Tx Govt Ch 13 Summary

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1

State spending as a percentage of personal income remains fairly constant, and state tax rates remain low compared with other states. About half of state revenues are raised through taxes. A substantial portion (more than one third) comes from federal grants in aid, and miscellaneous sources account for the rest. State borrowing is limited.

The educational system of Texas is generally decentralized and independent of the normal course of partisan politics. Its administrators and curricula are conservative, as is much of Texas politics.

2

Although political self interest actually determines which kinds of taxes are used, taxing decisions may be rationalized as serving some regulatory purpose or reflecting benefits received or ability to pay. Both narrow and broad based taxes are used in Texas.

Health care services are both publicly and privately financed in Texas, as in the rest of the nation, and they are plagued by a similar problem: the rising costs of providing better services to more people. A smaller proportion of residents are insured to cover these costs in Texas than in any other state, but national health care reform is set to dramatically expand private health insurance in Texas.

3

The largest single state tax is the general sales tax, which is regressive relative to income because it falls most heavily on middle and lower income people. Most state taxes, including selective sales taxes and gross receipts taxes, are also consumer taxes and regressive relative to income. Even business taxes are shifted onto consumers. Local ad valorem and sales taxes also burden those least able to pay. Among taxes that Texans pay, only the federal income tax is somewhat progressive.

Income support for the poor (such as Temporary Aid to Needy Families) is not a major state priority and it is not designed to eliminate the root causes of poverty.

4

The LBB dominates the process of proposing Texas’s state budget because the state legislature frequently follows its recommendations during the appropriations process. The governor’s most effective tool in spending decisions is the item veto. The spending process is political. Perhaps no other type of decision evokes more consistent and passionate political efforts from interest groups, think tanks, and administrative agencies.

Financed largely by motor fuels taxes and federal funds, the cost of maintaining the extensive highway system is growing faster than revenues. Construction of new highways to relieve traffic congestion has become problematic as the state seeks alternative funding sources such as use tolls. Facing budget limits, it is unlikely that TxDOT will substantially increase funding for local mass transportation authorities.

5

Education, health and human services, and transportation are the major services that state government offers, together constituting more than four fifths of the total cost of Texas’s state government. These services have a significant effect on the way Texans live and even on the way they think. It is nearly impossible to evaluate them objectively because they affect different groups so differently.

Individual and group positions on these and virtually all public policies differ according to who benefits and who pays the cost for which public services. The process of allocating costs and benefits is the very essence of politics.

6

Although it would b tempting 2 attribute the Texas low-tax, limited public service environment 2 a basic distrust of govt, some of its other public policies indicate a considerable willingness 2 use the power of govt 2 control the population. More than most states, Tx limits same sex relationships, implements the death penalty, restricts abortion, controls illegal drug use, and incarcerates a larger % of its population. Tx’s unwillingness 2 use the power of govt is primarily a reluctance 2 tax, spend, and regulate business. Texas’s political culture is supportive of govt power 2 enforce traditional values but skeptical of govt intervention in the economy. In short, Texas’s public policies support economic individualism & social conservatism more than most states.

Only Nevada relies more heavily on sales taxes than Texas. Because Texas local governments also rely on regressive taxes, Texas state and local taxes weigh more heavily on poor and middle income families than most states. As one of only five states with neither progressive personal nor corporate income taxes, Texas has no progressive tax resources.

7

Fewer employers provide health insurance than in most other states, and as a result, a smaller proportion of Texans are insured to cover increasing health care costs than the residents of any other state. More Texans are likely to benefit from health care reform, but because of their individualistic culture, they are more likely to resent federal mandates than residents of most states.

Although the governor has the line item veto on appropriations, like 42 other governors, that power generally shows little effect in reducing wasteful state spending or earmarks for special legislative projects.

8

Compared with other states, per capita expenditures for education are below average. Per student expenditures, like teacher salaries, are also considerably below average. College faculty salaries, income support for the poor, health care, investment in mass transit, and spending for virtually every public service lag behind much of the rest of the nation.

Texans pay a smaller percentage of their incomes in state and local taxes than in most states.