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Spending Cap: Constitutional Spending Limit and Dedication of New Tax Revenue Limit Ability to Meet Needs

  

Author:
Eva DeLuna Castro /(512) 320-0222 x 103

May 1, 2006

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Policy Page 263 described the spending needs that are still not a part of the state budget for 2006-07. The latest version of the supplemental appropriations bill, SB 16 by Ogden, identifies $2.95 billion in immediate needs. The state’s ability to respond to these needs, while reducing school property taxes and improving public education, has called into play a little-known restriction on state budgeting – the constitutional limit on spending – which limits the amount available for spending in the current biennium. An additional limit – the dedication of all revenue from tax changes made in the special session to further reducing property taxes – proposed by HB 2 by Pitts would further hamstring the next Legislature in writing the 2008-08 budget. This Policy Page explains the constitutional cap and the proposed dedication and the restrictions they would impose on the current special session and on future state budgets.