Office of the Governor Rick Perry

Governor's Initiatives - Texas Budget Compact

Principles for a Stronger Texas

We are approaching a legislative session that offers a very clear choice in the direction we'll be going as a state in the years and even decades to come. Given the increasing pressure on our budget, in particular with respect to Medicaid, it is imperative we remain committed to the sound conservative values that have made Texas the prosperous state it is today, and take steps to advance us even further. These are principles Texans live under and these are the principles Texans expect.

As we all have a vested interest in the future of Texas, we need to do everything we can to help our state become a stronger, more prosperous state, better prepared to deal with the unexpected and better positioned to care for our own. That's what the Budget Compact is all about, a unique opportunity to do right by Texans.

Action Items

That's why Gov. Perry is proposing "The Texas Budget Compact," comprised of five simple yet effective principles that will lead to a stronger Texas:

Practice Truth in Budgeting
Truth in budgeting effectively means hitting the reset button on our budgeting process and putting an end to budgetary tricks and maneuvers that produce nothing but short-term solutions and long-term confusion. When seeking to "balance" a budget, lawmakers might defer payments they know will come due, or underfund something with the intention of squaring the account at the beginning of the next budgeting cycle. It's certainly not unique to Texas, but it's a tactic that does little more than delay the tough decisions any enterprise - private, public or family - must make to continue living within its means.

Support a Constitutional Limit of Spending to the Growth of Population and Inflation
Keeping a tight rein on spending means fostering a solid, predictable economy, and a state government that doesn't put off tough decisions until they create major complications. That's why we need to constitutionally limit the growth of any increase in state spending to the growth of our population, combined with the rate of inflation.Currently, any increase in spending is limited by growth in personal income, which is a much more fluid and generally larger number than the one the Compact proposes.

Oppose any New Taxes or Tax Increases, and Make the Small Business Tax Exemption Permanent
One of the principles that separates Texas from the rest of the pack is our steadfast refusal to overburden taxpayers. That's why, when other states crank up taxes, employers and employees alike turn their eyes to the Lone Star State, confident in our dedication to the idea of letting Texans keep more of their own money. Keeping our state taxes low is a critical element in keeping our state on top of the national economy, whether we're talking about creating a new tax or increasing the rate on taxes already in place.

Preserve a Strong Rainy Day Fund
An important facet of fiscal responsibility is ensuring the state is financially able to cope with unforeseen events. Just like every home budget needs a savings account for emergencies, we need to preserve our strong Rainy Day Fund. An adequate Rainy Day Fund is critical to our ability to respond to and recover from disasters and emergencies, whether they're natural or man-made.

Cut Unnecessary and Duplicative Government Programs and Agencies
A basic value that has helped power the Texas economy over the past decade is our dedication to cutting expenses wherever possible, doing everything we can to get the most possible out of every single taxpayer dollar. We must remain true to that philosophy whether tax receipts are coming in higher than expected or lower than anticipated. That's why it's essential that we target and eliminate unnecessary government programs and agencies, especially those that are performing similar, or even identical, functions to those found elsewhere in government.

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