Local government should follow state’s lean budget lead

The Lone Star State is renowned for being a bastion of conservatism. But Texas’ love for low taxes and limited government— which has helped transform the state into an economic juggernaut — is really only true when referencing state government. The predominant governing philosophy among Texas’ local governments is decidedly not right-of-center.

Broadly speaking, policies enacted by cities, counties, and school districts tend to favor government-centric solutions that often corrode individual liberty and economic freedom. There are, of course, exceptions, especially in smaller, more rural communities. But the overall tilt is most decidedly to the left, in the direction of big government.

To illustrate this point, let’s consider three areas: taxes, spending and debt.

No tax in Texas is as brutal as the property tax, which is levied exclusively at the local level. Its annual assault on taxpayers has earned it “most hated tax” status, as evidenced by a recent University of Texas/Texas Tribune poll that found 84 percent of respondents supported cutting property taxes while 77 percent of those polled were in favor of limits on local governments’ ability to raise them.

This near-unanimous dislike for property taxes is easily understood.

From 1992 to 2010, local property tax levies soared by 188 percent while population grew just 40 percent, signaling a major discrepancy between how fast property taxes are growing and how fast those that pay property taxes are coming.

Driving much of this growth is public education profligacy. Consider that Texas school districts, which take in about 55 percent of all property taxes levied statewide, saw enrollment growth of just 21 percent from 2001 to 2011. Yet over that same period, school districts’ payroll and other operating costs grew by 64 percent, while debt service payments soared by 127 percent. It’s easy to see how, with this kind of excess, property taxes continue their skyward march.

But property taxes aren’t the only problem area. So, too, is local spending.

Unlike state government, Texas’ local governments don’t have a uniform spending limit in place to enforce fiscal responsibility. Consequently, local spending is growing much faster than it should be.

From 2000 to 2009, local government spending grew by 84 percent, while population and inflation combined rose just 44.9 percent. In other words, cities, counties, and school districts are outspending population and inflation by almost 2-to-1.

But while soaring property taxes and fast-growing local spending are problematic, a near-crisis exists when it comes to local debt.

According to the state agency charged with overseeing public debt — the Bond Review Board — local governments owed more than $333 billion in total debt as of fiscal 2014. That monstrous debt load, which is up roughly $35 billion since fiscal year 2009, means that every Texan is obligated for about $12,500 for his or her share of local debt. And with local debt growing the way it has been, that obligation is likely to get much, much worse.

Consider that from 2001 to 2011, local debt soared by 122.4 percent, while population and inflation grew just 53.3 percent. A trend like this is not sustainable over the long-term.

Texas’ local governments tax-and-spend mentality stands in stark contrast to state government, which is doing very much the opposite — showing budget restraint, cutting taxes, and socking a sizeable “rainy day” fund.

The result is that there’s a great divide that’s formed in Texas, with one side securing liberty from government while the other is taking liberties with government. It’s up to those in the former to restrain the latter lest we risk it all.

Quintero is the director of the Center for Local Governance at the Texas Public Policy Foundation. He can be reached at jquintero@texaspolicy.com.

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