A small group of Texas legislators will meet this week to decide how much they think the state’s economy will grow in the next two years.
The growth rate adopted two years ago was 10.71 percent. Two years before that, it was 8.92 percent. This year, the Legislative Budget Board will choose from four growth forecasts ranging from 11.68 percent to 15.71 percent.
This is dry stuff, but it carries a potent political charge. Whatever number is picked will effectively set the upper limit on state spending in the next budget, which lawmakers will write during the session that begins in January.
It is known as the cap, and the phrase to watch for is “busting the cap” — what lawmakers and others call it if and when they exceed the spending limit, or think about it, or want to block some program that would force them to spend beyond it.
Busting the cap is a matter of getting enough lawmakers — not an easy thing — to vote to spend more than is allowed to keep pace with the state’s adopted growth limit.
Because they are experienced with budget arithmetic and because they are (and this is intended in the most positive way) scheming politicians, there are ways to cheat. Those could come into play later in the session — in late April or early May — if the people in charge decide to push the limits set this week.
Conservative groups have tried to get rid of loopholes in the spending limits by applying them to the budget as a whole instead of to parts of it, and limiting the total to what is needed to cover inflation and population growth. The current cap does not apply to federal funds, or even to all state money, but only to growth in spending from tax revenue that is not dedicated by the state Constitution. In plain language, that means more than half of the state budget operates outside the cap. Expect those groups to be back next year with harder limits in mind when the full Legislature returns.
In the meantime, the cap will serve as a warning sign for agencies and others coming to budget writers looking for money. It makes denial a bit easier to take, if you think about it. Without a cap, budget people deciding not to spend money on a particular project have nothing to soften the blow.
This time around, it appears that there will not be a shortage of money. A booming economy and energy industry have made the state government prosperous. The comptroller will put actual numbers to the revenue forecast soon, and the spending limit has not yet been set, but it seems safe to say that more money will be available to lawmakers than the spending cap will allow them to spend.
Unresolved litigation over state financing for public schools offers one reason to keep the doors to the state treasury closed. A state district court ruled earlier this year that Texas lawmakers have not put enough money into public schools to reach the standards they themselves set, and have not ensured each student a shot at the same quality of education. The state appealed to the Texas Supreme Court. Depending on the outcome, lawmakers could be called upon to spend some money on schools.
In the long term, that could strain the budget. In the short term, it offers a handy excuse for budget writers trying to explain why they will not open the treasury while the state is so flush. Between that and the spending cap, they have the brakes they need, should they wish to use them.
Unless, of course, somebody wants to bust the cap.