Texas Public Economic & Social Policy

• Topical Scenario

• Economic Policy

• Social Policy

• State Finance

• Education Policy

• Health and Human Services

• Transportation Policy Policy

Topical Scenario• Texas Public Policy Foundation• Founded by Dr. James Leininger in 1990• Initially supported electing conservatives to the

SBOE• Expanded to support business community

agenda• Continues to support conservative policies.• TPPF

Center for Public Policy Priorities

• 1985 - Catholic Group focused on improving health care for the poor

• Became independent research Group in 1999• Priorities

– Workforce/Economic Development– Access to public benefits

• Medicaid, Food Stamps, Welfare (TANF)– Kids Count.

• CPPP• Texans for Fiscal Responsibility

Public Policy Heritage

• From 1876 - 1976 Texas was a one party state.• Policy decisions pitted wealthy, conservative

Democrats against the liberal/populist Democrats.

• Rich influential Democrats controlled the campaigns and government.

• Economic policy controlled social policy• Now the business oriented Republicans

control the government and economic policy still drives social policy.

Primary Public Policy Areas

• Economic policy - affects economic activity or has economic consequences for groups or individuals.

• Social policy - guides our development and relationships as human beings and our interaction with the environment.

• Security policy - provides protection of life and property while making every effort to respect the personal rights of individuals.

Policy Process• Process Stages

– Agenda setting– Policy making– Implementation– Evaluation

• Policy Actors– Business – Elected Officials– Special Interest Groups (TPPF)

• Policy Outcomes– Distribution/redistribution of resources– Balancing power (economic and political)– Improve quality of life and environment– Political Economy

• Web of economic, social, governmental, and political institutions and processes

Proposition 15

• $3,000,000 Bonds Proposal for Cancer Research• Policy Actors

– LiveStrong Challenge – Lance Armstrong

– Patrick Rose• 109 other Texas representatives

• Senate by overwhelming vote - ? (Proposition 11)

– Families Against Cancer Tax

• Policy Outcome– Improve quality of life and environment

Economic Policy

• Fiscal versus Monetary Policy

• Includes policies which: improve job availability, regulates productivity and work environments and competition and environmental concerns.

• Sometimes overlaps with social policy

• Pressures for regulation increases as population increases and become urban

Subsidizing & Regulating • Subsidizing - grant of economic resources

– land, highways, tax breaks, debt refinancing• Regulation - restriction on certain business

activities (for example establishing a minimum wage)

• 19th century - laissez faire• First regulation use Railroad Commission• Today includes financial institutions, oil

and gas production, utilities, insurance and labor

• Affected by ideology, public opinion, and interest groups

Wealth and Poverty• Significant uneven distribution of

resources• 17 % of population below poverty level

– 26% of Hispanics, 23% of African Americans and 7% of Anglos

• State politics controlled by wealthy elite• Economic policy developed and designed

by the wealthy elite• Higher the income and education the more

politically active.

Budgeting and Borrowing

• Biennial budget system - 9/01/07 until 8/31/09• Current budget $157 billion ($130 in 2005-2007)

• Legislative Budget Board (LBB) and the Governors Budget Office (GBO) prepare budgets for consideration

• Constitutional requirement to balance budget• Legislature can borrow bond money within

constitutional debt ceiling – this is an exemption to the balanced budget requirement.

The Budget Process• Comptroller estimates available revenues• Legislature uses LBB and GBO inputs to write

budget• Comptroller must certify final budget bill• If comptroller does not certify budget,

legislature may override with 4/5 vote• Dedicated funds limits flexibility• Constitutional limits based on economic growth

and welfare spending• Budget execution authority - emergency budget

actions allowing LBB and Governor to move funds in crises

Projected Growth

Certification for 2008/09

New Budget Surplus Projected

• From $4.3 Billion to $8.7 Billion– Sales tax $1.681 billion– Franchise $719 million– Oil Production $524 million– Natural gas $1.799 billion– Other taxes and fees $950 million

Revenue - State Income• Taxes – 51% of revenues

– general sales tax – 61%– new corporate franchise tax – 8.6%– motor fuel sales tax – 2.5%– motor vehicle sales tax – 10.2%– Insurance tax - 4%– oil/natural gas tax – 7.3% – tobacco, alcohol - 4%– utilities, inheritance, hotel/motel – 2.6%

• Federal funds - 31% • Licenses and fees - 8%• Lottery - 3%• Other - 7%

Revenue - Federal Funds

• Primarily in form of grants• Categorical grants - specific areas within

education, welfare, transportation• Block grants - social services, child care,

Development Assistance to Needy Families• 67% of federal aid goes to health and human

services

Tax Effects on Individuals• Progressive tax increases as incomes rise• Regressive tax decreases as incomes rise• Proportional tax is a flat tax not

connected to income• Federal income tax is progressive• Sales tax is regressive• In Texas the tax system is regressive

– income < $19000 pays 13.8% in taxes– income $50000 - $70000 pays 8.5% in taxes

• Based on GDP – Texans pay one of the lowest amount of tax.

Spending 2006/7

• Budget was $130.5 billion• Texas ranks 50th in per capita spending

– Constitutional amendment limiting welfare spending

– California collects 44% more in tax dollars but spends 61% more per person than Texas

• Spending by category– Category National Texas– Education 30% 34%– Highways 6% 8.6%– Health 7% 37.8%– Welfare 23%

Education

• Constitutional right - Article 7, Section 1– “an efficient system of public schools”

• TEA created in 1949• Largest state agency with a $13 billion budget• 1033 ISDs - most in nation• 274 Charter Schools - state contract schools

funded at $61 million not linked to any ISD.• KIPP• 5.4% of students attend private schools

School Financing

• State provides 38%• Federal government provides 10%• Local ISDs provide 52%

– Derived from property taxes

• Permanent School Fund - endowment– revenue from state owned land

• Available School Fund - investment income

A Question of Equal v. Efficient

• “an efficient system of public free schools”• Rich districts versus poor districts• Rodriguez v. San Antonio ISD 1971

– Federal lawsuit addressing equality in education.– Texas school finance does not guarantee U.S.

Constitutional equality.– Edgewood ISD - $5960 property value/student– Alamo Heights ISD - $ 49000 prop val/stud

• U.S. Supreme Court upheld system– agreed system in Texas not equitable– but…education not a fundamental right– Court upheld Texas position

• 1973 - 1987 little state reform• 1989 Edgewood v. Kirby - Texas Supreme Court agrees system is unconstitutional• Court not satisfied until 1995

Robin Hood to the Rescue

• 83 ISDs had $465,535 ($796,732) property val/stud

• 35 ISDs had $49,946 ($52,158) property val/stud• 116 ISD’s pay - 883 receive -$2.5 Bil• Courts directed redistribution of assets

– Capped taxable property wealth at $295,000– Rich districts consolidate with another (0)– Detach property and transfer to another (0)– Send money to state to transfer to another (66)– Pay for students in another district (20)– Consolidate tax base with another (0)

2004/6• 300 ISDs sue state over wealth redistribution and tax

cap– West Orange-Cove Consolidated ISD v. Alanis

• Texas Supreme Court agrees• 2005 legislative session results in no plan for future.• Special session began April 17th to address issue before

June 1st deadline– New Business Franchise tax– Cigarette tax increase $1.00 per pack– Reduction in property Tax

Education Quality Efforts

• 1983 Select Committee on Public Education

• Increased teacher salaries

• Mandated teacher testing

• No pass - no play rule

• TAAS Testing

• 1990 initiatives– testing changes; TAKS now.– safety– social promotion

Texas Higher Education• 100 institutions regulated by the

Coordinating Board of Higher Education• Tuition for residents one of lowest in nation• Permanent University Fund (24 schools)• Higher Education Fund (32 schools)• Funds generate $475 million per year• Hopwood case cause decrease in minority

enrollment• Top 10% rule

Health and Human Services

• Joint entitlement program• Federally funded and run by state• Food Stamps - eligible low-income people• Head Start - education/health care preK• Social Security - retirement/supplemental

income• AFDC - abolished in 1996 replaced by

Temporary Assistance to Needy Families• Texas Department of Housing and Community

Affairs - block grants• Texas is known for high poverty rates and low

social spending.

Health Care• 1 in 4 Texans has no health insurance

• Medicaid - insurance for low-income

• Medicare - insurance for elderly and disabled

• Children’s Health Insurance Program– covers qualified children not using Medicaid

• Texas Healthy Kids Corporation– state contract with private providers– Goal 33% of children covered by 2004– Discontinued because most in CHIP

Adequacy of Social Services

• Temp Assistance to Needy Families– $1.2 billion in federal assistance for Texas

– $600 million provided by State of Texas

– $209 per family due to number qualifying

• Lone Star Card (Food Stamps)– 2.7 million applied in 1994

– 1.4 million applied in 1999

– 2.3 million applied in 2004

– $85 per recipient per month

– only 50% qualifying apply

– Texas lost $800 million in 1999

Addition Policy Areas

• Gun Laws– Handgun restriction

• Capital Punishment– Mentally Retarded– Adolescents– Cruel and unusual punishment

• Abortion– Parental notification/consent– Waiting period

• Water Usage• Air Pollution• Global Warming

Transportation Policy

• Trans-Texas Corridor

• Focus on Texas Department of Transportation (TxDOT) - roads

• Who pays?– As you go– Bonds– Tolls

Pay-as-you-go or Tolls

• Interstate Highway System

• Dallas Fort Worth Turnpike

• Dallas North Toll Road

• Sam Houston Toll Way

• Transportation Taxes– Federal gas tax – 18 cents/gallon– State gas tax – 20 cents/gallon

• Hasn’t increased since 1991

Texas Mobility Fund

• Created by legislature in 2001

• Revolving Bond Fund for creating of toll roads from existing roads

• Regional Mobility Authorities (RMA)– Central Texas RMA created– Expanded powers in 2003– Capitol Area Metro Planning Organization

Policy and Public Opinion

• Constructing Public Opinion from Surveys

• Public Opinion, Political Knowledge, and the Importance of Ignorance

Measuring Public Opinion:Questions

• How can public opinion be measured?

• What problems arise from public opinion polling?

Constructing Public Opinion from Surveys

• Public opinion polls are scientific instruments for measuring public opinion.

• To be accurate, the poll must be based on a representative sample of the population.

• The validity of the poll depends on the sampling procedure used.

• Straw polls - not representative polls

Problems with Polls

• The good citizen response

• The bandwagon effect

• Inconsistent responses

• Push polls

• Survey wording

Question Differences%

Tax Cuts 60New Prog 25

Other 12Don't Know 4

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%Tax Cuts 22Def Prog 69

Other 6Don't Know 3

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Texas Polls• Affirmative Action - 1988

– 69% Oppose using in government employment– 72% Oppose in private employment– 52% Say it should be eliminated (1995)

• Funding Public Education - 1988– 40% Consider it fair 32% Consider it unfair– 45% Say funding inadequate 29% adequate– 80% Support increased education spending (2005)

• 56% Opposed increasing sales tax to do it.

– 58% Support “Robin Hood” Plan (2005)

• English as Official Language - 1987– 74 % favor

Flag Burning and Abortion

• Flag Burning - 1989– 67% felt a flag burning amendment would not be a

limit on freedom of speech

• Abortion– 63% felt it should be conditionally legal in 1989

– 16% felt it should be absolutely illegal in 1989

– 41% felt it should be illegal in 1997

– 80% favored parental notification

– 77% favored the 72 hour waiting period

Illegal Immigration 2004

• 86% felt very serious problem - 13% not serious.

• 48% favor Bush plan - 45% oppose plan.• Hispanics: 55% favor plan - 40% oppose

plan.• Anglos: 49% favor plan - 45 % oppose.• Blacks: 37% favor plan- 56% oppose.

Medical Marijuana 2004

• 75% favored idea• 19% opposed idea• 6% clueless• 83% in Central Texas favored idea• Favored by Party

– 67% of Republicans– 81% of Democrats– 82% of Independence

• Favored by Age– 18 - 29 - 81%– 40 - 49 - 70%– 60 - 80 - 60%

Gun Control and Civil Liberties2004

• 80% Support renewing the assault weapons ban

• 56% Support limiting civil liberties to fight the war on terrorism

Taxes and Gambling 2005

• 68% Support video lottery terminals• 28% Opposed• 4% Clueless• 54% Say property taxes are too high• 65% Support increasing cigarette tax by $1 per

pack.• 33% Opposed• 2% Clueless

Immigration Reform 2007

• Increase Border Security with Fencing – 83%• Allow illegal immigrant chance to become legal

after fines, back taxes and background investigations – 63%

• Penalty for employers hiring illegal immigrant workers – 83%

• Require workers to return to native country before status changes – 63%

UT Polls 2009

• Polls at Texas Textbook Web Page

Ideological Interpretations

• Hiring and Education Funding - majority favor

individualism over government regulation

• Social Issues (Abortion, Language, Flag

Burning, Religion in schools) - Majority

support government regulations.

• Polls show tendency to conservative ideology.