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Taxes
Understanding Texas Taxes
- What's the big deal with school funding and the state revenue system?
- What do lawmakers propose to do about it?
- How would their proposed solutions affect you?
- How can we really make the state revenue system robust enough to work for years to come?
In 2003, the Texas Legislature made draconian cuts in the state budget rather than raising taxes. Now they are trying to figure out how to get billions more dollars for public schools, but many lawmakers oppose raising any new state funds.
Any changes the Legislature makes to the Texas revenue system will have implications for every local community in Texas for years to come. Depending on the solutions lawmakers choose, the system could be more fair or less fair than it is now, it could rely on a more stable revenue model or a less stable one, and it could generate enough funds to bring Texas out of "last place" in key state services, or it could generate just enough to help schools for a couple of years.
Lawmakers will need to hear from voters about what solutions they favor. To help Texans think through the options, Texas Impact is developing this webpage as a go-to source for everything you need to know about Texas revenues and spending.
You'll find state revenue and spending information from state government; ideas about tax theory from think tanks; and proposed solutions from members of the Texas Legislature. You'll also find suggestions for getting involved and making your voice heard.
Can't find the information you're looking for? This site has links to many of Texas' budget and tax experts, who will be happy to answer your toughest questions!
NOTE: THIS PAGE IS A WORK IN PROGRESS. PLEASE CHECK BACK FREQUENTLY FOR NEW INFORMATION, AND FEEL FREE TO LET US KNOW ABOUT DOCUMENTS OR LINKS YOU THINK WE SHOULD INCLUDE.
- SECTION ONE: The Texas Revenue System
- SECTION TWO: The State Budget
- SECTION THREE: Proposed Changes to Texas' Revenue System
- SECTION FOUR: Tax Theory and Policy Analysis
- SECTION FIVE: Tax Fairness
SECTION ONE: The Texas Revenue System
How much revenue does Texas currently collect?
From the Comptroller's 2004-05 Certification Revenue Estimate: The State of Texas will have $58.4 billion in general revenue-related funds to finance appropriations in the 2004-05 biennium. (See Table 1 and Table 2.)
What are the sources of Texas revenue?
From the Comptroller's 2004-05 Certification Revenue Estimate: This revenue will come from three sources: tax collections; non-tax receipts such as fees, lottery proceeds, and interest; and the 2002-03 biennium ending balance.
More Detailed Revenue Information: http://www.window.state.tx.us/taxbud/revenue.html
How have Texas revenues changed over time?
Texas Revenue History by Source
Who are the state’s revenue experts?
Texas Comptroller of Public Accounts
As Texas' chief fiscal officer, the Comptroller has a constitutional responsibility to estimate available revenue for the state and is required to supervise the state's fiscal concerns and manage them. The Comptroller also collects taxes and fees owed to the state.
House Ways and Means Committee
From the Texas Constitution: All bills for raising revenue shall originate in the House of Representatives.
How does the Legislature know how much revenue the state will collect?
The Texas Constitution requires the Legislature to budget for no more than the amount of revenue that the Comptroller certifies will be available.
How is the Texas economy expected to perform for the next several years?
SECTION TWO The State Budget
How much money does Texas currently spend? AND What are the objects of Texas spending?
The 2004–05 biennial budget includes estimated appropriations of $58.9 billion from General Revenue Funds, $5.6 billion from General Revenue–Dedicated Funds, $39.2 billion from Federal Funds, and $14.5 billion from Other Funds.
The Legislative Budget Board's publication Fiscal Size-Up is a biennial publication that gives comprehensive historical information in narrative and graphic form on the state budget and how spending has changed over the years.
Click here to download the actual Budget of the State of Texas
How has Texas spending changed over time?
See Fiscal Size-Up.
For a more concise report, see the Comptroller's State Expenditure History
Who are the state’s budget experts?
The Texas Legislative Budget Board
"Before 1949, Texas did not have an effective system of budgeting. The state’s financial procedures were widely criticized as haphazard and arbitrary, and state agencies were funded by individual appropriation bills. Budgeting was assigned to the Board of Control, the state's purchasing agent and general housekeeping agency and predecessor to the General Services Commission. The Board of Control had no authority to refuse requisitions, however, or to make periodic adjustments in budgetary expenditures for state agencies.
The impetus for the creation of the Legislative Budget Board (LBB) was twofold: (1) escalating state government expenditures after the end of World War II; and (2) a recommendation from the State Auditor's Office for the creation of a legislative committee for the continuous review of state spending. The LBB was created in 1949. The legislation required all state agencies to submit their budget requests to the board for review and recommendations."
House Appropriations Committee
How does the Legislature decide how much the state will spend on each object?
House Research Organization: "Writing the State Budget"
Texas Legislative Appropriations Request System
From the LBB's instructions to state agencies regarding preparing appropriations requests for the 2005 Legislature:
"In 1992, the Governor and the LBB adopted a Strategic Planning and Budgeting system (SPB) to allocate state government resources. SPB
recognizes relationships between funding and performance, between accountability and resource allocation and most importantly, between
spending and results. The goal of Strategic Planning and Budgeting is to focus on the quality of services provided and to emphasize accountability
for expenditure of state resources. Major elements of the system are strategic planning, performance-based budgeting, budget implementation, and
budget monitoring. A more detailed description of the SPB system can be found in Instructions for Preparing and Submitting Agency Strategic
Plans for Fiscal Years 2005–09 (February 2004), the strategic planning instructions for agencies, which are available on the LBB website.
Introduction
While the strategic planning and budgeting structure serves as the starting point for developing an agency’s biennial budget request, the approved
budget structure may differ from the strategic planning structure. Changes to existing budget structures must be approved by the Governor’s
Office of Budget, Planning and Policy (GOBPP) and the LBB. Requested changes are reviewed by both budget offices to ensure that the structure
will provide an appropriate basis for budgetary analysis. Any changes to budget structures will be expected to allow comparison to previous
structures. In addition, to allow comparison of performance between years, historical data must be maintained and available for any measures that
are changed. Agencies wanting to modify previously approved structures and measure definitions should have submitted a written request to the
two budget offices by the April 2, 2004 deadline.
If revisions are not requested or approved, the budget structure previously approved for use in preparing an agency’s appropriation request for the
2004–05 biennium, as modified by the Seventy-eighth Legislature, General Appropriations Act, 2004–05 Biennium (2004–05 GAA), is the
approved structure for the 2006–07 biennium. Once budget structures are finalized, the LBB will send each agency a set of reports to serve as the
framework for entering the budget request into the Automated Budget and Evaluation System of Texas (ABEST)."
What are the main drivers of state spending?
LBB Fiscal Size-Up.
House Research Organization Texas Budget Highlights Fiscal 2004-05
The Texas budget is subject to many drivers. The main ones include:
DEMOGRAPHICS
The New Texas Challenge: Population Change and the Future of Texas
Steve H. Murdock, Steve White, Md. Nazrul Hoque, Beverly Pecotte, Xuihong You, and Jennifer Balkan
What will the future of Texas be? Will its population continue to increase, and if so how rapidly and where will this growth be most
extensive? Will its wealth increase with its population, or will per capita levels of income and wealth decrease? What are the
opportunities and challenges state government is likely to face in the first decades of the twenty-first century?
A team led by State Demographer Steve H. Murdock examines these questions using new figures gathered in the decennial
national census of 2000. From their analysis they are able to examine the effects of four major demographic trends that continue
markedly to affect Texas and other parts of the nation. The New Texas Challenge explores: changes in the rates and sources of population growth
• the aging and age structure of the population
• growth in the non-Anglo population
• the changing composition of Texas households
The intent is both to provide an overview of how far Texas has come and to suggest where it may be going under conditions
prevailing in the first years of this century.
Powerpoint version of Murdock's presentation
STATE ECONOMY
Comptroller's economic forecast
FEDERAL MANDATES
U.S. General Accounting Office report on unfunded mandates, May 2004
LBB "Federal Funds Watch" publications
SECTION THREE: Proposed Changes to Texas' Revenue System
INCOME TAX
Senator Eliot Shapleigh and Representative Eddie Rodriguez are two legislators who are advocating establishment of a state personal income tax.
Senator Shapleigh's Powerpoint presentation on "Investing in the Future of Texas"
Representative Rodriguez's online calculator that shows how his income tax bill would affect your household
Information on state income tax from the Center for Public Policy Priorities
GAMBLING
Governor Perry's revenue reform proposal from the May special legislative session
Information from the Baptist General Convention of Texas on gambling as a source of state revenue
NO NEW TAXES
KEEPING UP WITH PROPOSALS
Find House committee meeting schedules
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