Report Also Shows $4.7 Billion Would Have Been Returned to Taxpayers
1/6/05

AUSTIN -- As the Texas legislature prepares to convene its new session, the Americans for Prosperity Foundation today released a study showing that Texas' recent $10 billion budget crisis could have been prevented if the state had implemented a Taxpayer's Bill of Rights amendment in the 1990s.

The report, "A Taxpayer's Bill of Rights (TABOR) for Texas," shows that the state would have amassed $10.9 billion in surpluses since 1991 and that the largest budget shortfall would have been less than $2 billion -- a fraction of the recent shortfall that created a major budget crisis in the state. The study also found that Texas taxpayers would have received $4.7 billion in tax relief and rebates, and that $5.4 billion would have been invested in a budget stabilization fund to better handle revenue shortfalls. The report was written by University of Colorado Professor Dr. Barry Poulson, the nation's leading expert on the issue.

"Had Texas implemented a Taxpayer's Bill of Rights in the 1990s, the state would have amassed a real budget stabilization fund that would have helped offset the $10 billion shortfall that occurred during the recent economic downturn," Poulson explained. "In addition, taxpayers would have received $4.7 million in tax rebates and reductions."

A Taxpayer's Bill of Rights is a state constitutional amendment that would limit the annual growth in government. Under a Taxpayer's Bill of Rights, state expenditures and debt could not grow faster than the rate of annual population growth plus inflation. Surplus revenue received above this amount would accrue in a budget stabilization fund and a portion would be returned to taxpayers. Tax increases or spending above the amount of the Taxpayer's Bill of Rights limit would require voter approval.

Peggy Venable, director of the Texas chapter of the Americans for Prosperity Foundation, said there will be a significant push for a Taxpayer's Bill of Rights amendment in the upcoming Texas legislative session.

"The painful $10 billion budget crisis we experienced in the last session is still very fresh on the minds of every legislator who had to deal with it, and a Taxpayer's Bill of Rights amendment is the best way to guarantee we don't have to go through that nightmare again the next time the economy cools off," Venable said.

Click here to download the complete study.