FINANCING STATE GOVERNMENT + 1975, 2003 The League of Women Voters of Texas supports constitutional and statutory provisions for flexibility within a coordinated finance structure; equitable taxation system that assures adequate revenue; and increased accountability including the following:
- removal of provisions relating to dedicated funds, ad valorem tax exemptions, dollar amounts of debt limitations, and other such specific wording from the constitution and making them statutory
- budget execution to be a joint responsibility of the executive and legislative branches of state government
- application of appropriate fiscal management and business practices to conduct state business
- an equitable system of taxation which assures an adequate revenue; is easily administered; and is consistent with economic, social, and environmental goals
- appraisal of taxable property at full market value; state supervision to ensure equitable and uniform appraisal and taxing procedures
Explanation: Financing State Government
The League studied state financing as part of its multi-year study of Texas Constitutional Revision, adopting in 1973 a two-year study titled Financing State Government. The League study first focused on constitutional provisions relating to state finances. League members found that the state's elaborate restrictions on taxing, spending, and borrowing, intended to ensure fiscal prudence, often had quite the opposite effect. Instead they created obstacles to sound fiscal planning, management, and organization and failed to limit the financial practices they were intended to restrict. An example is the flat prohibition of state debt. Texas' outstanding debt not only exists but has been on the rise, just as total state spending has risen in recent years. The prohibition has served at times to increase the debt load by forcing the state to resort to more expensive methods of borrowing, such as the issuance of revenue bonds, rather than lower-interest-rate general obligation bonds.
The League agreed that the Constitution should permit the Legislature and Governor the freedom to develop fiscal policies for the state to meet current needs. Next, League study centered on the taxes imposed by the state government. The ability-to-pay approach for new or expanded taxes is preferred, although, in some cases, a tax levied according to the benefit theory would be acceptable as long as it was equitable and certain to be collected. A graduated personal or corporate income tax meets League criteria for a new tax, but a general sales tax does not. An equitable system of taxation also requires that tax laws be rewritten and enforced so there is certainty of collection at a relatively low cost.