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By W. Gardner Selby September 3, 2015

Abbott's proposal to tighten spending cap in constitution ran out of gas

State Sen. Kelly Hancock offered a proposal in the 2015 legislative session in line with a campaign promise by Gov. Greg Abbott to tighten an existing cap on state spending.

As of late April 2015, the desired constitutional tweak looked dead in the water. On May 1, 2015, we marked this an Abbott promise STALLED.

At that time, Hancock had won Senate approval of related legislation including language providing for a statutory spending cap along similar lines.

To our inquiry, the Center for Public Policy Priorities guided us to Senate Joint Resolution 2 by Hancock, R-Richland Hills, reflecting Abbott's promise to amend the constitution by tying state spending to population growth plus inflation.

Hancock's proposal, which cleared a Senate committee by April 7, 2015, would present voters with a proposed amendment limiting the biennial growth of all state spending to the estimated average growth in the state's population adjusted by the estimated average rate of inflation in the state for the two years preceding the spending and the two years afterward. Under the change, lawmakers could exceed the cap only by three-fifths votes of the Texas House and Senate.

If voters approve of the changes, intended to take effect in the 2018-19 budget period, the new cap would replace the existing constitutional cap limiting biennial increases in state spending not dedicated to particular purposes to estimated growth in the state's economy.

According to the proposal's fiscal note, by the advisory Legislative Budget Board, the sought limit would "likely reduce the allowable growth rate in appropriations for subsequent biennia." Looking back, the note says, "forecasted personal income has exceeded that of forecasted population and inflation over the last six biennia; twice, however, actual population and inflation has slightly exceeded actual personal income."

The Senate, though, had yet to act on the proposed amendment as of late April 2015. (Any such proposal requires two-thirds approvals of the Senate and House to reach voters.)

The Senate on April 9, 2015, sent the House related legislation, Senate Bill 9, rewritten during floor debate, according to a Texas Tribune news story, to give state leaders a path toward limiting spending to population growth plus inflation. How? The Tribune story noted the existing cap says certain state spending can't "exceed the estimated rate of growth of the state's economy." Senators rewrote SB 9, the story said, to define "an appropriate measure of the estimated rate of growth in the state's economy" as the combined growth of population and inflation.

Hancock said after the action: "A constitutional change would have written this adjustment in permanent marker, but we didn't have the votes for that. So we settled for writing it in pen."

Hancock added that he believed his legislation, if it becomes law, would further tighten spending. "Not everything that's worth doing in Austin requires a constitutional change," Hancock said, according to the Tribune.

Subsequently, a House panel revised SB 9, advancing by 14-6 a version to apply the spending cap to the entire budget, including all non-federal revenue while keeping the existing requirement that any spending above the cap require only a majority vote of the House and Senate. Also, the House panel changed the Senate-approved blanket population plus inflation calculation — with inflation being based on the Consumer Price Index (CPI) — by calling instead for the Legislative Budget Board to recommend caps for individual "spending categories," including education, health care and transportation.

As reported by the Austin American-Statesman at the time, the House proposal called for the budget board to calculate the caps based on "the rate of inflation in a representative set of goods and services for which appropriations are made for that spending category," meaning the spending limit for things like education would be specifically tailored to the inflation and population rates relevant to that industry. State Rep. John Otto, R-Dayton, who authored the revised version, said the "use of the CPI as an inflation adjustment is inaccurate for any of the major functions of government since it does not adequately reflect the impact of inflation on the purchasing power of the state government budget dollar."

House members approved that version on May 27, 2015, records show, then the Senate refused to concur in the changes. The bodies moved to form a joint conference committee, but the session ended without an agreed-upon measure.

A May 31, 2015, Texas Tribune story said leaders of the Senate and House blamed the other side. Lt. Gov. Dan Patrick said: "The Senate passed the people's priorities, the governor's priorities and my priorities on the spending cap and ethics reform during this legislative session. The House chose to ignore these very important bills."

House Speaker Joe Straus argued it was the Senate that was intractable on an issue that defied simple answers. "The House passed responsible, well-thought-out language that recognizes the spending limit is a complicated issue, not a sound bite," Straus said. "The Senate rejected this approach."

Given that Abbott sought a constitutional amendment tightening the spending cap, we newly rate this a Promise BROKEN.

Promise Broken – The promise has not been fulfilled. This could occur because of inaction by the executive or lack of support from the legislative branch or other group that was critical for the promise to be fulfilled. A Promise Broken rating does not necessarily mean that the executive failed to advocate for the policy.

Our Sources

Document, "Bicentennial Blueprint, Greg Abbott's Working Texans Plan," Oct. 28, 2013

Legislation, Senate Joint Resolution 2 and its fiscal note; Senate Bill 9, 2015 Legislature, Texas Legislative Council website (accessed April 29, 2015)

News stories, "Short on Votes to Tighten Spending Cap, Senate Built a New One," Texas Tribune, April 13, 2015; "Effort to Tighten Spending Cap Dies," May 31, 2015

News story, "Will Texas House's spending limit fly?," Austin American-Statesman, posted online May 26, 2015

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