If you find yourself in a hole, the first thing to do is stop digging; the second thing to do is start climbing.
Texas is facing some pretty deep crevasses at the moment, and it is time to take this sage old advice and put the shovel down. They haven’t totally submerged us (yet), but the longer it takes to make meaningful progress, the harder it will be to climb out.
The sources are multifaceted: population evolution and growth, changing economy and the end (at least for now) of the oil surge, aging infrastructure, and poorly ranked public education and inadequate resources to support education and training at all levels. When it comes down to it, we can effectively address these issues, but only if we stop digging.
Several aspects of Texas infrastructure are strained (highways, in particular), with negative effects on quality of life, safety, and the potential for economic growth. Although there has been some progress (as I’ve mentioned in previous columns), there is still more to do. Numerous studies (including some of ours) have found that through reducing congestion and lost productive time, facilitating better inventory management, and otherwise allowing the economy to work more efficiently, investments in infrastructure yield an annual return in excess of 30 percent.
Another issue is that, like many states, Texas is facing substantial unfunded pension burdens. It is crucial to ensure we are setting enough money aside to deal with these obligations in the future, but the fact is that recent budgets have provided for far lower contributions to retirement systems than called for by plan actuaries. The baby boomers are not getting younger.
In the area of public education, Texas compares poorly in terms of per-student spending, and a recent Texas Supreme Court decision is viewed by many as being a death knell to any improvement. Essentially, the Court said that the school finance system is flawed, but constitutional, thus allowing legislators to put off addressing the issue indefinitely. While there have been calls for dealing with the situation, some key leaders are resistant.
About 600 districts banded together to file the lawsuit in the wake of deep cuts to education budgets in the 2011 session, indicating that they could not fulfill their responsibilities without additional resources. The reality is that Texas spending per student is well below the national average, ranking near the bottom of all states. Moreover, it’s fallen further off the U.S. average in recent years. Without a significant change, it will be very difficult for schools to do what must be done to ensure young Texans are adequately prepared for the future (particularly given rapidly changing demographics). Without top-quality K-12 education, the state’s workforce will lose ground and the economic growth path will be notably constrained.
Another challenge is that Texas leads the nation in the percentage of residents without health insurance, which creates a notable strain on public hospitals and the overall health care complex. Multiple additional safety net programs are in crisis, including foster care and child protective services. Failing to provide adequate resources for these essential services can have devastating consequences for some of the State’s most vulnerable residents. In addition, improving outcomes can reduce future needs for social services and improve productivity.
My firm has examined the potential costs and benefits of investing in reducing child maltreatment, dealing with hunger, indigent health care, and redesigning the foster care system. In all cases, the overall fiscal gains to the State associated with effects such as the reduced need for future social services and improved productivity far outweigh the initial costs. The needed innovations, however, would be difficult, if not impossible to achieve without a commitment of State resources and require a view beyond the next two-year budget cycle.
There are some positive signs and developments. For example, WalletHub ranked the state fairly well (at 15) in terms of the return on investment in taxpayer dollars. They looked at state and local tax rates and the quality of services provided for education, health, safety, the economy, and infrastructure and pollution. Underlying data included such things as number of hospital beds per 1,000 residents, crime per capita, economic mobility, quality of roads and bridges, and much more. Although Texas doesn’t stack up well in most categories, the return on investment is still high because a lot is being accomplished in many areas with limited resources. Texas taxpayers are getting a lot of ‘bang for the buck’ in terms of spending, and that’s certainly good news.
It’s also not all bad on the education front. Even with resource constraints, there has been improvement in key measures such as high school graduation rates and college enrollment (though Texas still lags the nation). Many more high school students are taking college admissions tests, and schools are innovating to better address student needs. There’s only so much that can be done under the current resource restrictions, but efforts are being made.
While I am a fiscal conservative, believe in government efficiency, and recognize and support the important fiduciary obligation to taxpayers, sufficient money must be available to operate and meet basic needs, as well as provide the framework in which future growth can occur. True and lasting fiscal restraint does not mean spending the least amount possible at any given moment with no regard for future consequences; it means adopting intelligent and prudent public resource commitments that promote the economic vitality that will sustain a “low tax” environment for decades to come.
Texas has a dynamic economy, wealth of natural resources, young and growing workforce, enviable location, and many other attributes. However, we are in and around some big holes, and we need to stop digging.
Editor’s Note: The main photo accompanying this guest column was taken by Misty Boggs of MSGPR.