Rick Perry, former governor of Texas, will announce his second White House run. Perry served as Texas governor from December 2000, following the election of George W. Bush, until January of this year. During his long tenure, Perry showed reasonable fiscal restraint. Perry did not shrink the size of Texas’ government, but he limited its growth both in terms of spending and tax revenue.
Perry appeared in six editions of Cato’s Fiscal Policy Report Card. His first appearance was in 2004. His scores show consistent management of Texas’ budget as governor. He received a “B” in five of his six reports, with a “C” in 2012. Below are his scores in each report card.
Perry’s track record is certainly consistent given the tendency of some governors to slip while in office. For instance, George Pataki’s score fell from an “A” to a “D” between his first and last reports. Mike Huckabee went from a “B” to an “F.”
From fiscal year 2002 to fiscal year 2015, general fund spending in Texas increased 63 percent. This growth outpaced the growth in average state spending, which grew by 50 percent.
But when these figures are adjusted for population growth, Governor Perry’s record appears much better. Texas’ population grew almost 2.5 times faster than the United States’ population during this time period. In this situation, comparing per capita general fund spending growth is more instructive.
Texas: Per capita spending grew from $1,430 to $1,802, or 26 percent from FY2002 to FY2015
50-State Average: Per capita spending grew from $1,809 to $2,356, or 30 percent from FY2002 to FY2015
Spending did increase in Texas on a per capita basis, but it increased slower than spending in other states.
Inflation should also be considered. Once inflation is added, any remaining growth in general fund spending disappears. Texas’ spending increase of 63 percent from FY2002 to FY2015 exactly matches population growth plus inflation for that time period. Perry also pushed several constitutional provisions to try and ensure this fiscal restraint would last. He championed an amendment to the Texas constitution that would have limited spending growth to population growth plus inflation. He also tried to require that any tax increase must be approved by two-thirds of voters.
On taxes, Perry’s actions were mixed. In 2003, Perry supported a package that included fee increases. In 2006, Perry supported a plan that raised the cigarette tax by one dollar and repealed the state’s franchise tax in exchange for property tax cuts. The plan also created the complex Texas Margin tax as a replacement. The plan did result in a net decrease in taxes, but it was the wrong approach. The 2012 report card summarizes the issue well:
The new tax [the margin tax] hit 180,000 additional businesses and increased state-level taxes by more than $1 billion annually. The added state revenues were used to reduce local property taxes, but the overall effect of the package has been to centralize government power in the state and reduce beneficial tax competition between local jurisdictions.
In 2009, Perry pushed to increase the exemption on the Margin tax so that it would hit fewer businesses and he pushed to extend the exemption in 2013.
Perry’s long tenure as Texas governor shows consistency, earning a “B” on five out of six Cato report cards. Perry did not decrease the size of the state’s government, but he did limit its growth to population growth and inflation.