1. Public Policy in Texas
Chapter 8

2. Introduction Economic Policies Social 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 Policy making Implementation
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 policy’s implementation
Evaluation
Assessing the policy’s 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 Roles of Government
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 Biennial budget
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
Comptroller’s 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:

10. Principles of Taxation
Adequacy—raises enough money
Equity—everyone pays their share according to ability to pay
Economic competitiveness—enhances state and local economic development
Balance—avoids over-reliance on any one tax or set of taxes
Stability—withstands shifts in economy
Simplicity—minimal 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,

14. Effects of Taxation Progressive taxes Regressive taxes
Percentage of individual’s income paid in taxes increases as individual’s income increases
Regressive taxes
Percentage of individual’s income paid in taxes decreases as individual’s income increases
Proportional taxes
Percentage of individual’s income paid in taxes is the same for all income levels

15. Effects of Taxation—Texas

16. Effects of Taxation—Texas

17. State Expenditures: FY 2008 $81.94 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:

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 Tax—”Business 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
$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
Children’s 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 client’s rights and company accountability
Loss of state jobs
Insufficient employees to handle demands