The Texas Legislature ended its 84th regular session just a week or so ago, and, from the perspective of many of us, a lot was done that will help propel the state toward continue economic success. The fiscally conservative stance taken by the 181 men and women in the Texas House and Senate will continue to make Texas a haven for people seeking opportunity.
There were literally thousands of bills filed covering an array of issues. Many didn’t make it very far in the process, but four issues really stood out for me.
First was highway funding. Population growth, combined with our geographic position in the middle of the country, makes trade a big party of the Texas economy. And trade is largely dependent on good, safe highways. Therefore, investing in roads provides a vital boost to our economy, which is why we fund our roads from local, state and federal sources. Voters will be asked this fall to approve a constitutional amendment that would move a portion of motor vehicle sales tax dollars and a portion of general sales tax dollars to highway funding, as along as the sales tax revenue remains above a certain level. If voters approve this amendment, more than $2.5 billion per year would go toward highways. This is extremely important because, from an economic perspective, if you can’t move goods or people, it is pretty hard to grow the economy.
The second major issue addressed this legislative session was taxes. The legislature enacted significant tax cuts, and, as is the case with most legislation, there were compromises. In this case, the compromise was between cuts to sales taxes and cuts to property taxes. In the end, $3.8 billion in tax cuts were approved, including an increase in homestead exemptions (thereby cutting property taxes) and a 25% cut in the business franchise tax. Texas’ continued efforts to lower taxes coupled with the lack of a state income tax creates a giant welcome sign to businesses.
In fact, Texas is one of the few states that doesn’t break your bank!
Border security was another major topic this session. Texas has a very long and porous border with Mexico, and, having a ranch in a border county, I can tell you it is very thinly patrolled. Thankfully, the legislators paid heed. The legislature voted to increase the number of Department of Public Safety agents, lengthen the hours of operation, and ensure the National Guard stays in tact until the staffing increases are complete. They also approved an additional $800 million for the state agency for implementation of these improvements. The resulting activity will also be measured so that a progress report can be made to the next legislature.
The last issue that stood out for me this session was higher education, which got a big boost this session in two different but important ways. First, $3 billion in tuition revenue bonds were passed, which will result in more than 60 colleges and universities renovating buildings and adding space. No state dollars have been added to efforts such as these since 2006, which is why this was a significant focus of this session. Second, at Governor Abbott’s urging, the legislature approved $40 million for attracting Nobel Laureates and other major researchers to our public universities. I hope both these efforts prove to be powerful magnets for our higher education system, because Texas has so many smart and talented students in its colleges and universities.
Just a final note – while Texas was making sure to have a balanced budget, leaving plenty of money in the Rainy Day Fund, generally propelling the state forward, and leaving a welcome mat in place, other states took a different approach.
Connecticut reversed course sharply, raising business taxes again, and guess what, the state’s business industry is pretty peeved. Making investments in business and people requires some level of certainty about whether or not a rug is going to be pulled out from under you. General Electric is now considering moving out of the state, precisely because of the fact that taxes have been raised five separate times since 2011. That is pretty tough for a business to deal with. In fact, the United States Census Bureau reports six states lost population in fiscal years 2013 and 2014, and Connecticut was one of these. Not surprising. States like Connecticut, California, and Illinois continue to over-tax, over-regulate and make life generally more difficult for its businesses and citizens.
It’s no wonder Texas is the state that continues to make the grade!
A bright spot on the eastern edge of the country is North Carolina. Major tax cuts and other reforms in 2013, which included a cut to the state income tax rate and corporate tax rate, as well as an elimination of the estate tax, really turned their economy around. In May, their governor announced a budget surplus of $400 million.
One thing is pretty clear. A positive economic environment depends on serious thinking about how to do things that create a friendly climate for citizens, businesses, education, and innovation. And I am glad Texas is getting it right.
We’re hitting the bullseye every time!
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