If Washington Wants to Balance Its Books, Congress Could Learn Something From Texas

As Washington remains mired in dysfunction, Congress and the White House should look to Texas as a model, writes Mark McKinnon.

01.25.13 9:45 AM ET

The inaugural balls are over. Reality returns. Let the debt-ceiling debate begin. Again. But Congress won’t find the final answers to the nation’s fiscal fiasco inside the Beltway. For that, Congress needs to look to the states—like Texas, where a balanced budget is constitutionally required, where spending decisions are tied directly to projected revenue, and where “power to the people” is actually the model of governance.

Far more than 1,500 miles separate Austin, Texas, from Washington, D.C. The Lone Star State is really a whole nother country. Here, Texas Comptroller Susan Combs is urging taxpayers to demand more—more answers, that is.

“Taxpayers have a right—and more importantly a responsibility—to see how their money is being spent,” Combs writes in The Wall Street Journal. “And it’s not just federal spending. As the chief financial officer of our second-largest state, even I have found it hard to get a handle on how much governments are spending, and how much debt they’re taking on. Every level of government is piling up incredible bills. And they’re coming due, whether we like it or not.”

In Texas money goes further, with one of the lowest costs of living, one of the lightest tax burdens as a percent of income, and one of the lowest debt per capita ratios. But that can change without vigilance. One of only a handful of states with no income tax, property taxes here have risen three times faster than the inflation rate, and four times faster than the population growth in the last 10 years. Not one of the Texas brags you will hear, that tax increase is due in part to the 500 “special purpose” districts with taxing authority created in the same period and local governments more than doubling their debt load.

Combs tells taxpayers in Texas—and across the nation—that not only is the increasing debt burden theirs, so too is the power to do something about it.

She recommends taxpayers take back control in their states by identifying all taxing authorities, such as the state, city, school district, hospital district, port authority, etc.; demanding all spending and debt information be made public by these taxing entities; and calling for regular, publicly posted reviews of each taxing authority’s performance.

But the idea I find most interesting is requiring that every ballot measure in every bond election include the current amount of outstanding debt, the annual debt-service payment, and how the proposed new debt will impact that figure. Here especially, information is power to the people.

Combs reflects the right kind of thinking in Texas and is already leading the way to improve transparency and accountability.

And though the state may be mocked for its swagger, Texas has all the cattle to go with the hat.

Texas Gov. Rick Perry addresses the opening session of the 83rd Texas Legislature, Tuesday, Jan. 8, 2013, in Austin, Texas. (AP Photo/Eric Gay)

Eric Gay/AP

Texas Gov. Rick Perry addresses the opening session of the Legislature on Jan. 8 in Austin.

Continually ranked the best state for businesses large or small, Texas added more than one third of all new private-sector jobs from 2002 through 2012. The state’s unemployment rate has fallen to a four-year low of 6.2 percent—even with its population explosion and the highest number of inbound moves from other states over the last 10 years. And Texas is adding not only more jobs, but more high-wage jobs than the rest of the country, outpacing California in science, technology, and engineering.

As a result, Texas is also the leader in total personal-income growth, with a growth rate five times the runner-up’s over the last 10 years. Sales-tax revenues in December were $2.17 billion, up 9.4. percent from December 2011. And the state’s “rainy day” fund, levies on oil and gas production set aside for use in times of unexpected revenue shortfalls, is projected to reach a healthy $11 billion, some of which is likely to be consumed by Medicaid expenses still due.

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Not immune to the challenges every state faces, the Texas Legislature, which meets only 140 days every other year, continues to focus on improving education outcomes, expanding health-care options, and ensuring an adequate water supply to meet increasing population, agriculture, and industry demands.

The state’s biennial budget is tied directly to projected tax revenues. But to keep state spending in check, Gov. Rick Perry has called for a constitutional amendment tying any future increases in spending to the combined rate of inflation plus population growth.

Limited government, low taxes, controlled spending and debt, and a restrained regulatory environment make Texas work. Taxpayers empowered with more information will make Texas work better.

Washington could learn a lesson or two (or even a few trillion) from the Texas model.