By Governor Rick Perry
In less than a year, newly-elected members of the 83rd Legislature will take their seats and begin crafting the budget for the next biennium. This two-year state budget is a particularly important piece of legislation; one that can chart the course for our state for many years, even decades, to come.
By most accounts, we'll have a larger pot of money on hand, as job creation and sales tax receipts have been consistently up - and up significantly - for two years straight.
Some will interpret higher sales tax receipts as a great excuse for the state to start a tax-dollar spending spree. But in reality there is no such thing as "extra" money, when it's coming out of the pockets of Texas taxpayers.
After surviving a national recession and watching excessive spending wrack up trillions in new debt under President Obama, Texans have a new appreciation of the importance of wisely managing their financial resources.
The upcoming Texas budget process is an opportunity for wisdom and common sense, and to commit to policies that will keep Texas the top job-producer in the nation.
Given the increasing pressure on our budget, in particular with respect to Medicaid, we must remain committed to the sound conservative values that have made Texas the prosperous state it is today, and take steps to advance us even further. These are principles Texans live under every day and these are the principles Texans expect their government to govern by.
That's why I've proposed the Texas Budget Compact, a collection of five common-sense principles that should guide the direction of our legislature in the upcoming session and sessions to come.
I believe anyone serving in the Texas Legislature, or aspiring to serve, should commit to:
1.) Practice truth in budgeting;
2.) Support a stricter Constitutional limit on the growth of spending;
3.) Oppose any new or higher taxes;
4.) Preserve a strong Rainy Day Fund; and
5.) Cut unnecessary and duplicative government programs and agencies.
Let's take a look at these, one at a time.
Truth in budgeting means ending the practices of budgetary tricks and maneuvers, like deferrals and IOUs. We need to use fees and dedicated accounts for the purposes they're collected, and if fees are not being used for the intended purpose then we need to stop collecting them. Texans have to make tough decisions every day and government should, too.
Government shouldn't grow any faster than our population does. That's why we need to replace the current Constitutional limit on spending growth - which is based on the growth of personal income - with a stronger cap based on the rate of inflation and Texas population growth.
Small businesses are the engine of our economy, so keeping small business taxes low and fair is a critical part of our state's economic success. So in 2013, we must make the small business tax exemption permanent.
Over the past two legislative sessions, our legislators have successfully fought to exempt businesses with less than $1 million in revenue from the state margins tax, meaning these business owners have more money in their pocket to hire new workers or buy new equipment. Let's give them certainty on this issue this session and beyond.
Next, we need to preserve a strong Rainy Day Fund, which is an asset critical to our ability to respond to unforeseen circumstances and emergencies, whether financial or natural in origin, and also helps us secure a very favorable bond rating.
Any money spent out of the Rainy Day Fund should be used exclusively for one-time-only items, never for ongoing expenses.
Lastly, we need to reexamine government and remove any and all unnecessary programs and agencies, especially those performing similar, or even identical, functions performed elsewhere.
While we've made great strides in streamlining government over the years, much work remains to be done.
As stewards of the economy, we always have to look to cut expenses first before we think about spending any additional dollars.
We also all have to remember that the cost of Medicaid - the federal-state program paying for health care for low-income citizens - is a ticking time bomb, and is primed to do massive damage to our budget and our ability to fund public schools, criminal justice and other priorities in the short and long terms.
Expansion of Medicaid under the Obama Administration will significantly increase state spending and reduce flexibility, driving fixed costs higher. If the Supreme Court upholds Obamacare, that required state spending will accelerate even more dramatically. Under current projections, Obamacare will cost the state $27 billion over 10 years starting in 2014.
It's time for Medicaid money to be distributed to states in block grants, so states have the funds and flexibility necessary to deal with the challenges of their unique populations. We also need to work harder at targeting and preventing Medicaid fraud, because stopping dollars from going out is a lot more efficient than trying to get the money back after the fact.
Together, the five common-sense conservative budget principles I've outlined will result in a stronger, more prosperous Texas, better prepared to deal with the unexpected and better positioned to care for our own.
The upcoming state legislative session reflects a golden opportunity to demonstrate, yet again, the right way to build a balanced budget, run a growing state economy, and encourage job creation and prosperity for our citizens: The Texas Way.