Public Policy in Texas

1
Public Policy in Texas

• Chapter 8

2
Introduction

• Economic Policies
• Policies that affect economic activities or have
  economic consequences for individuals or groups
• Social Policies
• Policies that guide our development as human
  beings and our relationships with other humans
  and our broader environment

3
Roots of Public Policy

• Leader and straggler in economic regulation
  Railroad Commission provided leadership PUC
  developed late
• Economic assistance during the New Deal
• Great Society programs expanded support for
  social welfare and economic regulation
• Deregulation during the 1990s

4
Public Policy Process

• Agenda setting
• Getting an issue to be considered by the
  government
• Policy making
• Making public policy through one of the branches
  of government
• Implementation
• Bureaucracy makes rules and regulations for a
  policys implementation
• Evaluation
• Assessing the policys effectiveness

5
Policy Actors

• Economic, political, and governmental elites
• Wealthy Texans
• Foundations and Think Tanks
• Texas Research League
• Texas Public Policy Foundation
• Media
• Newspapers, magazines, Blogs
• Academia
• Universities

6
Policy Outcomes

• Political Economy
• Web of economic, social, governmental, and
  political institutions and processes
• Subsidy grant of economic resources by
  government
• Regulation government restriction on economic
  activities
• Roles of Government
• Nourish the elements that make innovation
  possible skilled workers, investment money,
  system that fosters innovation and change
• Bring the poor into the growth process

7
State Finance

• Budgeting
• A plan for how much money one expects to receive
  and how much one proposes to spend
• Biennial budget
• Fiscal year September 1 August 31

8
State Finance

• Budgeting Restrictions
• Balanced budget
• Bonds and debt
• Comptrollers revenue estimate and certification
• Dedicated funds
• Constitutional spending limit based on economic
  growth calculated by the LBB (1978)
• Limit on welfare spending 1 percent of budget
  (1982)
• Budget execution authority (1985)

9
State Revenues FY 2008 86.98 Billion

• State taxes (47.5.3)
• Federal funds grants-in-aid (30.2)
• Licenses, fees, permits, fines, and penalties
  (11.8)
• Interest and investment income (2.7)
• Lottery (1.8)
• Land income (1.2)
• Sales of Goods and Services (0.6)
• Settlement of claims (0.6)
• Contribution to employee benefits 0.0)
• Other (3.6)
• Source http//www.window.state.tx.us/taxbud/reven
  ue.html

10
Principles of Taxation

• Adequacyraises enough money
• Equityeveryone pays their share according to
  ability to pay
• Economic competitivenessenhances state and local
  economic development
• Balanceavoids over-reliance on any one tax or
  set of taxes
• Stabilitywithstands shifts in economy
• Simplicityminimal compliance and enforcement
  costs

11
State Taxes FY 2008 41.36 Billion

• Sales tax (54.2)
• Franchise tax (10.8)
• Motor vehicle sales tax (8.1)
• Motor fuels taxes (7.5)
• Natural gas production tax (6.5)
• Insurance Occupation Taxes (3.5)
• Source Texas Comptroller

• Cigarette and tobacco taxes (3.5)
• Oil production tax (3.5)
• Alcoholic beverages taxes (1.9)
• Utility taxes (1.2)
• Hotel and motel tax (0.9)
• Inheritance tax
• Other taxes (0.4)

12
State and Local Tax Burden, 2008
13
Level of Taxation in Texas

• Texas state and local taxes took 8.4 percent of
  Texans personal income in 2008.
• Texas ranks 43th in state and local tax burden
  (2008).
• Federal taxes took 22,539 per household in 2007.
• Texas ranked 20th in federal tax burden in 2007.
• Source Tax Foundation, http//www.taxfoundation.o
  rg/

14
Effects of Taxation

• Progressive taxes
• Percentage of individuals income paid in taxes
  increases as individuals income increases
• Regressive taxes
• Percentage of individuals income paid in taxes
  decreases as individuals income increases
• Proportional taxes
• Percentage of individuals income paid in taxes
  is the same for all income levels

15
Effects of TaxationTexas
16
Effects of TaxationTexas
17
State Expenditures FY 200881.94 Billion

• Education
• 30.8 billion (37.6)
• Health and Human Services
• 29.7 billion (36.2)
• Transportation
• 7.7 billion (9.4)
• Public Safety and Corrections
• 4.0 billion (4.9)
• Employee Benefits (3.6)
• General Government (3.1)
• Natural Resources/Recreation Service (2.6)
• Source http//www.window.state.tx.us/taxbud/expen
  d.html

18
Public Education

• Structure of Elementary and Secondary Education
• Texas Education Agency (TEA)
• Independent School Districts (ISDs)

19
Education Funding

• San Antonio ISD v. Rodriguez (1973)
• Edgewood ISD v. Kirby (1989)
• 1990, legislature increased allocation to poor
  districts. Supreme Court declared
  unconstitutional in 1991.
• 1991, legislature created property tax, which the
  Supreme Court invalidated as a statewide property
  tax.
• 1993, current system adopted. Ruled
  constitutional in 1995.

20
Education Funding

• Property rich districts (305,000 in assessed
  valuation per pupil) distribute funds to poor
  districts
• Consolidate with a poor district
• Detach property and transfer it to poor district
  (tax purposes only)
• Send money to the state (attendance credits)
• Pay for education of students in poor district
• Consolidate tax bases with poor district

21
Funding Public Education

• West Orange-Cove CISD v. Alanis (2001)
• Issues
• Adequacy The plaintiffs argued that the state
  did not provide sufficient funding to meet the
  requirement that students pass the TAKS test.
• Cap on Property Tax for M O The plaintiffs
  argued that the state created an unconstitutional
  statewide property tax by setting the ceiling on
  school districts property tax.
• Equity The plaintiffs argued that the state did
  not provide sufficient funds for building
  maintenance and construction.
• Neeley v. West Orange-Cove CISD (2005)

22
Education Funding

• Legislative Solution
• Retained Revenue Sharing
• New Business TaxBusiness Margins Tax
• Up to 1 percent of gross receipts minus payroll
  costs or costs of goods sold
• Shifts burden from capital-intensive businesses
  to service providers
• Increased cigarette tax
• Cut property taxes for 2007-2008
• 1.00/100 assessed valuation by 2008

23
Higher Education

• Institutions of Higher Education
• Public Universities
• Community Colleges
• Funding Higher Education
• Permanent University Fund (PUF)
• Available University Fund
• Higher Education Fund
• Tuition deregulation
• Access to Higher Education
• Closing the Gaps initiative HECB

24
Health and Human Services

• Federal-State Partnership
• Temporary Assistance for Needy Families (TANF)
• Block Grant
• Limits on eligibility
• Food, Shelter, Clothing, Protection
• Food stamps
• Women, Infant, and Children nutrition program
  (WIC)

25
Health and Human Services

• Health Care
• Medicaid
• Childrens Health Insurance Program (CHIP)
• Adequacy of Health and Human Services Programs

26
Transportation Policy

• Texas Department of Transportation
• Texas Good Roads Association (TGRA)
• Toll Roads
• Regional Mobility Authorities (CTRMA)
• Trans-Texas Corridor

27
Join the Debate Privatizing Public Assistance

• Arguments for Privatization
• Reduction in time to receive services
• Reduction in personal time
• Increased accuracy of eligibility
• Arguments against Privatization
• Concerns about clients rights and company
  accountability
• Loss of state jobs
• Insufficient employees to handle demands