Chapter 12 Public Policy in Texas

Copyright © 2016 Cengage Learning. All rights reserved. learning objectives LO 12.1 Analyze and evaluate Texas tax policies. LO 12.2 Describe the politics of state spending. LO 12.3 Analyze Texas educational policies and the politics of education. LO 12.4 Analyze Texas health and human service policies and the politics of income redistribution. LO 12.5 Describe Texas transportation policies and evaluate the prospects for reform. LO 12.6 Apply what you have learned about Texas public policy issues. Copyright © 2016 Cengage Learning. All rights reserved.

Copyright © 2016 Cengage Learning. All rights reserved. Trends in Texas State Expenditures— All Funds, by Biennial Budget Periods 1994–2015 (in millions of dollars) Figure 12.1 The columns show that state expenditures have grown considerably, but the line shows only modest spending growth, controlling for inflation and population growth. Source: Legislative Budget Board, Fiscal Size-Up, 20124–20135 (Austin: Legislative Budget Board, 20124), p.146. at www.lbb.state.tx.us/Documents/Publications/Fiscal_SizeUp/Fiscal_SizeUp.pdf. Why should measures of state spending be adjusted for inflation and population growth? Do unadjusted figures show anything meaningful about public policy? Copyright © 2016 Cengage Learning. All rights reserved.

Copyright © 2016 Cengage Learning. All rights reserved. revenues Texas revenues come from: State taxes (47%) Federal funding (36%) Interest on investments Revenues from public lands Licenses, fees and other minor non-tax sources Copyright © 2016 Cengage Learning. All rights reserved.

Sources of Estimated State Revenues, 2014–2015 Budget Period Figure 12.2 This figure shows that Texas’s largest single revenue source is federal funding, and the largest state tax is the general sales tax. Based on Legislative Budget Board, Fiscal Size-Up, 20124–20135 (Austin: Legislative Budget Board, 20124), p. 299 at http://www.lbb.state.tx.us/Documents/Publications/Fiscal_SizeUp/Fiscal_SizeUp.pdf. Besides the general sales tax, which of Texas’s other taxes should be considered sales taxes? What are the arguments for and against consumer taxes? What are the arguments for and against consumer taxes? Copyright © 2016 Cengage Learning. All rights reserved.

Copyright © 2016 Cengage Learning. All rights reserved. revenues Taxation National taxes State taxes General sales taxes Selective sales taxes (hidden) Gross-receipt taxes Severance taxes General sales taxes: Broadly based taxes collected on the retail price of most items. Selective sales taxes: Taxes levied on the sale, manufacture or use of specific items such as liquor, cigarettes, and gasoline; these are also sometimes known as excise taxes. Copyright © 2016 Cengage Learning. All rights reserved.

Copyright © 2016 Cengage Learning. All rights reserved. revenues Taxation (cont.) Local taxes Ad valorem taxes Real property Personal property Copyright © 2016 Cengage Learning. All rights reserved.

Copyright © 2016 Cengage Learning. All rights reserved. revenues The Politics of Taxation The tax base: who should pay? Not all taxes are equally effective in raising funds for the public till Tax rates Tax base Broad-based tax Tax rate: The amount per unit of taxable item or activity. Tax base: The object or activity taxed. Broad-based taxes: Taxes paid by a large number of taxpayers. Copyright © 2016 Cengage Learning. All rights reserved.

Copyright © 2016 Cengage Learning. All rights reserved. revenues The Politics of Taxation (cont.) Regulatory taxes—designed to control isolated individual choices Benefits received tax—assessed according to the services received by the payers Ability-to-pay tax—apportioned according to taxpayers’ financial capacity Copyright © 2016 Cengage Learning. All rights reserved.

Copyright © 2016 Cengage Learning. All rights reserved. revenues The Politics of Taxation (cont.) Tax rates: progressive or regressive taxes? Progressive tax rates Increase as income increases Federal income tax Regressive tax rates Tax rate declines as income increases General sales tax Declining marginal propensity to consume Copyright © 2016 Cengage Learning. All rights reserved.

Copyright © 2016 Cengage Learning. All rights reserved. revenues The Politics of Taxation (cont.) Texas has one of most regressive tax structures among states Lower-income families pay disproportionate share Supply-side economics Supply-side economics: The theory that taxes on higher-income individuals should be kept low to allow them to save and invest to stimulate the economy. Would higher rates of state spending in Texas drive up taxes and discourage economic growth in the state? Copyright © 2016 Cengage Learning. All rights reserved.

How State and Local Tax Burdens Rank among the 50 States Figure 12.4 This figure shows the percentage of income residents paid to state and local governments in all 50 states and is based on a model that takes into account tax shifting. Note that Texans paid less than most other states. Source: National Tax Foundation, Annual State-Local Tax Burden Ranking Fy 2011, April 2, 2014 at http://taxfoundation.org/article/annualstate-local-tax-burden-ranking-fy-2011 . Do low tax rates attract business and promote economic growth in Texas? What is the effect of low state tax rates on the quality of state services? Copyright © 2016 Cengage Learning. All rights reserved.

Copyright © 2016 Cengage Learning. All rights reserved. revenues Other Revenues Federal grants-in-aid Borrowing and other revenues General-obligation bonds Revenue bonds Other non-tax revenues: Various licenses, fines and fees Dividends from investments Sale and leasing of public lands Copyright © 2016 Cengage Learning. All rights reserved.

Copyright © 2016 Cengage Learning. All rights reserved. state spending The Appropriations Process Allows legislature to legally authorize state to spend money The Politics of State Spending Many factors; competing interests Logrolling No single decision better typifies the political character of a state than the decisions made during the appropriations process. The whole pattern of spending is, in a sense, a shorthand description of which problems the state has decided to face and which challenges it has chosen to meet. The budget shows how much of which services the state will offer and to whom. Why do state spending decisions usually generate strong political controversy? Copyright © 2016 Cengage Learning. All rights reserved.

State Appropriations by Function, 2014-2015 Figure 12.5 The largest slice of Texas’s budget pie goes to education, but the portion spent for health care is rapidly increasing. Based on Legislative Budget Board, Fiscal Size-Up, 2014–2015 (Austin: Legislative Budget Board, 2014), p. 2 and p. 467 at http://www.lbb.state.tx.us/Documents/Publications/Fiscal_SizeUp/Fiscal_SizeUp.pdf . Copyright © 2016 Cengage Learning. All rights reserved.

Copyright © 2016 Cengage Learning. All rights reserved. education Elementary and Secondary Schools History Recent trends School accountability standards Privatization School accountability: Using measurable standards to hold public schools responsible for their students’ performance and teachers’ competence. Copyright © 2016 Cengage Learning. All rights reserved.

Copyright © 2016 Cengage Learning. All rights reserved. education Elementary and Secondary Schools (cont.) Public school administration State administration Independent school districts Charter schools Charter schools: Publicly funded, privately managed schools that operate independently from the district system. Copyright © 2016 Cengage Learning. All rights reserved.

Copyright © 2016 Cengage Learning. All rights reserved. education The Politics of Public Education Curriculum The curriculum and the culture wars Textbooks Faculties Copyright © 2016 Cengage Learning. All rights reserved.

education The Politics of Public Education (cont.) Students Public school finance Federal State Local → ad valorem property taxes School privatization Which factors most affect student achievement? Copyright © 2016 Cengage Learning. All rights reserved.

Copyright © 2016 Cengage Learning. All rights reserved. education Higher Education Administration of colleges and universities The Texas Higher Education Coordinating Board Community college approach Copyright © 2016 Cengage Learning. All rights reserved.

Texas Public Higher Education–Enrollments, Fall 2012 Figure 12.6 Nine out of ten students enrolled in higher education attend public institutions. Most students enroll in public community colleges. Based on Texas Higher Education Coordinating Board and Legislative Budget Board, Fiscal Size-Up 2014–2015, p. 272 at http://www.lbb.state.tx.us/Documents/Publications/Fiscal_SizeUp/Fiscal_SizeUp.pdf. What challenges do growing enrollments present to Texas institutions of higher learning? Copyright © 2016 Cengage Learning. All rights reserved.

Copyright © 2016 Cengage Learning. All rights reserved. education The Politics of Higher Education Faculty issues Financial issues Student accessibility Student diversity Affirmative action Student retention Quality Copyright © 2016 Cengage Learning. All rights reserved.

Full-Time Texas Resident Tuition and Fees per Year Figure 12.7 This graph shows the dramatic rise of tuition resulting from state budget cuts and tuition deregulation. Texas Higher Education Coordinating Board, 2013 Texas Public Higher Education Almanac: A Profile of State and Institutional Performance and Characteristics (pdf), p 7; 2012 Texas Public Higher Education Almanac: A Profile of State and Institutional Performance and Characteristics (pdf), p 7. Evaluate the alternatives to raising tuition in Texas institutions of higher learning. Should students or the public bear the greatest burden in financing higher education? Is higher education worth the cost? Copyright © 2016 Cengage Learning. All rights reserved.

HEALTH AND HUMAN SERVICES Health Programs Direct health services State health-insurance programs Medicaid Children’s Health Insurance Program (CHIP) Medicare Copyright © 2016 Cengage Learning. All rights reserved.

Texas Health and Human Service Agencies Figure 12.8 This organizational chart illustrates the wide range of services provided by the Health and Human Services Commission. Source: Health and Human Services Commission. Identify the major social service programs shown in this chart. Why is it important for a single commission to coordinate so many of the state’s human services? Why is it important for a single commission to coordinate so many of the state’s human services?

HEALTH AND HUMAN SERVICES Health Programs (cont.) Private health insurance The uninsured 1 in 4 Texans has no health insurance Highest percentage of uninsured residents Health Care Reform Affordable Care Act (ACA): The comprehensive federal health-care reforms designed to expand Medicaid coverage, to limit objectionable insurance company practices, and to make subsidized health insurance available to businesses and individuals through competitive insurance exchanges. How does the Affordable Care Act expand the role of state and federal governments? Copyright © 2016 Cengage Learning. All rights reserved.

HEALTH AND HUMAN SERVICES Income Support Programs Temporary Assistance to Needy Families (TANF) Unemployment insurance Texas Workforce Commission In 2014–2015, the maximum monthly TANF grant for a family of three was $304, considerably below the national average. The Texas median TANF grant is about one-half the national median. Unemployment insurance: The insurance program designed to provide compensation as a partial income replacement for those who have lost their jobs; it is a social insurance program financed with taxes paid by employers. Copyright © 2016 Cengage Learning. All rights reserved.

how people get health insurance: percent by insurer Table 12.4 This table shows how people get their primary insurance. It shows most Texans have employer-sponsored medical insurance, and despite public insurance, almost a quarter of Texans have no health insurance at all—a larger percentage than any other state. Source: Kaiser Family Foundation, “Health Insurance Coverage of the Total Population,” 2012, at http://kff.org/other/state-indicator/total-population . Is health insurance a private matter beyond the proper scope of government? Copyright © 2016 Cengage Learning. All rights reserved.

HEALTH AND HUMAN SERVICES The Politics of Welfare and Income Redistribution Defining welfare Unearned, government-provided benefits Corporate welfare Welfare myths Welfare realities The causes of poverty Income redistribution: A public policy goal intended to shift income from one class of recipients to another, regardless of whether these programs are designed to benefit lower-, middle-, or upper-income groups. Social insurance: Public insurance programs such as Social Security and unemployment compensation in which eligibility is based on tax premiums paid by the beneficiaries or their employers rather than need alone. Copyright © 2016 Cengage Learning. All rights reserved.

Copyright © 2016 Cengage Learning. All rights reserved. TRANSPORTATION Highway Programs The Politics of Transportation Highway privatization Mass transit Mass transit: Transport systems that carry multiple passengers such as train and bus systems; whether publicly or privately owned, mass transit systems are available to the general public and usually charge a fare. Does Texas have alternatives to the public highway system that would accommodate the transportation needs of its growing population? How would the state pay for these alternatives? Copyright © 2016 Cengage Learning. All rights reserved.

texas uninsured residents Click picture to view video Copyright © 2016 Cengage Learning. All rights reserved.

video discussion questions How many millions of Texans are currently uninsured? Who is most likely to be without insurance? Is basic health care a right or a privilege in our culture? What should Texas do, if anything, to help those who cannot afford health insurance? Copyright © 2016 Cengage Learning. All rights reserved.