Promoting Prosperity

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Promoting Prosperity
900 Lydia Street - Austin, Texas 78702 Phone
[phone] fax [phone] - www.cppp.org

• October 2004
• F. Scott McCown, Executive Director
• mccown_at_cppp.org

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Child Population Growth

• Fastest growing child population in U.S. between
  2000-2003
• 350,000 additional children
• 183,000 more than California
• 75,000 more than Florida
• Second largest child population in U.S.
• Third largest of children to total population
• By 2040, school enrollment projected to double

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The Changing Face of Texas
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Texas Population by Age Ethnicity, 2040
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Texas Labor Force by Educational Level, 2000 and
2040
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Indicators of Need
Source Congressional Quarterlys State Fact
Finder 2004.
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Underinvesting in Children
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Size of the States Economy

• Gross state product (personal and business
  income) 900 billion a year
• 1 9 billion a year
• Total Personal Income 735 billion a year
• 1 7.35 billion

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End Robin Hood?

• 1.1 billion a year

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Lower Property Taxes?

• 10 costs
• 1 billion a year
• 1.50 to 1.25 costs
• 2.5 billion a year

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Increase spending on education?
Annual cost of public school enrollment growth
500 million (1.5 billion a biennium) Annual
cost of 3 inflation for public schools 785
million a year (2.4 billion a biennium). Annual
cost of increasing spending by 250 per student
1 billion
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Public Education Spending

• 2002-03 Texas spent 7,152 per student.
• NEA ranked Texas 32nd among the states.
• Average state spending was 7,829 about 10
  higher than Texas.
• Costs of living adjustments are faulty.
• Austin 106.1 of U.S. Average
• Dallas 98.5 of U.S. Average
• Houston 96.1 of U.S. Average

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Restoring Medicaid/CHIP?

• A ballpark cost for reversing rate, eligibility,
  and benefit cuts to Medicaid and CHIP for
  2004-2005 plus covering Medicaid and CHIP
  shortfalls for 2004-2005 (from drug costs/use and
  caseload growth being higher than assumed) is at
  least  1 billion (GR).  The costs for 2006-2007
  to carry forward restorations, pay for inflation,
  and pay for caseload growth would be greater. 

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Total

• End Robin Hood 1.1 billion
• Lower property taxes 2.5 billion
• Improve education 1.0 billion
• Restore M-aid/CHIP 0.5 billion
• Sub-total 5.1 billion
• Current services ?
• Total ?
• Revenue Estimate ?
• Difference ?

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What Texas State Government Spending Pays For
Source U.S. Bureau of the Census, Government
Finances series. Data for 2001 for Texas, total
expenditures (including trust) of 64.7 billion.
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What Texas Local Government Spending Pays For
Source U.S. Bureau of the Census, Government
Finances series. Data for 2000 for Texas, total
expenditures (including trust) of 66 billion.
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State Spending and the Economy
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Source Comptroller of Public Accounts, Annual
Property Tax Rpt Cash Report.
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Indicators of Ability to Pay
Source Congressional Quarterlys State Fact
Finder 2004.
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Delaware Sub Loophole

• 200 million a year

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Sin Tobacco/Alcohol

• Increase cigarette tax from 41 to 1.41 per pack
• Would raise 850 million per year
• Would discourage teen-age smoking
• Beer is now taxed at 19.4 cents per gallon an
  increase to 1.00 per gallon would raise 374
  million a year
• Total 1.2 billion a year

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Video Lottery Terminals

• Slot machines
• 561 million a year
• The crack cocaine of gambling

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Sales Tax

• Raise the rate ¼ 550 million a year
• Expand the base to most everything but health
  care 3.25 billion a year

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Business Activity Tax

• Several different proposals
• Value Added Tax
• Gross Receipts Tax
• Payroll Tax
• Could raise several billion a year depending on
  the rate

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If We Replaced Current School Property Taxes with
Sales Taxes
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The Texas Constitution Article 8 - TAXATION AND
REVENUE Section 24 - PERSONAL INCOME TAX
DEDICATION OF PROCEEDS (a) A general law enacted
by the legislature that imposes a tax on the net
incomes of natural persons . . . must provide
that the portion of the law imposing the tax not
take effect until approved by a majority of the
registered voters voting in a statewide
referendum held on the question of imposing the
tax. (b) A general law enacted by the
legislature that increases the rate of the tax,
or changes the tax, in a manner that results in
an increase in the combined income tax liability
of all persons subject to the tax may not take
effect until approved by a majority of the
registered voters voting in a statewide
referendum held on the question of increasing the
income tax. (f) In the first year in which a
tax described by Subsection (a) is imposed and
during the first year of any increase in the tax
that is subject to Subsection (b) of this
section, not less than two-thirds of all net
revenues remaining after payment of all refunds
allowed by law and expenses of collection from
the tax shall be used to reduce the rate of ad
valorem maintenance and operation taxes levied
for the support of primary and secondary public
education. In subsequent years, not less than
two-thirds of all net revenues from the tax shall
be used to continue such ad valorem tax
relief. (g) The net revenues remaining after the
dedication of money from the tax under Subsection
(f) of this section shall be used for support of
education, subject to legislative appropriation,
allocation, and direction.
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TEXAS CONSTITUTION (continued) (h) The maximum
rate at which a school district may impose ad
valorem maintenance and operation taxes is
reduced by an amount equal to one cent per 100
valuation for each one cent per 100 valuation
that the school district's ad valorem maintenance
and operation tax is reduced by the minimum
amount of money dedicated under Subsection (f) of
this section, provided that a school district may
subsequently increase the maximum ad valorem
maintenance and operation tax rate if the
increased maximum rate is approved by a majority
of the voters of the school district voting at an
election called and held for that purpose. The
legislature by general law shall provide for the
tax relief that is required by Subsection (f) and
this subsection. (Added Nov. 2, 1993.)
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How Would An Income Tax Work?
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A State Income Tax, With Property Tax Reductions,
Would Benefit Most Texans
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