Why does a balanced budget approach work? It’s simple really. The importance of a balanced budget amendment is that it forces the legislature, by force of law, to focus all budget discussions on reconciling spending and revenue. We are free to reconcile by a number of means: raise taxes, cut spending, or a combination of the two. But, at the end of the day, every budget debate comes back to reconciling spending and revenue. As a legislature, we can never ignore it. Even the most liberal members of the legislature are forced to work toward that reconciliation. Otherwise, the Comptroller of Public Accounts will never certify the budget and we start all over again.
Texas runs on a biennial (two year) budget. At the beginning of every biennium the Comptroller submits a biennial revenue estimate to the legislature. This estimate tells the legislature the amount of revenue from taxes and other sources that will likely be available to spend. The legislature then makes the decision on how they want to meet that estimate. If, in years like this one, there is a projected shortfall in revenue, the prudent way for the legislature to reconcile the shortfall is to cut its expenses. For instance, this legislative session the legislature cut spending by 8.1% from the previous biennium. The Comptroller then looks at the adjustments in spending and revenue the legislature makes, and determines whether that amount of revenue is sufficient to cover the state’s obligations for the biennium. If it is, then the budget is certified and put into place.
The difference in Washington is that reconciling revenue and spending is never the focus. Instead, the debate is about spending limits. Reconciliation can be easily ignored. Without the force of law compelling reconciliation it will never be realized and the federal government will continue to spend the futures of our children and grandchildren into oblivion. The real difference between an Austin budget debate and a Washington budget debate is that the force of law compels Texas to reconcile our spending to our revenue. Without this requirement, Texas legislators might be just as prone as congressmen are to want to “bring home the bacon” and escalate reckless spending in hopes of re-election.
State Representative Phil King serves Parker and Wise counties in the Texas House of Representatives.