. But what is the impact of this policy on Texas taxpayers?
According to state records obtained by NBC 5 in Dallas-Fort Worth in early June, the cost per bus rider was more than $1,400. For comparison, that is more expensive than a first-class plane ticket from many of the cities located on the Texas-Mexico border to Washington, D.C. Much of that cost actually comes from the hired security for each bus.
To offset this cost, Abbott pledged to raise funds via private donations to ensure that the impact on Texas taxpayers was minimal. As of July 22, however, the state had only collected $118,297 for this effort. That is just a drop in the bucket compared to what this policy has already cost taxpayers (nearly $7 million).
Moreover, Abbott has caught the ire of many Texas conservatives who take issue with what can best be described as further enabling illegal immigration by busing them further into the country—as opposed to back across the border itself—for nothing more than a political statement.
Political Noise
It is difficult to gauge the impact of policies at both the state and federal levels due to the surrounding political noise, which is often an exercise in performative political partisan theatre.
The “Remain in Mexico” policy implemented under the Trump administration was officially ended in early August, after its termination was delayed awaiting adjudication by the U.S. Supreme Court. Shortly after the U.S. Supreme Court ruled on the matter, a U.S. district judge placed a brief and temporary injunction that halted the policy even further. Mere hours after the injunction was lifted, the U.S. Department of Homeland Security officially announced their plans to end the policy, meaning anyone currently waiting in Mexico for their hearings could instead do so in the United States.
Shortly before the busing policy was implemented, we reported on whether the juice had been worth the squeeze when it comes to what was already being spent on the ongoing state border security funding effort through Operation Lone Star. In the most recent legislative sessions, the Legislature appropriated upwards of $3 billion for border security efforts, an unprecedented amount. In late April, an additional $495.3 million was appropriated to continue funding those operations from elsewhere in the state budget. In early July, Abbott’s office announced an additional $30 million would be allocated to the efforts of the governor’s public safety office. For those keeping track, the price tag for state border security efforts is near $4 billion.
Many local elected officials along the Texas-Mexico border and conservatives across the state continue to call on Abbott to declare an invasion, which would allow him to expel those caught coming across the border. Thus far, Abbott has been reluctant to do so, and the political gamesmanship has continued.
What Does It All Mean?
It cannot go without saying that there is an ongoing gubernatorial election in Texas; this undoubtedly affects which policy decisions are implemented. It is also possible that political undertones exist in preparation for politics beyond that of just the Texas governor’s mansion, as has long been rumored by political insiders.
As the Texas Legislature gets set to convene in January of 2023, they will do so after having conducted multiple studies on the impacts of Operation Lone Star, per their own interim committee charges as set by both the state Senate and House of Representatives. This will undoubtedly drive policy priorities related to this issue throughout the legislative session.
The fact is that billions of taxpayer dollars are already being allocated to supposedly secure the Texas-Mexico border via Operation Lone Star, whose metrics for success are dubious at best, given that the goalposts are loosely defined.
Ultimately, time will tell whether the unprecedented billions of dollars spent by the State of Texas (i.e., Texas taxpayers) have strengthened our border or whether a shift in strategy is necessary to turn the tide of illegal immigration and save taxpayers money along the way.
No Such Thing as Failing Schools in Texas, Sort Of
An announcement from the Texas Education Agency (TEA) on Monday came with great news! According to them, there is no such thing as a failing school in Texas … kind of.
The TEA just released its newest accountability ratings for public schools and is now using a new metric. Instead of the traditional A-F ratings it has used, the agency has a new system that only grades A-C schools, and those pesky and embarrassing “D” and “F” schools are now swept under the rug with the new “Not Rated” score.
Is this not a typical government solution to a problem? They move to redefine terms and eliminate transparency from parents whose children are in failing schools. This report comes on the tail end of one of the worst political bienniums ever for public schools. In the past few years, schools have:
shut down completely.
forced kids to learn from their computers at home.
forced masks on kids at no risk for COVID for months at a time.
defended pornography in school libraries despite parental outcries.
held LGBTQ rallies to groom children.
taught critical race theory (CRT).
shut out parents who complain at school board meetings.
seen enrollment drop by 2% for the first time in Texas history, while homeschooling numbers tripled in that same time.
It is no wonder that the school choice movement is louder than ever and has public school bureaucrats and taxpayer-funded lobbyists terrified that their monopoly on indoctrination is coming to an end. But it is surprising that after one of the worst political bienniums for public schools in Texas history, scores across the board seemed to have improved (TEA scores show the number of schools in the A and B categories ticking up slightly).
Before parents jump for joy, they should know that the way schools determine these grades is heavily reliant on the STAAR test, which coincidentally received a redesign to “make it more tightly aligned with the classroom experience.” While the changes to the STAAR test and the new grading system are complex, the overall point is that Texas schools are on a positive publicity campaign now through the end of the 2023 legislative session.
While Texas Governor Greg Abbott has publicly voiced his support for school choice legislation, he has yet to disclose what that would actually look like. This has “educrats” and the education establishment terrified that their grip on Texas children might soon be coming to an end.
Perhaps even more worrisome is the amount of money that any potential school choice legislation would add to education costs in our budget. This remains unknown, since we will not know what a legislative proposal on school choice would look like until the state Legislature convenes next year.
With a projected $27 billion surplus available, lawmakers and lobbyists are currently fighting over who gets to spend the most out of the potential new slush fund. In a recent article, TFR reported that the amount currently available to spend is “around $12 billion,” meaning lawmakers have already gobbled up more than half of the projected surplus to grow the government.
What does this mean? It means we would continue to fund failing schools that are protected from competition, and the money that should be used to give taxpayers a break on property taxes will likely be used to grow our already bloated state budget.
Texas schools are flush with cash. If anything, they should lose funding after the last abysmal two years, and those dollars should then be dedicated to real school choice legislation. Imagine if money already dedicated to public schools were freed from the institutions and given directly to taxpayers, so they could use it to educate their children in the best schools of their choice.
How can you help? Voice your support for school choice and fiscal sanity by signing up for The Fiscal Note to stay up to date on all fiscal issues that affect Texans, especially our broken public education system. We CAN put Texas on a path to fiscal sanity and future prosperity if we amplify our voices loudly enough.
House Speaker Wants to Renew Controversial Corporate Welfare Program
Last week, Republican Texas House Speaker Dade Phelan made headlines for his comments at the West Texas Legislative Summit in San Angelo, Texas, where he indicated that the House will take a “long, hard look” in the next legislative session at bringing back the controversial Chapter 313 tax abatement program.
He continued by saying he believed the House can pass a version of the program “that is more transparent, with more accountability and oversight.”
.@DadePhelan in San Angelo says House’ll take a “long hard look” next session at Ch. 313 corporate tax incentive program, which expires at the end of this year. He’s confident House can pass a “version of 313s that are more transparent, w/ more accountability & oversight” #txlege
In February, we reported that a potential resurrection of the program was in the works after Phelan said as much at the Texas Oil and Gas Association’s (TXOGA) annual Ad Valorem Tax Conference in San Antonio, Texas.
The #txlege continues to prioritize & work on providing property tax relief, improving the appraisal system, and developing a program to replace Chapter 313, a crucial incentive program to attract businesses to Texas. (2/2)
You might be saying to yourself, “Didn’t the Legislature end this program?”
Brief Background
Last legislative session, lawmakers chose not to continue the program by ultimately not passing legislation seeking to do as much through the entirety of the legislative process, to the chagrin of much of the Republican legislative leadership.
The program is set to officially expire on December 31 of this year.
What is the Chapter 313 Program?
Corporate welfare, plain and simple. The program is a part of the Texas Economic Development Act and allows school districts to grant property tax abatements to businesses. Unlike similar tax abatement agreements, which have their own problems, the revenue lost by the school district is instead made up for by state taxpayers.
Since its inception, businesses have received more than $10 billion in property tax exemptions – about $1 billion annually – which instead comes from state coffers (i.e. taxpayers). For example, taxpayers in Lubbock, Texas, might be paying for a property tax abatement for a business located on the opposite side of the state.
The list of current Chapter 313 agreements can be found here.
Major Political Party of Opposition
In the recently adopted 2022 Republican Party of Texas platform, a plank exists that explicitly declares opposition to bringing back the program:
94. Property Tax Abatements: We support repealing Tax Code Chapter 312 county and municipal property tax abatements, and we oppose reintroducing school property tax abatements, formerly known as Chapter 313.
This is important because, like Phelan, the majority of lawmakers in the Texas Legislature are Republicans. In fact, Republicans have controlled the Legislature and every statewide office for nearly two decades. Will they abide by their own party’s platform?
Moreover, even the Texas Democrat Party’s platform includes language to this effect:
Prohibit “corporate welfare” incentives that pit states and communities against each other.
With both of the political parties within the state Legislature against such a policy, whose interests are really at the heart of this program?
What Does it Mean for Texas Taxpayers?
Though the program is slated to be discontinued in December of 2022, Phelan’s sentiment that the program should be replaced should concern Texas taxpayers, who are still reeling from ever-increasing property tax burdens.
Texans for Fiscal Responsibility’s position is that abatements allow large corporations and those with political influence to temporarily exempt a portion of their property’s value from taxation — a privilege not granted to Texas homeowners or the vast majority of businesses. This has become an attractive option for giant corporations seeking temporary relief from Texas’ oppressive property tax rates.
Taxpayers should not be stuck with increased tax bills in order to carry the additional burden of well-connected businesses. Instead, they should demand the Texas Legislature let these programs expire and encourage local governments to compete for business by cutting taxes and bureaucratic red tape to foster an environment of free enterprise, rather than picking winners and losers.
Abbott Forecasts ‘Biggest Property Tax Cut in Texas History’
Recently, Texas Governor Greg Abbott gave the keynote address at the 18th annual West Texas Legislative Summit in San Angelo, Texas. In the address, he talked about property taxes and other issues in his plan for the upcoming legislative session.
The chief economist for the Texas Public Policy Foundation (TPPF), Vance Ginn, Ph.D., tweeted about Abbott’s bold claim, indicating Abbott revealed that he plans to use a large portion of the estimated $27 billion surplus to pay down the maintenance and operations (M&O) compression rates. However, Abbott seemed to stop short of specifying just how much of that surplus would be used for what he called “the biggest property tax cut in the history of Texas.”
I decided to research what this would actually equal in dollars so we would know how to hold Abbott accountable for such a bold claim.
The question that immediately comes to mind is: How would we go about measuring such a vague statement? Is Abbott referring to money that the Legislature has previously allocated specifically for property tax relief, or is he referring to actual cuts in property taxes?
If we look at the often-cited “historic property tax relief” provided by the Legislature in 2019, we see that $5 billion was paid down on M&O for a “7-cent compression” on school M&O. In 2021, $6.1 billion was appropriated to maintain that same compression, yet the “buydowns” did not actually result in property tax reduction—it simply resulted in slower growth of the taxes themselves.
Texans for Fiscal Responsibility (TFR) has written extensively about this bait and switch the politicians in Austin often use to convince you they are cutting taxes despite your bill going up every year. In the chart below from the comptroller’s 2018-2019 report, you can see that tax levies have continued to rise despite lawmakers’ efforts over the years.
We found that in 2006, a much larger sum was appropriated by lawmakers for property tax relief, totaling $14 billion. Sadly, this only resulted in about $400 less in tax levies the following year, and the tax burdens increased by nearly $5 billion in the next two years, as seen in the chart from TPPF below.
Despite the effect of the $14 billion in paydown being minimal, it seems as though the largest property tax cut paydown in Texas history was at least that.
The projected $27 billion surplus available to the legislators in the upcoming legislative session is already being picked apart by the Austin swamp. TFR has heard reports that of the total projected surplus, roughly $5 billion will be allocated to Medicaid, about $2 billion to school safety measures or border security, and about $6-8 billion to maintain House Bill 3 funding as passed in 2019, which includes the aforementioned M&O compression.
Taking those numbers into account, it appears more than half of the projected surplus has already been spoken for, according to Austin insiders familiar with the process. If true, this leaves taxpayers with a measly $12 billion in available surplus for true property tax relief, less than the aforementioned largest property tax cut given in 2006.
If these numbers prove true (they are just rumors for now), it would be impossible for Abbott to come through on his promise of the “biggest property tax cut in Texas history.”Maybe he has something else up his sleeve, but if the past is any indication of the future, taxpayers will likely get more of the same “slow the growth” tax relief strategy from their lawmakers. Thus far, those plans have not given anyone relief from ever-growing tax burdens—so TFR created one that would.
As part of our Texas Prosperity Plan, we maintain that lawmakers should use every penny of the available surplus to put Texas on a path to ultimately eliminate the property tax while simultaneously making efforts to freeze and cut state spending.
A budget freeze was also recently included in the 2022 Republican Party of Texas platform. In fact, all three of the policy issues included in TFR’s Texas Prosperity Plan made it into the party platform. While we wait to find out whether Abbott really has a plan to provide the “biggest property tax cut in Texas history,” you can read all about our plan HERE.
How can you help? Voice your support for banning taxpayer-funded lobbying, eliminating the property tax, and freezing state spending by signing up to support the Texas Prosperity Plan. Sign up for The Fiscal Note to stay up to date on all fiscal issues that affect Texans, especially our broken property tax system. We CAN put Texas on a path to fiscal sanity and future prosperity if we amplify our voices loudly enough.
Democrat Lawmaker Suggests Expanding Medicaid is Wise Fiscal Policy
Democrat State Rep. Bobby Guerra (Mission), who “boasts” a career rating of an F on the Fiscal Responsibility Index and scored a dismal 17 out of 100 in the most recent legislative session, recently took to the Rio Grande Guardian to opine about why he believes “expanding Medicaid is wise fiscal policy.”
Notably, this comes at a time in which Texans are reeling from historic inflation and a bleak economic outlook due to things like runaway spending on both the federal and state levels, among other fiscal insanities.
In the column, Guerra uses an interim charge issued by Republican House Speaker Dade Phelan and an upcoming hearing of the newly created Select Committee on Health Care Reform as his reasoning to discuss the topic.
Guerra, who also serves as the current vice chairman of the House Public Health Committee, has long been a supporter of expanding Medicaid in Texas, having filed his own unsuccessful legislation to do just that in several different ways since first being elected.
Saving Texas Money?
In the column, Guerra alleges, “If Texas expanded Medicaid, the federal government would pay 90% of the cost, reducing Texans’ responsibility to just 10%. Expanding coverage for adults between the ages of 19-64 with incomes below 138% of the poverty level (a family of four that makes at or below $38,295 per year) is not only wise fiscal policy, but it is also a moral imperative.”
According to David Balat, the director of the Right on Healthcare Initiative at the Texas Public Policy Foundation, other states that have expanded Medicaid, like New York and California, have had to address budget shortfalls that resulted from expanding the program and enrollment exploding. Even states controlled by Republicans, like Ohio and Indiana, saw Medicaid expansion cause exponential increases in state spending, eating “into the budgets for other important priorities, such as public safety, schools, and roads.”
Balat goes on to say, “Largely as a result of expansion, Medicaid spending is now 50 percent higher than education spending nationwide, and 30 states spend more than a quarter of their budgets on Medicaid.” He notes that “if Texas were to expand Medicaid, state spending would increase by nearly $1.3 billion every single year. Another 2.8 million able-bodied adult Texans would be added to welfare. Texas hospitals would see roughly $720 million in new Medicaid shortfalls, the equivalent of nearly 12,000 lost hospital jobs.”
In April of 2020, Balat and Dr. Brian Blase produced a report that indicated “the bulk of evidence suggests targeted health programs, including those geared towards children, prove to be far better public investments than does a massive Medicaid expansion.”
Expanding Medicaid hardly seems like a “wise fiscal policy,” as Guerra suggests.
It should be noted that state spending is already increasing at an alarming rate, albeit as of recent legislative sessions it has grown more conservatively. Texas’ state spending is on track to grow 300% over the last two decades, even though the state’s population has only grown by 40% in that same period.
Moreover, in the next legislative session, set to begin in January of 2023, Texas lawmakers will also be faced with a historic budget surplus (i.e. they over-collected taxpayer money). It is absolutely within the realm of possibility that some lawmakers will be motivated to use some of this surplus to put Texas on a path to Medicaid expansion.
Efforts in the 87th Legislative Session
Democrats wanting to expand Medicaid in Texas is nothing new; an effort is made every legislative session to make this a reality.
Remarkably, in the most recent legislative session, several Republican House lawmakers signed on as joint authors of legislation that would do just that, despite their own party’s platform explicitly calling for no further expansion.
Legislation authored by Democrat State Rep. Julie Johnson (Carrollton) garnered enough support from a bipartisan group of lawmakers to put the Texas House of Representatives on the precipice of its passage, having 76 (a majority) total authors. Nine Republican lawmakers counted themselves among that list, which caused the author of several pre-filed budget amendments, Democrat State Rep. Garnet Coleman (Houston), to hold a press conference announcing his intent to offer an amendment to the state budget, which was being deliberated at the time, to expand Medicaid in Texas.
The vote on the budget amendment ultimately failed, with only 68 House lawmakers voting in favor. Though other Republican lawmakers originally signed on as supporters of Johnson’s legislation, only one—State Rep. Lyle Larson (San Antonio)—ultimately voted for the amendment.
Perhaps unsurprisingly, they are all lawmakers who score near the bottom of their entire caucus on theFiscal Responsibility Index, with scores ranging from 28 to 43 out of a possible 100.
Larson and Huberty chose not to seek re-election, and Stephenson lost his most recent party’s primary election. None of them will be returning for the 88th legislative session.
After efforts in the regular legislative session failed, a bipartisan group of lawmakers sent a letter to Texas Governor Greg Abbott in June of 2021, imploring him to add the topic of Medicaid expansion to the impending special legislative session agenda. A total of 56 House lawmakers signed the letter, including Guerra and Larson, one of the Republicans who supported the expansion in the regular legislative session.
The subject was never added to any of the three subsequent special legislative sessions’ agendas.
Republicans in Texas
Though Republicans have held the majority in the state Legislature for nearly two decades, they have also empowered—and often even aided—Democrats to promote policies such as Medicaid expansion.
These Democrats and liberal Republicans have then gradually advanced such policies through the Legislature but ultimately stop the broader expansion within the legislative process.
Long a plank in their platform, the Republican Party of Texas explicitly opposes the expansion of Medicaid in Texas:
Texas HSA: We recommend the creation of the State of Texas Health Savings Account, with funds in excess of those needed in the Rainy Day Fund, for the purpose of enabling the state to develop reserves sufficient to exit the federal Medicaid program, which will not expire nor be utilized for any other purpose.
Medicaid Reform: We support Medicaid block grants to the states and returning Medicaid to its original purpose to be a temporary assistance program. We oppose any further expansion of Medicaid.
A Brief and Consolidated Recent History
Shortly after the passage of the 2010 “Affordable Care Act” (ACA), which included provisions calling for every state to expand Medicaid, the U.S. Supreme Court ruled in NFIB v. Sebelius that states could not be subject to penalty for opting out of its expansion. This led Texas to decide to instead maintain the previously existing Medicaid rules.
In 2013, the Texas Legislature passed legislation requiring the Texas Health and Human Services Commission (HHSC) to first receive approval from the Legislature before deciding to expand Medicaid.
This prompted a series of “Texas Solutions” in the form of legislation every session to address the numbers of uninsured Texans in the states. Thus far, none have made it through the entirety of the legislative process.
What Does it All Mean?
While Americans—and more bluntly, Texans—are being forced to be guarded about their own spending due to record-high inflation and exploding spending habits at both the state and federal government levels, it is more apparent than ever that concerned citizens should implore their lawmakers to do the same.
Seeking to expand programs like Medicaid in Texas has never proven to be a fiscally responsible idea, nor would it be wise in the midst of the current economic turmoil. In a matter of months, the 88th legislative session will convene, and lawmakers will be faced with the decision of what to do with the historic budget surplus. It is important that taxpayers demand they return that money to them as opposed to letting lawmakers spend those surplus dollars on their pet projects.
Texans for Fiscal Responsibility (TFR) has long held that Texas does not have a revenue problem, it has a spending problem. To help address many of the economic challenges facing the state, TFR recently released the “Texas Prosperity Plan.”
Go read the Texas Prosperity Plan for yourself and voice your support for banning taxpayer-funded lobbying, eliminating the property tax, and freezing state spending by signing up to support the TPP. While you are there, sign up for The Fiscal Note to stay up to date on all fiscal issues that affect Texans, especially our broken property tax system. We CAN put Texas on a path to fiscal sanity and future prosperity if we amplify our voices loudly enough.
Explainer: What is ESG?
If you are an investor or someone who pays close attention to the economy, you have probably heard the term ‘ESG’. Despite hearing the acronym, many do not understand what it actually is and its implications for our economic system. In this article, we aim to define what ESG is and the problems associated with its implementation.
ESG stands for Environmental, Social, and Governance investing. Here is a brief explanation of the criteria considered for ESG investors, according to Forbes:
Environment. What kind of impact does a company have on the environment? This can include a company’s carbon footprint, toxic chemicals involved in its manufacturing processes, and sustainability efforts that make up its supply chain.
Social. How does the company improve its social impact, both within the company and in the broader community? Social factors include everything from LGBTQ+ equality, racial diversity in both the executive suite and staff overall, and inclusion programs and hiring practices. It even looks at how a company advocates for social good in the wider world, beyond its limited sphere of business.
Governance. How does the company’s board and management drive positive change? Governance includes everything from issues surrounding executive pay to diversity in leadership as well as how well that leadership responds to and interacts with shareholders.
If after reading those explanations you said to yourself, “This sounds like woke nonsense”, you would be right. So where did these leftist ideas come from? The first group to coin the phrase ESG was the United Nations Environment Programme Initiative in the Freshfields Report in October 2005. This idea was created by our globalist ‘friends’ at the UN to pull companies to the left by making it undesirable for investment firms to invest in companies with low ESG scores. As you can see from the chart below, their strategy has been working very well.
If there is a scoring system, how is it calculated? Well, there is no standard system. Scores are thought up by “research firms” that assign companies scores. As a matter of fact, to the average observer, ESG scores don’t seem to make sense at all. If you thought oil companies would score low, and companies like Tesla would score high, you would be wrong. Elon Musk tweeted about how the system is a scam run by woke ‘warriors’ recently.
Exxon is rated top ten best in world for environment, social & governance (ESG) by S&P 500, while Tesla didn’t make the list!
ESG is a scam. It has been weaponized by phony social justice warriors.
If there is no objective metric, then ESG is just another tool in the woke left’s belt to attack conservatives and companies that refuse to ‘toe the line’ and bow down to the woke mob. From an ideological perspective, it is contrary to free enterprise and stifles competition. It imposes rules that are based on racist ideas and forced acceptance of the LGBTQ agenda, which includes grooming children. What can we do?
As usual, we need to look no further than Florida Governor Ron DeSantis to lead the charge against the leftist woke hordes. He recently proposed legislation that would protect Floridians from the ESG movement. Quoted from a recent article from The Center Square, Ron DeSantis said:
The ESG movement “threatens the vitality of the American economy and Americans’ economic freedom by targeting disfavored individuals and industries to advance a woke ideological agenda,” DeSantis said.
“The leveraging of corporate power to impose an ideological agenda on society represents an alarming trend,” DeSantis said when announcing the new plan Wednesday. “From Wall Street banks to massive asset managers and big tech companies, we have seen the corporate elite use their economic power to impose policies on the country that they could not achieve at the ballot box. Through the actions I announced today, we are protecting Floridians from woke capital and asserting the authority of our constitutional system over ideological corporate power.”
DeSantis’ 2023 legislative proposal would prohibit big banks, credit card companies, and money transmitters from discriminating against customers based on their religious, political, or social beliefs, which have been identified as contributing to the score.
Governor Abbott, who has made a habit out of following Ron DeSantis’ lead, should be taking notes to protect Texans as the 2023 legislative session draws near. Texans for Fiscal Responsibility (TFR) opposes the globalist woke ESG score as a hindrance to free enterprise and will encourage our subscribers to do the same. Reach out to your lawmaker and encourage them to commit to passing legislation that protects Texans from the woke mob trying to destroy capitalism.
What else can you do to help? Sign up for The Fiscal Note to keep up to date on all fiscal issues that affect Texans, especially our broken property tax system. We CAN put Texas on a path to fiscal sanity and future prosperity if we amplify our voices loud enough.
