Lies, Damned Lies, and LBB Statistics

Transcription

1 Lies, Damned Lies, and LBB Statistics Breaking down the August 2013 Legislative Budget Board Trends Table Figures often beguile me, particularly when I have the arranging of them myself; in which case the remark attributed to Disraeli would often apply with justice and force: There are three kinds of lies: lies, damned lies, and statistics. --Mark Twain

2 In August 2013, the Legislative Budget Board (LBB) released a trends table purporting to show that All Funds expenditures for the 83rd Texas Legislature had been reduced by 1.3% when certain economic factors were taken into account. This conclusion was at odds with the facts as reported by Texas Public Policy Foundation: session-to-session spending by the 83rd legislature increased at least 24% in 2013.

3 Unsurprisingly, the LBB trends table has been used by big-spending politicians to justify their votes in support of SB1 (the general appropriations act) and other supplemental appropriations bills. With the LBB s numbers, the spend-everything crowd has attempted to deceive voters on the campaign trail back home, attempting to convince them that they had a fiscally responsible session. But the LBB s numbers don t tell readers how much was spent by the most recent legislature, only what was spent per biennium. And what s worse, the LBB s numbers are misleading with regards to how much was spent on a biennial basis. The following is a breakdown of the LBB trends table showing the accounting gimmicks used by the board to produce their politically convenient numbers.

4 This is the trends table as published by the LBB. The table at the top is a document showing all funds spending and general revenue spending as adjusted by population and inflation. We will address the problems with those numbers in a moment. The second table at the bottom is useless. It is based on the fallacy that a portion of the state s increase in spending since 2007 shouldn t be counted because that spending was intended to offset local property tax cuts. There are two problems with that line of thinking.

5 First, table two assumes that every dollar in taxes cut at the local level should be off-set with an increase in state spending. Tax cuts should be paid for with spending cuts, not increased state spending. Second, the property tax cut in 2006 (which was accompanied by an increase in the much-loathed business margins tax) hasn t resulted in real tax relief. Numbers provided by Comptroller Susan Combs show a slight decrease in property taxes in 2007 which was wiped out entirely by According to the facts, property taxes increased 22% between 2006 and Seven years have now passed. How much current spending should LBB bureaucrats and big-spending politicians be allowed to offset due to their failed property tax-cut?

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8 But the numbers in table one don t accurately reflect spending by the 83rd Legislature either. The footnotes to the LBB trends table show manipulation of the numbers in and by counting current spending against the previous biennium. In reality, all funds spending for the biennium after the 82nd legislature amounted to $ billion. Those numbers have been manipulated up to $ billion by the current legislature s spending. Likewise, an accounting gimmick has been applied to spending to make it appear $6.1 billion lower by taking patient income at medical schools off the books without reducing the numbers in previous sessions accordingly.

9 When all of the 83rd Legislature s spending is taken into account, and the $6.1 billion in patient income is included for the sake of proper comparisons, it is evident that the 83rd Legislature spent $ billion a $ billion increase over the previous Legislature. That s a session-to-session increase of 26.9%. 82nd Legislature $ Billion +$ Billion 83rd Legislature $ Billion 26.9% Increase Maybe that is why all but one of the House Democrats voted Yes on the budget while 30 Republicans nearly 1/3 of the Republican Caucus voted No. Note: A previous version of this presentation failed to take into account the effect of HB 4 and HB 275 during the 82nd legislature. HB 4 reduced spending in the biennium by $354 million. HB 275 increased spending by $3.199 billion through making a draw on the ESF. Collectively these acts accounted for spending by the 82nd legislature of $2.845 billion in addition to the $ billion appropriated for the biennium.

10 The general revenue spending numbers have been skewed as well. Another footnote shows that general revenue spending for the biennium has been reduced by $1.75 billion by offsetting a payment deferral (an accounting gimmick in its own right by the 82nd legislature) with $1.75 billion from the Economic Stabilization Fund.

11 So what does a proper trends table look like? First of all, it includes the $6.1 billion in patient income so that comparisons are valid. Second, it puts the $1.75 billion deferral payment back in the biennium general revenue total, where it should have come from instead of being funded by a raid on the Economic Stabilization Fund. These changes are necessary so that numbers from one biennium to the next can be compared. To not make these changes to a trends table would render the results meaningless. But while session-to-session spending tells us more about the success and failure of our politicians, the LBB report doesn t pretend to show the spending of each legislature. The report shows spending per biennium and doesn t measure the degree to which a crop of politicians back-filled spending into a previous biennium.

12 But a proper trends table also shouldn t compound inflation and population. Population growth often forces growth in government spending, but unlike inflation which undercuts the value of the actual dollars spent, there is not a dollarfor-dollar increase in government spending for every person who is born in Texas or moves here. On the next page, and on our website at we have produced a trends table showing useful information about spending in Texas going back to 1992, a full decade further than the current LBB report.

13 With a proper trends table to help us, we can see that spending from the biennium, even when that number was supplemented by increased spending by the 83rd legislature, increased by 8.3% When that number is adjusted for inflation, it is still a 5.7% increase. Since 2002, all funds spending has increased 36.7%, even when adjusted for inflation. That is ten percent faster than population growth over the same period.