Gaining Ground

Introduction


Midway through the 1990s, Texas is gaining ground.

After years of economic struggle, we're finding our footing again.

Jobs are up, and crime is down -- though the link between the two is still sometimes overlooked.

Trade has blossomed, and Texas seems poised to take a strategic spot in the growing global marketplace.

New business starts are on the rise, unemployment under control, manufacturing holding steady.

Construction, consumer confidence and capital investment are strong.

Even the Help Wanted Index -- about as exciting to most Texans as some PBS documentary based on the adventures of an assistant auditor in a big accounting firm -- has jumped 13.5 percent over last year, a sign that jobs are more plentiful.

By almost every standard measure of economic growth, the news is good.

Texas is gaining ground on another front, too: the battle to reshape state government into an efficient and effective catalyst for change.

Four years ago, it was a different story. When lawmakers arrived in Austin for the legislative session in 1991, they found themselves staring down the twin barrels of a difficult dilemma. On the one hand loomed a projected budget shortfall of up to $6 billion and, on the other, the very real prospect of new taxes or even a personal income tax.

One state official called the pending budget a "blueprint for disaster."(1) Another labeled it "the worst fiscal crisis we've faced in 20 years."(2) Yet another surveyed the economic outlook and confessed, "I am not abundant with glee."(3) A leading newspaper editorial wondered if the time had arrived when "new prisons could not be opened, public schools would not get money promised by 1990 legislation and a half-million needy Texans would be dropped from health and welfare rosters."(4) "Money, money, where is the money?" asked another,(5) while a third simply demanded, "It's Broken -- Fix It."(6)

That was easier said than done. Despite the crunch, Texas ranked at or near the bottom in most spending categories and received fewer federal grant dollars per person than all but three other states, forfeiting at least $1.2 billion each year that could have been raised without costing Texas taxpayers an extra penny.(7) Dedicated funds, created to guarantee stable revenue sources for priority programs, had placed much of the budget beyond legislative control, tightening the portion available to meet general needs -- and prompting still more dedicated funds.

Texas was also entangled in lawsuits that had led to costly court orders in our schools, prisons and mental health and mental retardation facilities. Public and higher education, which accounted for 44 percent of total state spending, remained underfunded and subject to their own lingering lawsuits in state court. Prison construction and operating costs had climbed 22 percent in the previous year, while spending for health and human services had jumped a combined 40 percent during 1990. Meanwhile, state agencies across the board had asked lawmakers for more money, and their combined new spending requests exceeded the total state budget by $8 billion.(8)

Then, the Texas Performance Review (TPR) was born. With the passage of Senate Bill 111 that year, the Legislature set in motion one of the most comprehensive reviews of state government ever undertaken. The primary objective, as defined in the legislation, was to "challenge and question the basic assumptions underlying all state agencies and the programs and services offered by the state." It wasn't intended as a mere budget cutting exercise because Texas was really rather tightfisted compared to most states. To bring about lasting reform in the fiscal arena, therefore, the review would have to extend far beyond budget cuts to the broader issues of how state government is organized, managed and financed.

Today, as lawmakers again prepare to convene in Austin on the second Tuesday of January, Texas has haltingly regained some of its financial health. The nation's outlook, clouded by the Gulf War four years ago, seems somewhat more certain as 1994 draws to a close -- an important point, since our state fortunes are more closely tied to the nation's than ever before. The Texas economy increasingly marches to a rhythm laid down outside our state borders, and that rhythm is more upbeat than it was four years ago.

State government sits on a $2.2 billion cash balance cushion, the result of both hard work and more than a little luck. The economic landscape is a little more lush than it was in 1991, with the prospect of more prosperity just beyond the horizon. The culture of complacency at some state agencies has been exposed and the importance of a good working relationship between government and business has been re-established.

We've gained a great deal of ground in a few short years. But just because everything is different doesn't mean that anything has changed.

Fiscal Impacts

The recommendations contained in Gaining Ground would have a variety of effects on the state's finances.

Some recommendations would produce straightforward savings immediately. Others would dramatically improve the state's efficiency, but their impact on costs or savings cannot be estimated.

A number would have no immediate fiscal impact. They're just sensible proposals that would make for good government.

Finally, some proposals would increase costs in the short term, but with an eye toward improving customer service and creating future savings and efficiencies.

In all, Gaining Ground's recommendations, if enacted, would produce an additional $1.9 billion in general revenue over the 1994-95 budget period. The increase in all funds would be nearly $2.1 billion over the next two years. Five-year increases in general revenue would total $4.2 billion; the all-funds total would rise by $4.6 billion over five years.

Table 1 shows the fiscal impact of Gaining Ground's proposals based on the functional areas of state government as discussed in Volume 2 of this report. Each recommendation is described separately and in detail in Volume 2.

The five-year impact of each of the issues is summarized in the appendix to this volume.

Table 1: Impact of the TPR Recommendations
(Amounts in Millions)

                   General     Other       Total:     Impact on
                   Revenue     Funds     All State      State
Section             Impact    Impact       Funds      Employment

Work Force         -$0.1       $0.0        -$0.1        -44.0

Education          207.4     -100.0        107.4         11.0

Health 
   and Human
   Services        170.1        0.0        170.1     -1,172.0

Employee 
   Issues          878.1      257.6      1,135.7     -8,459.0

Public Safety 
   and
   Corrections     266.1        3.8        269.9     -1,938.0

General 
   Government      350.9       19.8        370.7        -84.0

Cross 
   Government        0.2        4.9          5.1          2.4

Total, All
   Categories   $1,872.6      $186.2    $2,058.8    -11,683.6


Source: Texas Performance Review.

Endnotes

  1. State Senator Chet Brooks quoted in Ken Herman, "Sharp predicts $4.2 billion shortfall for '92-'93," Houston Post (January 5, 1991).
  2. State Representative Bruce Gibson quoted in Gardner Selby, "State leaders warned of $4.2 billion shortfall," Dallas Times Herald (January 5, 1991).
  3. State Senator John Montford quoted in Ross Ramsey, "A sense of urgency looms over session," Dallas Times Herald (January 8, 1991).
  4. "Welcome Back: Tough challenges face the Legislature," Fort Worth Star-Telegram (January 8, 1991).
  5. "Money, money, where is the money?" Dallas Morning News (January 8, 1991).
  6. "It's Broken -- Fix It," Houston Post (January 8, 1991).
  7. Comptroller of Public Accounts, Breaking the Mold: New Ways to Govern Texas, Volume One (1991), p. 24.
  8. Ibid, pp. 24-28.