Who Can Guarantee An A On Texas Government Exam?

Federal Context

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Introduction

What is federalism? Federalism is a form of government based on layers of government. It is a form of government that combines the components of centralized and decentralized forms of government, with decentralized governments (state and local) under the restricted control of a national government. It is a balancing act much the same as the relationships in a family. Think of your parents as the national government and you and your brothers and sisters as the subnational governments. Individually, you are allowed to make some decisions and choices, but only within the context of the parameters set by your parents. The decisions that they make have a direct impact on what you do or do not do or can or cannot do. Further, the decisions that you make affect and are affected by the behaviors, activities, and decisions of your brothers and sisters (try wearing your sister's clothes without asking andyou will see what I mean!). In that way, our structure of government is very much like a family unit.

In America, federalism refers to three layers of government. First, there is the national level (the parents), which includes the president, congress, federal courts and federal bureaucracy. Below that is the state level (each state is a sibling, child of the national government), which in Texas includes the governor, state legislature, state court system, and state bureaucracy. Finally, there are local governments (grandchildren perhaps?), which in Texas include city governments, county governments, school districts and “special districts.” Like their state and national counterparts, cities and counties may posses an executive, legislative, and judicial branch, and bureaucrats. For example, Arlington has a Mayor (executive), a City Council (legislative), justices of the peace (judicial), and policemen, metermaids, etc. (bureaucrats).

Where did the founding fathers of the United States (Texas came into this system in 1845 long after it was established in 1791) get this system? Was it a new concept? While it may have been new to Anglos, many Native American tribes had been using such a decentralized system for centuries to govern diverse tribes. Did the founders borrow the idea from Native Americans? Did they base it on their own family units? Were they merely looking for a compromise between a government that was too centralized (England) and too decentralized (The Articles of Confederation)? Given the passage of time, we may never know the answer to that question. Perhaps the answer is a combination of all three.

Federal Context

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History of the Federal Structure

Congratulations!!! You have been selected by the citizens of your state to represent them in the Constitutional Convention of the newly formed United States of America in 1787. Along with about sixty other men (sorry, no women selected until 1989!), you have been charged with revising the failing Articles of Confederation. The nation is in economic disarray and there is a very real possibility that England or France will attack if something is not done to bring about unity and some sense of order in the young country. The pressure is on! What do you do?

You have direct experience with two forms of government: one centralized and one decentralized. As a colonial citizen in the 1770s, you were subject to the British crown, a centralized monarchy where all power lay in the hands of the king and was wrought with abuse. There was a king and a single (unitary) government. The monarchy controlled everything-they appointed all of the other leaders.

On the other end of the spectrum, you had the Articles of Confederation that was so decentralized that no one was in control and nothing got done. This was known as a confederacy - individual states that are joined together very loosely. There was a very weak central government (a national Congress with 26 members- two from each colony) all of the real power lay with the thirteen individual states. The members of the Congress were paid (or not paid) by the states. Any effort to strengthen the national government would require a unanimous vote, which proved to be impossible to obtain on important issues like taxation.

By the late 1780s, clearly the Articles of Confederation were not working-there was no national military, states were fighting each other and there was a perception that the government was dissolving. Do you try to salvage one of these traditional forms of government? Or, do you devise a combination of the two, taking some aspects of centralization and some of decentralization? The founding fathers took the latter option, devising a form of government that would become known as federalism.

Federal Context

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Why did the founding fathers create this sort of hybrid government known as Federalism?

I would suggest there were three possible motivations. First, the most noble is the democratic motivation - this is what you learned in elementary school. The founders sat down to design the first (and best) democratic government in history. It was indeed the first government that put a significant amount of power in the hands of the people. According to this theory, the founders were motivated by a desire to do the right thing and the best thing creating government of the people, by the people and for the people.

A second theory suggests that the founders were more concerned about protecting their own economic interest. This economic motivation notes that most of the founders were financially successful and all of that would be lost if the government collapsed. They created a government in which most of the power was in their own hands (increased centralization, stronger Congress) or in the hands of other wealthy white landholders, knowing they would likely be members of that stronger Congress.

A third motivation, and the one I tend to support the most, combines the other two, suggesting that the founders were motivated by a desire to survive, both individually and as a nation. It was clear that the current system was not working and if the country faltered England would try to take the colonies back-each of these men would die of treason if that happened. I call this the pragmatic motivation - the founders created this particular form of government in an effort to protect themselves and protect their country. With the failures of the Articles of Confederation on one side and an anxious English Monarchy ready to strike on the other, they had to find a solution that worked. Maybe they just got lucky!

Federal Context

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Horizontal/ Vertical Federalism

Federalism implies two distinct relationships. First, it implies vertical federalism, the relationship between the national government (the United States) and the subnational government (Texas and the other states). How is power distributed between the two? Who or what determines the outcome when there is a conflict? Which level of government has the final say when there is a difference of opinion or policy? As noted earlier, you can think of this relationship as being like that between a parent (federal government) and a child (state government).

On the other hand, Texas must not only worry about what is going on in Washington, DC, it must also be concerned with what is happening in Louisiana, Colorado, California, New York, and the rest of the states. This refers to horizontal federalism. If taxes are too high on a business in Texas, it may move out. If services are not good in Texas, citizens can move to another state. And, Texas is in a unique position such that it must also be concerned with what Mexico is doing. If wages get too high along the border, jobs and companies will head south. This relationship can be compared to that between siblings- what you could get away with was often a reflection of the good or bad behaviors of your brothers and sisters!

Assume that you have been elected governor of Texas. How will the fact that we are in a federal system of government influence your decisions? What will you do in the case of a natural disaster? Will you raise taxes? Will you work to lower pollution emissions? Will you work with other states to increase child support payments? Will you decrease welfare benefits? Every one of these decisions will be influenced by the positions and decisions of the other actors in the federal system.

You may be the governor of Texas, but you are not alone and Texas is not an island (or an independent nation, contrary to what some believe!)!

Federal Context

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Distribution of Responsibilities

The relationship between the subnational government and the state government is like any other relationship. It changes over time and the balance of activities for which each partner is responsible changes over time. Just as you may do some things better than your spouse or significant other, the national government may do some things better than the state government, or, vice versa. Or, just as you may have more time or resources than your spouse or significant other, the state government may have more resources (normally money) to perform a particular function at a given point in time than the national government.

There are generally five different factors that go into determining whether the state or national government (or a combination of both) will address a particular policy problem. First, it is often a question of ability - which branch is in the best position to address an issue. While it makes no sense to expect state governments to take the lead on national security, it would be just as ludicrous to think the national government should take the lead on fire enforcement (a house will burn down long before the truck gets there from Washington, DC if you are in Texas!).

Second, it may come down to resources - which level of government has the ability to pay for the policy. Sometimes the state governments have more money, at other times the national government does. Recently, with the nation in an expensive war and debt on the rise, many states have taken on additional obligations in health care, education, and the environment.

Third, there is often variation in who wants to do it due to interest. A particular state may get involved in policy (health care, for instance) because its governor is very interested in that topic. Likewise, as President George W. Bush did with education or President Barack Obama did with healthcare, a president may expand the role of the national government in a policy area of interest to him or her.

Fourth, sometimes the distribution of activity is a function of tradition - power will be distributed as it always has been. For example, states have traditionally played a dominant role in education, civil rights, and education. On the other hand, the national government has often played a strong role in defense, national security, and economic policy.

Finally, the state and national government may choose to share the responsibility. For example, while the federal government provides most of the money for Medicare and Medicaid, the state and local governments actually establish the rules and distribute the services.

See the next page to see how Texas compares.

How Does Texas Compare: Federal Context

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Per Capita Federal Expenditures by State, 1999

Texas proudly claims its independence from and its disdain for the federal government. This independence appears evident in the proportion of federal transfers from the federal government to Texas (excluding discretionary pork barrel funds from Congress). Only seven states receive less federal money per capita than Texas when we look at direct transfers. This low rate may be due more to the fact that Texas is not usually willing to spend the money to get maximum matching funds and that it is often late to complete the forms or apply for money, than to any ideological purity. Also, as suggested by the fact that other highly populated sates like California, Florida and New York are also at the bottom fo the list.

Source: Consolidated Federal Funds Report for Fiscal Year 2010, US Census Bureau.

How are Powers Divided?

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The Constitution

The United States Constitution is held in higher esteem than any other document in this country, except perhaps for the Declaration of Independence. We speak of it with hushed tones and great reverence almost as if the Almighty handed it down to the founding fathers on a stone tablet. And yet, it was not handed down from the heavens, but rather written by men and later amended by men, and women, who are human beings with their own motives, frailties and, weaknesses. Further, it was not written, or purported, by its authors to have all of the answers. Rather, the founders wrote the declaration as a framework on which future generations would place the appropriate specifications to fit that time and place. It was purposely written as a skeleton so that each age and generation could add the "muscle and nerves" appropriate for that time and place in history.

If anyone wants to make the argument that the founders did not intend for the Constitution to provide the definitive answers to governmental questions that would arise, he or she need only look at the question of federalism. Do the states have rights in relation to the federal government? The Constitution says yes. Does the federal government have the right to overrule the decisions of the states? The Constitution says yes! Does a state have the right to ignore the directives of the national government? The Constitution says yes!!

How are Powers Divided? Ask the US Constitution

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Current issues that have given rise to clashes between states and national government include gun control, access to welfare benefits, and affirmative action. In each case, documentation can be found in the Constitution to support the independence of the state as well as the supremacy of the national government. We may look many places to determine the nature of the relationship between the states and the national government. However, if we want definitive answers, the Constitution may not be the place to look. It describes four types of powers, two that suggest the national government will rule and two leaning support to the argument that states should have the final say:

• Delegated Powers: These powers are expressly given to the national government in the United States Constitution and include regulation of interstate commerce, establishment of a monetary system, establishment of military units, and the creation of post offices and post roads. These powers are granted exclusively to the national government.

• Implied Powers: Powers granted to the national government are implied by two sections of the Constitution, The “Elastic Clause" (Article I, Section 8, Clause 18) and The “Supremacy Clause” (Article VI). The "Elastic Clause" indicates that the power of the national government can expand to include all, “Laws, which shall be necessary and proper for carrying into Execution the foregoing Powers.” Further, the “Supremacy Clause” indicates that, “This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land.” In other words, the national government may establish laws necessary to carry out the expressed powers and those laws shall supersede those of the state and local governments.

• Denied Powers: The national government, in the spirit of federalism is not, however, all-powerful. Several amendments to the US Constitution restrict the powers of the national government. For example, the national government cannot restrict speech, the practice of religion, or the freedom of assembly. Further, they cannot restrict the right of legal residents to vote, arrest someone without cause, or try a defendant twice for the same crime. Until the middle of the twentieth century, these limitations applied only to national government unless expressed in individual state constitutions.

• Reserved Powers: Finally, the Tenth Amendment to the US Constitution suggests that all powers not given to the national government shall be reserved for the states. In other words, while the national government may rule supreme in cases where state and national law conflict, states reserve the right to regulate areas not addressed by national policy. In light of this, states have historically taken the lead in many areas of policy regulation, including mining safety, employee rights, environmental regulation and welfare reform.

In the end, the US Constitution makes it clear that the national government will rule supreme when there is a direct conflict between the laws of the state and national governments (Supremacy Claus- Article VI)  . However, states do have considerable leeway in issues where the national government is relatively silent or in areas where the states wish to go beyond regulatory floors established by the national government. For example, while the national government may set a minimum standard for mine safety, the states may go beyond that minimum, but not below it. Or, while every state must have a minimum wage, states can make that minimum wage higher, but not lower, than the national standard.

How are Powers Divided? Ask the US Supreme Court

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If the answer to the division of power between the state and national government is not defined clearly in the in the US Constitution, where else might we look to determine the appropriate balance?

The Supreme Court

One quite obvious place would be the supreme interpreter of that document, the Supreme Court of the United States. According to the Constitution, precedent, and common practice, one job of this body is to interpret the meaning of the Constitution, including differences that the state and national governments might have over the meanings of particular provisions. But, does the Constitution provide a definitive answer that can be applied for all time? Probably not.

Initially, the Supreme Court had little or no power. It was the least well-defined branch of the three according to the Constitution. In the early 1800s, no one really knew what the Supreme Court was supposed to do or how it was supposed to do it. That was, until, John Marshall became Chief Justice and established its power in a case known as Marbury vs. Madison (http://www.law.umkc.edu/faculty/projects/ftrials/conlaw/marbury.html) (1803). This case established the right of the Supreme Court to evaluate and declare unconstitutional the actions of the President or the Congress, which became known as the power of judicial review.

Marbury vs. Madison. As he was leaving office, President John Adams, a Federalist (wants a strong national government), appoints a bunch of his Federalist friends to be judges. One of these friends is William Marbury. However; his commission (letter) to make him a Justice of the Peace in the District of Columbia does not arrive until after midnight, when, technically, Thomas Jefferson (an Antifederalist) is now President. Jefferson revokes the appointment. Marbury sues to get the position back and the case goes to the Supreme Court.

As chief justice, John Marshall decides that Congress had no right ask the Court to decide this case so he invalidates the suit-Marbury does not get to be a judge (he never tires again) and the Supreme Court establishes its power over the other branches of the federal government. Interestingly, for the reminder of Marshall's time as chief justice (more than 30 years), the Supreme Court did not use its newfound power of judicial review to strike down an action of Congress a single time.

Gibbons vs. Ogden. While the previous case established the power of the Supreme Court to find acts of the President and Congress to be unconstitutional, it did not address the question of a conflict with state courts. That was left to a case a few years later, Gibbons vs. Ogden. In this case, Aaron Ogden, formerly a US Senator and Governor of New York, was granted by the state of New York the exclusive rights to navigate the waterway between New York and New Jersey. However, Thomas Gibbons had been operating a ferry on that body of water under a contract granted by Congress. Given that two people cannot have exclusive rights to anything, this created a problem. The case eventually found its way to the US Supreme Court, where it was decided that Gibbons, under the federal agreement, had the right of way. This made clear that not only could the Supreme Court overrule Congress or the President, but judicial review also applied to the decisions of state courts. The federal Supreme Court could overturn those as well.

While the decision of the Supreme Court is definitive for its time, it is not definitive over time and can be changed by another Supreme Court decision down the road. For example, while the Supreme Court has ruled that states may charge different tuition levels to students who are from out-of-state, they have also ruled that states cannot give different levels of welfare benefits to citizens from out-of-state. For decades they ruled that states had the right to draw electoral districts however they wanted, and then in the 1960s decided that states needed to draw districts in a manner that benefited minorities.

Then in the 1990s, the supreme court decided that such practices, previously required by the court, and was unconstitutional!! While the Supreme Court might provide a temporary answer, that answer is reflective of the political nature of the times and just who is on the court at any one time. In fact, perhaps the strongest legacy of any president is not his or her policies, but his or her lifelong appointments to the Supreme Court. The Supreme Court has gone back and forth over time, sometimes siding with the states, and other times with the national government. The next time you see a Supreme Court decision, see if it overturns a previous decision and alters the relationship between the state and national government!

How are Powers Divided? Ask the US Congress

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Congress

While matters of the Constitution and legal precedents are supposed to be decided apart from politics, politics can never be removed from any decision regarding the distribution of power or money. This is very true with the balance of state and federal power. The United States Congress makes decisions every day that define the relationship between the state and national governments. They encourage (seat belts and speed limit reductions) or demand (civil rights and voting rights) that states take particular actions or prohibit states from taking others(discrimination). States make decisions and policy in light of the decisions that have been made or are likely to be made by Congress. If Congress will give a state $1 for every $1 it spends on education, but $2 for every $1 it spends on transportation, that state is likely to spend more on transportation, even if they really need money for the roads. This is called matching funds.

However, just as the perspective of the Supreme Court changes regarding the distribution of national and state powers, the degree to which Congress will involve itself in the decisions of the states varies significantly over time. In the 1960s, Congress involved itself heavily in such programs as welfare, housing and, segregation. In the 1990s, Congress, reacting to shifting public opinion and an increasing budget deficit, began to return more responsibility (for policies and financing) to the states, including welfare, public safety, and civil rights. When Democrats took control of the US House, they began to challenge President George W. Bush's efforts to decentralize things like Medicare, Medicaid and Social Security and then when they won the White House (President Barack Obama) in 2008, Democrats moved quickly to centralize power, especially in the arena of health care. Once the Republicans regained control of the US House in2010, the battle was on between Democratic efforts to address problems from Washington and Republican efforts to shift power back to the states. And, the dance goes on!!!

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• How are Powers Divided? Ask the State Governments and the People

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• The State Governments

• While it is easy to focus on the role of national players like the US Supreme Court and the US Congress when looking at the balance of power between the state and national governments, we should not forget the ability of the state governmetns to influence that balance. This is particularly true in Texas, where Governor Rick Perry  has taken a leading role among all states in pushing back against efforts fo the Obama Administration to expand the powers of the federal government, especially relative to "Obamcare," (The Affordable Care Act). When states believe that the national government has overstepped its Constitutional bounds, they have the right to sue the national government through their Attorneys General. For example, Attorneys General in more than two dozen states brought a suit agains the Obama Administration charging that the mandate reqiuring people purchase insurance was unconstitutional. While the Supreme Court did not side with the states on this matter, it did agree that the federal government could not make the states expand Medicaid.

• Whether state governments support federal intervention or oppose it usually depends on political and fiscal factors. Generally, Republican governors and legislators are more likely to oppose increasing national powers while Democrats are less likely to oppose it.  However, when budgets are tight in the states, even conservative Republicans might be willing to take money (look at the stimulus money under Obama- governors in only two states rejected it- Alaska and South Carolina) to help get through the tough times even if the are philosophically opposed to federal power. 

• Court of Public Opinion

• Finally, the true determinant of where the power lies between the state and national governments may lie with you and me - the public. While the Supreme Court may be a bit slow in responding to public opinion, the President and the courts are not. If the public believes the national government is incompetent or unresponsive, it will look to the states for action. If it believes the states have screwed up, they will turn to the national government. With the perceived partisan gridlock (Republicans and Democrats fighting) in Washington, most folks believe the states can do better than the national government, and we see the states addressing issues like the environment, health care and, education reform in ways that the national government cannot or will not. Indeed, a 2011 GALLUP Poll found that while less than fifteen percent of Americans trusted the United States Congress, more than two thirds (68%) trusted their local governments and well over half (57%) trusted their state governments.

• When the public does not trust one level of government or another, politicians at the level that is low on trust may be reluctant to take on additional responsibilities or activities while leaders in the trusted institutions may be emboldened to at.

• The Shifting Balance Between State and Federal Governments

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• Changing Patterns of Federalism

• The reality is that the relationship between the different levels of government, like a relationship you might have with your significant other or your parents, is not static, but evolves, shifts, and changes over time. It cannot be defined or set in stone by the Constitution, but rather it is changed and altered over time to fit the needs and desires of that time. Sometimes, such as during the 1990s, the states may take on more power, while during other times, like the Great Depression of the 1930s, they may willingly give up power to the national government. As things change, so must the relationship between state and national government, just as the relationship between you and your boss (or parents for that matter) also adapts as you grow and mature, and your skills and abilities develop.

• Historically, we can see three different phases, or patterns, of federalism in America. The first, which existed primarily from 1789 until the 1930s (with a break during the Civil War) was called dual federalism or layer cake federalism. With this approach, the levels of government are quite separate, with each level doing its own thing (things) and there is very little interaction among them. Historically, the federal government was in charge of interstate commerce and defense; the states, of education, transportation, and voting rights; and the local governments of public safety (fire and police)) and local services (water, sewage, etc.). This approach dominated for almost 150 years.

• However, with the economic collapse of the 1930s (the Great Depression), many state governments were unable to cope with the daunting challenges presented by 25% unemployment and higher. Instead, they turned to the national government and very willingly, President Roosevelt, who gave us marble cake federalism.

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• With this approach, which ran from about 1932 until the early 1960s, the interaction can be viewed like pieces of marble cake, with each policy area (education, transportation, economics, etc.) viewed as a single slice of marble cake. The different marbling (chocolate, strawberry, vanilla) represents the three levels of government (state, national and local). In some policy areas (i.e.,defense) the national government comprised the largest section of the slice, but the state and local governments had some role. In areas where the states had exclusively held power (i.e. transportation), the national government took on some role, although the states stayed most powerful. Each policy area has some activity from each level, but the balance varies significantly across the policy areas (just like the balance of marbling varies in each slice of marble cake).

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• Finally, as Lyndon Johnson dramatically expanded the role of the national government in the 1960s, our understanding of federalism shifted once more. This approach is called picket fence federalism, which suggests that by the 1960s, society and the problems it creates were so complex and required so much interaction that there was a significant amount of activity in every policy area at all three levels of government (national, state and local). Notice that the interaction takes place within policy areas - suggesting little cooperation across policy areas. This means that there may be a lot of duplication of activities and inefficiencies. You may get more competition between policy areas rather than cooperation.

• While it is not an "officially recognized" type of federalism, some have suggested that in reversing the trend toward more centralized power, President Ronald Reagan (1981-1989) ushered in a new type of Federalism called "New Federalism" in which the national part of the "picket fence" became smaller and the state and local parts larger.  However, a close look at the data suggests that the shift was not as dramatic as many would have us believe.  In the end, the balance did not change that much. The reality is that state and local governments have come to rely so much on federal money that a true shift back to Layer Cake or Marble Cake is unlikely.

Why Does the Balance of Federal Power Change?

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Trends in Federalism

As you should have figured out by now, the relationship between state and national governments is not fixed. Rather, it changes dramatically over time, depending on a variety of things. Historically, the trend has been in one direction, a gradual increase of national power. First, the nature of the relationship reflects the general attitude of the public toward government. If the public believes that the national government is good (as in the 1930s and 1960s), it will invest more power in the national government. If, on the other hand, public opinion shifts against the national government as it did in the 1990s, the role of the national government is diminished.

Second, the balance of power between the state and national governments reflects the particular politicians that are in power. Generally conservative politicians push for decentralizing power to the states, while liberal politicians, assuming the states are more conservative, prefer more centralized decision-making. A Democratic Congress in the 1960s dominated the centralized and Democratic presidents, while the 1980s and early 1990s reflected the values of a Republican presidential run and the first Republican Congress in forty years. Both made decentralization (also called devolution) of power to the states key components of their elections. With the Democrats return to control of Congress in 2006, but a Republican President, we may see some shifts.

Finally, regardless of the politicians or public opinion, the balance of power changes with the complexity of the issues. While simpler times required simpler solutions, our complex modern society requires more complex solutions. The national government has taken on a larger role out of necessity as much as anything. Historically, the role of the national government expanded only in the times of military (1860s, 1920s and 1940s) or economic (1840s and 1930s) crises.

However, modern issues like air pollution, information technology, domestic terrorism, and juvenile crime cannot be adequately addressed on a state-by-state basis. For such problems to be addressed effectively, there needs to be a national strategy and a national network. While the role of the national government may fluctuate over time, we will never return to the time when the states were relatively free of national intervention because the issues will not permit it, even if the politicians and the public want it. "The good ole days" of independent state governments and happiness probably never existed to begin with, and definitely never will again!

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The State and National Dance: Who Pays and Who Plays

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Balance of Decision-Making and Funding

Two very difficult decisions underlie any relationship, whether that relationship is between a husband and wife, a boyfriend and girlfriend, a parent and child, an employer and employee, or a state and a nation. First, how will decisions be made, and second, how will the costs of those decisions be distributed among the participants in the relationship? There is no right or wrong answer to these questions, but rather it must be worked out to the satisfaction of each party involved.

For example, some spouses work well with the traditional roles of male decision-maker and financial provider, while others would chafe under such an arrangement. On the other hand, some couples work best when one party makes the money, but the decision-making power is shared, or both parties share the financial and decision-making burdens. Further, the nature of the relationship may change over time as the priorities, skills, and responsibilities of each spouse changes.

This change over time is not unlike the changing nature of the relationships between the state and national governments. Historically, the national government played a limited role in the financial and policy making decisions of the states, because there was a strong belief in state autonomy and the national government did not have the financial resources to intervene. However, as issues became more complex and the national government gained more revenue (especially with the passage of the national income tax in 1913),it began to take a greater role in making decisions and financing them.

This trend carried over into the 1980s until the national government ran up a big debt (like the husband or wife who tries to spend to impress the other) and the national government could no longer provide large amounts of money. This same scenario is playing out in the first part of the twenty-first century as the Iraq (Bush) and Afghanistan (Bush and Obama) Wars and the federal stimulus law (Obama) have run up tremendous national debts. Finding little desire in giving up decision-making power, the national government shifted much of its control to mandates and negative incentives (fining states who did not act).

Who Pays and Who Plays

As noted above, two key factors must be established in any relationship: who is going to pay for things and who is going to make key decisions. This is just as true for the relationships between the governments as betwees spouses (and finding the best balance just as hard and just as important). Historically, the different combinations can be divided into five categories that will be discussed below. We will start with the least restrictive (states get the money and the decisions) to the most restrictive (states get no money or decisions).

Revenue Sharing: From 1972 until 1979 for states) and 1986 (for cities), the federal government gave states money based on their population and allowed them to spend it on whatever they felt necessary. As long as the money was not used illegally, it could be used on anything from education to transporation to welfare.

Block Grants:  In the 1980s when the federal government ended revenue sharing, they shifted much of the funding to block grants, designed to put a little more control on how states could spend the money they recieved. Initially, the money was granted in one of thirteen policy "blocks" (for example, education, transportation, etc.) and states had to spend the money within that area. An education grant might be spent on kindergarten in one state, middle school in another and high school in another, but it had to be spent on education.

Categorical Grants: Much of the federal spending under Lyndon Johnson's "Great Society" program (1960s) came with many strings attached, called Categorical Grants.  In this case, states could get the money, but only if they spent it on exactly waht the national government said.  For example, if the federal government offered a grant for improving reading in early childhood, the state could have the  money, but only for that specific program-  they had no say in how the money was spent. 

There are two types of Cetagorical Grants- Formula Grants (states get as much money as a given formula allows- if it is for a program for the elderly, each state will receive a certain amount based on the number of elderly people in each state) and Competitive Grants (states compete for the money, granted to a limtied number of sates, and the best proposals win).

Restrictions: As the federal government began to run into budget problems in the late 1980s and early 1990s, they began to move away from giving money at all and began to just tell states what to do, threatening to take away money already given if the states did not do as they were told. Restrictions refer to policies that tell states they most stop doing something or lose federal funds.  For example, stop using race as a factor in granting college enrollment or risk losing federal funds.  Restrictions do not require states to take new actions- only stop doing things they might be doing.

Mandates: The most restrictive approach, and the one despised by the states, is mandates. With mandates, the federal government tells states they must do certain things and also must bear the cost of doing those things. Examples of unfunded mandates include No Child Left Behind (2001) and parts of The Affordable Care Act- Obamacare (2009). While Republicans generally oppose mandates as undue burdens on the states, growing federal deficits mean that even Republican members of Congress are supporting more mandates. Governor Rick Perry of Texas has been particularly vocal about the unfairness of mandates.

Does Texas Get Its Money's Worth?

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Citizens in every state pay federal income taxes and then some of those taxes come back to the state in the form of the block grants and categorical grants discussed above. However, to sort of quote George Orwell in Animal Farm, "All states are equal, but some are more equal than others!" States to not get the same amount of revenue back from the federal government that its citizens pay in.

How Does Texas Fare?

Just like a large family with many children, not all children are treated the same by the parents (or, at least the children don't think so!). One gets to stay up later than the other. One has a curfew while the other does not. In this sense, the fifty states are like the fifty children of the United States government. And, in this family, some "children" are treated better than others. Traditionally, Texas has not been treated as well as some of the other children when you look at the amount of money that the federal government has given to Texas in the form of project grants and financial transfers (the amount of money sent to the state as a proportion of the amount sent to Washington by the state tax payers).

In 2011, for every $1 dollar Texas sends to Washington in taxes, we got about 91 cents back (http://www.ritholtz.com/blog/wp-content/uploads/2012/02/give-take-small-final.png). To understand why Texas is treated differently, think about why you might treat different children differently. Maybe one is more responsible than another. Or, one does not need or want as much help as another. This is the case with Texas. First, Texas often does not complete the paperwork necessary to receive the project grants - it leaves a lot of money on the table because it does not apply on time or philosophically, Governor Perry and the Republican Legislature do not believe federal aid is apprporiate (for example, Texas has refused to expand its Medicaid eligibility even though 100 percent of the expansion will be paid by the federal government).

Second, much of the money is tied to the poverty level of the state. New Mexico and Louisiana get much more help from the federal government because they need much more help! For every dollar they send to Washington, Louisiana and New Mexico each get more than $2.00 back because they don't have that much to give. On the other hand, a wealthy state like Connecticut gets back only about seventy one cents on the dollar.

Texas has fared much better when politics is a factor since Congress always has some discretionary funds for special projects. Texas has traditionally had senior members in Congress who were in a position to win approval of projects for their districts. This was particularly true when Tom DeLay was Majority Leader of the House Republican pPrty from 1994 to 2006. However, since 2006, there have been few Texans high in leadership. So, in some ways, Texas is the child who is often left out, but, as with that child, much of the time, the neglect is a function of bad behavior by the child!

• How are Powers Divided?

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• Horizontal Federalism

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• In many ways, the government of Texas is in a market. It competes with the governments around it, and, with the mobility of individuals and capital today, with every state and nation in the world. No decision made by Texas is made in a vacuum, but rather influences and is influenced by decisions of other states. For example, for many years, Texas did not have a lottery while other surrounding states did. Citizens would go to those states to spend lottery money that could have gone to Texas. To avoid a continued loss of revenue, Texas in the late 1980s instituted a state lottery.

• Likewise, businesses every day must decide where to build their plants, sell their products, or offer their services. If the business climate in Texas is too unfriendly, then those businesses will go elsewhere. This is truer now than ever as more and more businesses are involved in the distribution of information and services rather than of products. It may be very difficult to move an automotive plant, but by moving a few computers and zip disks, all of the "capital" of a financial institution, insurance firm, or real estate agency can move literally overnight. They have little or no sunk costs and therefore can shop around the country for the best offer and move their operations accordingly.

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• Horizontal federalism breeds cooperation as well as competition. The presence of other states in the region responding to similar problems means that they can benefit from working together to solve those problems. For example, Texas is a part of regional efforts to control pollution in the Southwest, track down deadbeat dads, and manage nuclear waste. As you listen to this lecture, think about how the politics in Texas might be different if the policy makers did not have to worry about the activities of other states. States also can learn from each other and learn from the mistakes of other states. If Maine has a problem, it can try to address it. It can see if other states have done it and other states can see how Maine deals with it.

• Opportunities to share ideas across states are many, including participating in national organizations like the National Governors' Association (NGA.org), the National Conference of State Legislatures (NCSL.ORG) and the State Legislative Leaders Foundation (SLLF.ORG). At these meetings and with reports written by these organizations, leaders in one state can find out what is being done by leaders in other states to address shared problems.

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Structure of Local Federalism

While much of the attention of federalism is placed on the relationship between state and national governments, that relationship is not the only important component of vertical federalism. Indeed, it may not even be the most significant component! The relationship between a state and its many subunits (cities, counties, school districts, and special districts) probably has a more direct effect on your life than anything that the folks in Washington do. This particulalry important in Texas, where the state has more than 3,700 units of local governments including towns and cities, counties, school districts and a variety of special purpose districts!

Think about the importance of local government. City governments, in all likelihood, protect you and provide you with water, waste disposal and recreational opportunities. County governments provide the framework for such programs as Social Security, Medicare, Medicaid, Unemployment Compensation, and Food Stamps. In counties with no major towns, they also provide protection and security. Independent School Districts provide perhaps the most significant service of any unit of government, educating our children. Public education is the linchpin of American culture and of the American dream. Finally, special districts regulate everything from water and sewage to airports and shipping.

There is no aspect of our lives that is not touched by some unit of local government. And yet, most of us know little or nothing about the people who work in those units. The next time you blindly cast a vote for county judge or for a member of the school board, remember just how important these positions are and take a little time to cast an educated vote.

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Cities (Municipalities)

Unlike counties or school districts, cities in Texas differ significantly across the state. There are five different ways that cities can different from one city to the next in Texas. Those differences are: level of autonomy, structure of government, elections, how they spend their money, and how they raise their money.

Autonomy

One of the things that governments, as well as people, strive for in life is autonomy: the freedom to make decisions on our own. Cities in Texas have a significant amount of autonomy. If you want proof, just compare the budgets, structures, electoral systems, and expenditures of various cities in Texas. While Dallas gets much of its money from the property tax, Arlington can rely more on the sales tax because of the consumer activity at Six Flags, Hurricane Harbor, and The Ballpark in Arlington. Houston and El Paso have very strong mayors, while Dallas and San Antonio have 'weak mayor' forms of government. Most major cities in Texas and the United States spend a significant amount of money on public transportation, while Arlington spends almost nothing. Ft. Worth elects nine city council members from particular districts, while Arlington elects some from districts and others at large.

Why are cities across Texas so different in how they govern? First, because they can be. Cities in Texas are considered to have the greatest autonomy of any units of local government in the country. Second, the needs and resources of each city are different. The ethnic diversity of Dallas makes its needs relatively different from the more homogeneous Arlington. Tourists who visit the Alamo and the Riverwalk give San Antonio a revenue source that other cities in Texas do not have.

The autonomy granted cities in Texas enables those cities to develop governments, services and revenues that reflect the particular challenges and opportunities unique to it. Texas legally recognizes two types of cities: general law cities (under 5,000 residents) and Home Rule Cities (over 5,000 residents). General Law cities do NOT have a lot of autonomy. They live under the same state laws and regulations established to govern all municipalities in Texas. There are almost a thousand general law cities in Texas, but because they are small, relatively few people live in them.

In 1912, Texas added a provision that indicated that any city above 5,000 residents can choose to become Home Rule Cities. In addition to having more than 5,000 residents, home rule cities must have a charter passed by a majority of the voters and finally, it must have an organized form of government. More than 300 Texas cities have successfully applied for home rule and more than 90 percent of the state’s population live in these larger cities. These cities can choose from various forms of local government, budgeting methods and electoral types.

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Local Federalism: The Varied Structures of Texas Cities

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Structure of Government

Cities vary significantly in terms of size, resources (particularly economic), politics, and demographic makeup. Therefore, the government of a city will necessarily vary as it reflects the unique combination of needs and resources for that city. While the most common structure of city government in Texas is the mayor-council form, most (eight of the ten largest) large cities have a council-manager form. Arlington, Dallas, San Antonio, Austin, Corpus Christi, and Amarillo all have this form of government.

In fact, Amarillo, along with Terrell, was the first city in Texas to adopt this form of government in 1913. Why is the Council-Manager form of government most common among large cities in Texas? First, larger cities can afford to hire a city manager to run the city (a good city manager will earn above $100,000). For a town of 200 people, that is not feasible. Second, the issues faced by a larger city are more complex and generally require a city manager to govern effectively.

The mayor-council form of government is the most common form of municipal government in Texas, prominent in almost all smaller cities and towns, particularly General Law Cities. It puts the primary powers of decision making in the hands of an elected Mayor and an elected City Council. Sometimes the mayor is very strong and has the power to run the city (strong mayor form of mayor–council), but in others, the Mayor is more of a figurehead and the council runs the city (weak Mayor form of mayor-council).

On the other hand, the key player in a council-manager form of government is a city manager hired by the elected city council and mayor. The city manager is professionally trained to do this job and is paid well to do it. The idea of this approach is that it takes some of the politics out of the decision by having a professional make the decisions. However, because elected officials hire them, politics still matters. Among home rule cities, this is by far the most common form of government.

A third form of government growing in popularity across the country is the Mayor-Manager Form (also called the Chief Administrative Officer Form). In this approach, a politically powerful Mayor will share power (sometimes uncomfortably) with an professional City Manager. In 2005, Dallas Mayor Laura Miller proposed this approach for governing her city, but voters rejected it.

Finally, a disasterous storm leveled Galveston in 1900 and the aftermath included the creation of a new form of local government, The Commission Form, where elected commissioners form the governing board with no mayor and each commissioenr is responsible for a policy area (fire and safety, transportation, etc.). Over time, this form of government fell out of favor, even in Galveston, and is no longer used in Texas.

Governmental structure not only reflects differences in cities, it also manifests itself in the way those cities are led. A council-manager city, with a weak mayor, will often find itself without a true leader. Decisions made by consensus may be democratic, but they are seldom visionary or focused on the big picture. On the other hand, cities like Houston or El Paso, with their strong mayor forms of government, can often look forward and take a big picture approach to solving problems.

Local Federalism: Choosing City Leaders

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Elections

One of the things that we hold most dear in Texas is the right to elect our government officials. As noted earlier, we elect everything from governor to dogcatcher. However, not all elections are created equal. The method by which you elect officials is as likely to determine who gets elected and how government works, as are the choices of the voters. Keep in mind that no matter the specific method of election (see below), all municipal (city) elections in Texas are nonpartisan elections with no party labels (Democrat or Republican) appearing on the ballot.  However, it is usually clear which candidates lean toward which parties as the campaigns go on. 

At-large, no-place election systems, most common in small Texas towns, tend to give the advantage to candidates with a lot of money and neglect the poorer parts of the town. With this form of government, all candidates for city council run to get a majority of votes across the entire city and represent the entire city. This form is still the most common method in general law cities and in the smallest home rule cities but it is now less common than it was because it tends to discriminate against poor candidates and minorities.

In contrast to this form of government, council members in a single member district system run in specific districts to represent a portion of the city. The city will divided into a number of districts and candidates then run from each of those districts and represent those districts. For example, Arlington has nine electoral districts, and individuals run in each of those districts and only have to defeat other people running in them to win. While increasing the likelihood that all parts of the city will be represented and that minorities and less economically well off candidates may be elected, this tends to increase political fighting on the city council and decrease unity.

While at-large no-place elections tend to alleviate some of the fears regarding lack of unity, they are less likely than single-member district elections to secure representation for minorities, women, and the economically disadvantaged. Dallas is a good example of the perils of single-member districts. It has fourteen single-member districts and a mayor; it is legendary for its fights and turf battles on its city council. San Antonio and El Paso have similar electoral forms.

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• Local Federalism: Choosing City Leaders (Part II)

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• It is still possible to discriminate against a particular group even in a single member district system. Yes. On the one hand, you can draw the districts so that the minority voting population is split across all of the districts, but does not have enough to elect a majority in any single district. This method of electoral discrimination is called cracking (you have cracked the minority votes up). On the other hand, if you cannot avoid having at least one minority district, but still want to discriminate, you employee a method called packing, by which you draw the districts so that the vast majority of minority voters are packed into one or two districts-the minority group will win those seats, but will not gain a majority on the council. Both of these methods are legal and quite common. They may be used against partisan minorities (Republicans or Democrats), age minorities (college students) or economic minorities (poor people).

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• Finally, a third variation is called the at-large place elections in which every candidate runs citywide, but they don’t all run against each other. For example, if you had a nine-member city council, you could designate nine different places (slots on the ballot). Then, you would decide which “slot” you want to run for. If you run for slot or place 3, you still run citywide, but you only run against other folks seeking slot 3. Perhaps Hispanics choose to seek one slot and African-Americans choose to seek another. They all still run citywide. You can get more diversity, but also have folks who represent the larger city.

• Arlington, until the early 1990s, was made up entirely of at-large members, elected citywide. While the council had ethnic diversity, by the late 1980s the areas of Southeast Arlington were almost never represented. In 1992, Arlington chose to have a combination council - one elected mayor, five single member districts and three at-large place seats. Houston has a similar system, with a mayor, five at-large members and nine single-member districts. This means there are representatives from each part of the city as well as four people concerned about the interests of the whole city. Austin, the state capital, is one of the few large cities in Texas with an At-Large Place election system. The city's five council members run in place elections city wide, with an understanding that one seat will be "reserved" for Hispanic candidates, one for black candidates, and one for women candidates.

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Expenditures and Revenues

Every city has a budget to raise and to spend. Arlington's proposed budget for 2013 is almost $400 million. On the other hand, the city of Dallas proposes to raise and spend more than 1.013 billion in that same period and the proposed budget for Ft. Worth is about $550 million.

All cities must raise money and spend money. That is the nature of government services. However, the methods by which they do that can vary extensively. Some cities may raise much of their money from tourists (Arlington), while others may rely on property taxes (Dallas) or sales taxes (Ft. Worth). Why is there such variation among cities when it comes to the way they raise money? First, cities have different resources- Arlington has the Ballpark, Cowboy Satadium, Six Flags and Hurricane Harbor, but Dallas and Ft. Worth do not. Dallas has Reunion Arena, the Dallas Convention Center, higher property values and more financially stable citizens than Ft. Worth, so they can rely on property taxes.

Not only do cities vary according to revenues, but also by how they spend their money. All cities are responsible for public safety, transportation, welfare and parks and recreation. Some cities spend more on transportation (Dallas and Ft. Worth) than do others (Arlington). On the other hand, Arlington spends more on economic development and recreation than Dallas or Ft. Worth. Why are expenditures so different? One reason is the political philosophy of each cities voters and officials. Arlington has long spent little on public transportation for fear that it will bring more poor people to the city. Second, cities respond to their demographics. Dallas and Ft. Worth have more economically disadvantaged citizens than Arlington, so they must expend more for transportation and social programs and spend less on economic development.

Local Federalism: Counties

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Counties

Texas has the same 254 counties that were established in the Constitution ratified in 1876. These 254 counties were established to help the state carry out its duties and are considered an arm of state government rather than an independent institution like cities.

County governments are clearly the lowest level of government in Texas when you look at relative power or autonomy. Their structure, revenue, expenditures, and methods of election are established by the state. The nature of county government and county elections must be the same, according to the Texas Constitution in Harris County (population 3.4 million) as in Loving County (population 67!).

Why do you think that is? First, remember the time at which the current constitution was implemented: 1876, following the administration of E.J. Davis and Reconstruction. The authors of the constitution did not trust government, so they felt the best way to control it was to place very strict limitations on it. Second, counties were created to be the arms of the state, distributing the services that the state provided to its citizens, like protection, etc. Third, while counties were created by the states, people who make up a city created that city. The desire for the city emanated from the citizens who wanted to make it happen, and those citizens demanded a voice the counties could not. Counties were created by the state to serve the needs of the state.

Regarding their structures, all counties look the same. You have a county judge, elected countywide who presides of over four county commissioners. The county judge is like the mayor of the county. He serves as a county commissioner and he is a judge in county judicial matters. The county is divided into four districts, each electing one commissioner to represent that district and make sure its needs are met. In most counties, Commissioners are responsible for distribution money for bridge and road construction in their section of the county- a method that is often troubled by scandel.County governments in Texas remain very political, with many jobs determine more by who you supported in the last election than by your ability to do the job (this is known as the "spoils system").

Elections are established in the constitution. County judges and county sheriffs are elected countywide and commissioners are elected in single-member districts. In more rural counties with small populations, County Judges and County Sheriffs remain key political players, often running their counties like individual kingdoms. Unlike municipal elections, county officials are all elected in partisan elections with their party affiliations (Republican or Democrat) plainly displayed on the ballot. Often, these officials are elected because they are a Republican or Democrat rahter than for their ability to do the job.

Regarding revenues and expenditures, counties basically spend and raise money as directed by the state. As noted above, each commissioner has a great deal of control over how bridge and road money is distributed in their section of the county. While this power may be minimal in urban counties where municipal governments do most of the work, they are very significant in the many rural counties of the state.

As more and more people move into the cities (over 80% are there already), is there any need to have county governments? Will they remain or wither away? Should they wither away?

Local Federalism: Independent School Disricts

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School Districts

There is no job that any government does that is more important than educating the almost 5 million children enrolled in Texas Public Schools. Texas has almost 1,100 Independent school districts ranging in size from 24 students (yes-24 students!) in the Divide ISD to more than 200,000 students in the Houston ISD.

In order to do that, and in the tradition of independent government for which Texas is famous, Texas created more than a thousand independent school districts. Within minimum standards set by the state, the leaders of these districts, elected school board members, make decisions that govern the daily operation of their districts. These districts have some autonomy, but not a great deal-probably somewhere between that of the cities (very autonomous) and the counties (almost no autonomy).

Their basic structures do not vary - elected school board members (ranging from three to nine members) who are elected in non-partisan elections, hire district superintendents. There is some variation in elections. Large districts use a single-member system, whole small districts still use the at-large no-place system. However, with recent Supreme Court rulings requiring access to quality education, there is limited variation in expenditures and revenues. So, in short, they have some autonomy over structure and elections, but much less on revenues and expenditures. This does give each local area some ownership over its schools.

What are the advantages of such a system? First, local people should be best able to determine what a local school district needs and how it will best serve the needs of the community. It is unlikely that people in Austin can really evaluate educational needs in Brownsville. Second, local control increases local pride and involvement in schools, making the schools better and more reflective of community values.

Are there any disadvantages to such an approach? Absolutely. First, such autonomy across the state means that some schools are much better than others-in other words, some kids are getting a better education than others. Second, local control means that many school districts are at the mercy of local school board members who are out of touch with the needs of modern education. It is hard to see how a 70-year-old white man can provide understanding guidance for an inner city school district that is 90% minority. Finally, local control means that many unqualified or poorly qualified people may be elected to run a school district. How many of you can name one member on your local school board? And yet, we get to elect the people we charge with providing an education for our children!

Political Institutions II

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Overview of the Budget Process

Government exists for the purpose of providing the services that people demand. The major outcome of that demand and the major product of government is the budget-the programs and services that the government chooses to provide to its citizens from police to education. The budget of Texas is nothing more and nothing less than a list of priorities for the state of Texas. The amount of revenue available to the state to spend is fixed at a certain amount based on the predictions of the Comptroller of Texas.

Therefore, it is not possible for the government of Texas to do everything the people want, or even everything the politicians want. So, they prioritize things by saying given the amount of money we have, we will spend this much on each public safety, education, transportation ,etc.. This budget reflects the values, economic times (economic gains or losses or crisis), the legislative priorities (particularly the speaker of the House and the lt. Governor), and the political priorities of the Governor.

There are three stages to the budget development process in Texas: planning and preparation, authorization and appropriation, and execution (spending).

• Planning and Preparation: As noted earlier in the semester, most of the heavy lifting on the budget in Texas is done by the Legislative Budget Board. However, the governor of Texas, with the help of the Budget, Planning and Policy Division, develops his or her own budget. This means Texas has a dual-budgeting system. However, the LBB budget tends to carry considerably more weight than that of the governor's. This process usually takes place in the spring of even-numbered years, before the legislature meets in its regular session the following spring. Recall that the budget covers two years.

• Authorization and Appropriations: Once requests have been made and a budget developed, it is up to the legislature to authorize (say it is okay) the money and the give it out (appropriate). While the whole legislature (House and Senate) votes on it, it relies heavily on the money committees (Ways and Means, and Appropriations in the House, and Finance in the Senate). Once both chamber's (House and Senate) have put their stamps on it, a conference committee works out the differences. The governor then gets the bill – he can veto all or parts (line-item veto) of the bill.

• Execution (Spending): This step is also taken by the legislature. However, the governor has more control over it when the legislature is not in session and when there is a crisis.

How might things be different if the governor controlled the budget? One thing about a budget by committee is it looks like a budget by committee! There is little underlying philosophy because each committee member wants something of his or her own in it. Second, research suggests that legislative budgets are larger than budgets written by an executive. Finally, without a strong budget power, governors find it very difficult to fulfill campaign pledges.

This does not mean that the governor has no influence on the budget as both Rick Perry and George W. Bush showed.  However, their influence came from their abilities to get the public behind them and to work with the legislature, rather than their ability to use formal budget powers.

What are the chances of giving the governor more budget power so that he or she might set the direction for the state? Slim to none, because the legislature would be giving up power to do that and politicians do not like to give up power!

Show Me the Money: Where Does it Come From?

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Texas Revenues: Where the Money Comes From

While Texans claim to be fiercely independent and Governor Rick Perry rails against Federal intervention in the affairs of the state of Texas, Texas does not seem to mind taking federal money.  In 2010-2011, more than 40 cents of every dollar the state spent came from the federal government.  This is a higher proportion than from any other single source, incuding all state tax revenues combined.  The largest in-state reveneue source is the sales tax.  Interestingly, while you hear a lot about the lottery, it makes up less than two percent of the state's budget. Note that Texas does not have a state individual or corporate income tax, but relies heavily on licenses, fees etc (other revenues).

The total biennial budget for 2010-2011 was over $181 billion!

*  Other revenues include income from land, fees, fines, licenses, and penalties.

**  Other taxes include taxes on cigarettes, utilities, hotel rooms, alcohol, and insurance.

Show Me More Money: How Does Texs Get its Money?

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Texas Revenues: Where the Money Comes From, continued

Texas is considered a “pay as you go system,” meaning that Texas cannot propose to spend more than it believes it will have to spend. A four-fifths vote of the Legislature is necessary to approve emergency borrowing.  However, Texas has managed to get around this limit by allowing the state to issue bonds (borrow money)for specific project, including university buildings, veterans programs, parks and water development. Therefore, while Texas supposedly can't run a debt, the state owed more than $30 billion in bonds in 2008.

The largest portion of money spent by the Texas government comes in the way of transfers from the federal government. The federal government provides monies through grants and programs and the state administers the funds. Within the state tax system, the dominant revenue source is without question the sales tax (22.7% for 2010-2011). No other tax source even comes close. For all the talk about the state’s lottery, it provides less than 3% of the state’s revenues.

Let's look at the general characteristics of the state of Texas. It is a system where the political system, the elected officials, and the voting populace tend to all lean toward the wealthy. Individual rights have been significant in Texas since it became an independent country in the 1830s. The voting population has been skewed toward the wealthy for just as long. Therefore, what kind of revenue distribution would you expect to find?

First, you would expect to find a system which taxes the poor at a much higher rate than the wealthy. A 2009 study (http://www.itepnet.org/whopays3.pdf)  finds the Texas system among the most regressive of all the states, with poor and middle class people paying a much higher percentage in taxes than the wealthy. In Texas, the poorest 20% of the population pay more than 12 cents of every dollar they earn in taxes, while the top one percent of the population pay just over 3 cents of every dollar in taxes. Other states tend to have more proportional or progressive tax systems.

NOTE: Regressive tax systems are those where the poor pay a higher proproation of their income in taxes, usually including sales tax, lottery and taxes on cigarettes and alcohol. Progressive tax systems are those where citizens who make more pay a higher proportion of their income in taxes, usually these systems rely heavily on individual income taxes and luxury taxes on expensive items. Finally, a proportional tax system is one where everyone pays the same proportion of their income in taxes (an example would be a flat tax- something that is talked about but has not been tried in the United States.

Second, you would expect very business-friendly taxes. We have that-there is no business income tax and franchise taxes (the price of doing business) are very low.

Third, you would expect Texas to rely heavily on those taxes that are directed mostly at the poor (regressive taxes). We have that-over half of all state money comes from the sales tax and several million from the lottery and "sin taxes" on alcohol and tobacco products. These are paid primarily by the poor.

Finally, in this individual-oriented state, you would expect low or no individual income tax. We have that-there is not an individual income tax in Texas. As more and more minorities and lower-income citizens begin to vote, will we see a change in the nature of wow pays taxes in Texas? What do you think?

Show Me the Money: Where Does it Go?

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Texas Expenditures: Where the Money Goes

NOTE:  The data in this table refers only to money generated in Texas and does not include federal dollars- when those numbers are included (see textbook), the percentages change, but the ranking of the various policy areas stays the same.

A look at the 2012-2013 budget reveals the state’s priorities when it comes to spending.  Over forty cents of every dollar of the state's money (not including federal grants) that Texas spends, is spent on education, predominantly Kindergarten through high school. Health and human services (Medicare, Medicaid, etc.) came in second with almost a third (31%).  The recession has taken a significant toll on education spending- just five years ago, education spending was well over half of the budget (now it is 43 percent) and welfare programs were just over a quarter- now welfare spending (health and human services) are almost a third. However, these two areas have long been the two dominant budget items in Texas (and most other states). If you combine those two, they take up almost three-quarters of the state budget! Those who suggest they will cut the state’s budget dramatically must be willing to cut in these two areas to have any real impact and who wants to cut education or offend old people?

One question to consider.  As the average age of the population continues to rise, do you think the proportion of money dedicated to health care will go up?  Will the proportion dedicated to education go down?

Public Policy: What is it?

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The Policy Agenda

While the state budget is an important part of what the government does, and indeed perhaps the most important part, that is not all that the government does. Every two years, the Texas Legislature passes, and the governor signs, numerous bills into law that affect our lives without spending money. The laws passed by the legislature an signed by the governor comprise public policy: those decisions that effect our lives on a daily basis

It is the state that requires you to wear seatbelts. It is the state that makes sure you get a gallon of gas if that is what you pay for. It is the state that determines what classes you will have to take to graduate. It is the state that determines how fast you can drive your car or even if you can drive your car (they issue your driver's license and inspection's ticker).

The Public Policy Process (or Cycle) is comprised of five stages:

Problem Identification. First, in order to have a solution, you muist first identify a problem. Publiuc policy is generally passed to address a real or perceived problem. Often, those problems are brought to our attention by a tragedy. The murder of a little girl in Arlington resulted in the national Amber Alert system. Often the media and interest groups play a critical role in the identification of the problem.

Proposal of Solutions. Once a problem has been identified, policymakers, the media, individuals, think tanks and interest groups propose a variety of solutions. Often these solutions reflect the ideology and the interest of the people proposing them. For example if we all agree that the rising cost of health care is a problem, Republicans may propose a free market approach and Democrats a government program.  Doctors would propose limiting medical law suits will lawyers would propose cutting doctor payments.

Policy Selection. Once the various options are on the table, it is up to elected officals in the legislature to determine which solution (or combination of solutions) will be adopted.  The legislature will debate and dicsuss the options within the context of the process described in Section III of the course (The Legislative Process) and then pass a solution that is sent to the governor who can sign it, veto it or allow it to become law without his or her signature.

Policy Implementation. While most of us focus is on how a bill becoems a law (step 3), many often forget the most critical step: implementation.  Even the best law is ineffective it is not implemented properly.  This stage is done by the bureaucracy (administration).  Teachers, principals and superintendants implement education policy. Social workers and case workers implement welfare policy. Laws don't always work out as expected, often having unintended consequences.

Policy Evaluation. Finally, once the policy has been implemented and in place for a while, the results are evaluated.  Did the policy address the problem that was identified at the beginning? Did it cost more or less than expected? Were their unintended consequences? Are there changes that could make the policy more effective?

Pretty much every aspect of your life is affected by decisions made in Austin by the legislature and the governor. For the sake of simplicity, we will consider five general areas of public policy (as reflected in Chapters 13 and 14 of your textbook): health and welfare; education, energy, environment and transportation.

Below, we will take a look at some of the areas of public policy that are important in Texas and see what the state is doing in those areas.

Public Policy: Education Policy

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Education Policy: Making the Grade?

As noted above, Texas spends more of its money on education than on any other policy area, spending more than half of each dollar it spends, in this area. Indeed, the Texas Constitution (Section 7) requires the state to "make suitable provision for the support and maintenance of an efficient system of public free schools." However, while the mandate to provide a free public education is clear, exactly what that mandate means and how it will be carried out is determined by the policymakers.

Consider below some key characteristics and questions regarding education policy in Texas:

1) The Balance of state and local control. As noted above, Texas has more than 1,100 Independent School Districts, each dedicated to providing "public free education" in their district. The elected school boards and appointed superintendants in each district are responsible for hiring and firing teachers, building and maintaining facilities and allocating resources to their schools. However, they can only make their decisions within the confines of policies regarding curriculum, graduation requirements and testing established by the State Board of Education. The battle between what state officials want and what local officials want will continue.

2) To Test or Not To Test? That is the (Multiple Choice) Question! Like most states, Texas began a concerted effort in the1980s to make sure that students were getting the kind of education they needed to succeed in the 21st century and that they were not just being "passed along." In 1984, the Legislature established the TAKS (Texas Assessment of Knowledge and Skills test) requiring students to pass it in order to graduate. After more than twenty years, that test was replaced in 2011 with STAAR (State of Texas Assessment of Academic Readiness) which focused on performance and improvement. While parents generally support such testing, many teachers oppose it, suggesting that their effectiveness cannot be measured by a single written test. Recently, the number of tests required has been cut in half.

3) Funny Math: Declining Revenues and Rising Demands. Like every other state in the nation, Texas underwent a dramatic recession in the late 2000's with a significant drop in state revenues. At the same time, the number of students was continuing to grow and the pressure on schools to perform (No Child Left Behind and STAAR) was increasing. In order to save money, the state decreased it support for public schools, often requiring that teachers be laid off and class size increased. Teachers are expected to do more with less.

4) The End of the Little Red School House. As challenges to public education have mounted, so have the various proposed solutions (remember step two of the public policy cycle: Proposed Solutions) that will significantly alter our traditional image of the "little red school house." First, while private schools (often religious oriented) have always been a part of the Texas school system, they have never received state money (separation of church and state). However, school vouchers (allowing parents to use state money for private schools) would change that. So far, vouchers have NOT been approved in Texas, but are likely on the way. Another alternative is charter schools, public schools that have a unique academic focus and are not subject to all of the state regulations of a traditional public school. Texas now has more than 500 charter schools. Finally, another growing trend is home schooling where families choose to educate their children at home. These students (now more than 300,000) must still complete tests to prove proficiency before receiving their high school equivalency degrees.

A Note About Higher Education. While most state education dollars go to primary and secondary schools, the state is also responsible for higher education (community colleges, technical schools and four-year universities). From the beginning of the state, money was set aside in the Permanent University Fund (PUF) to provide for higher education. However, the amount of money in those funds has decreased significantly in recent years and now, the state of Texas provides less than twenty percent (down form over fifty percent a decade ago) of the money needed to fund higher education. Most of that loss has been made up with dramatic increases in tuition (up more than 80 percent over that same decade). At the same time the state is cutting assistance to higher education, they are also putting increased pressure on them to enroll and graduate more students, enforce more requirements on professors and broaden their curriculums.

Trees vs. Oil: Energy and Environmental Policies as War

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As everyone knows, the history of Texas is closely linked with that of energy. The discovery of oil at Spindletop in the early part of the last century gave Texas a significant resource that defined the state for nearly a century and allowed it to keep taxes low on it citizens. However, the historic reliance on energy and natural gas also meant that when those resources falter, the state's economy falters. The recession of the late 1980s hit Texas harder and earlier than most states because of its reliance on energy revenues. By the early 2000s, the more diverse state economy fared better.

Oil. While many still think of Texas as dotted with oil rigs and characters straight out of the movie "Giant," the fact is that oil production in Texas peaked in the 1970s. While oil still provides a significant part of the state's economy and the state's revenues, people and industries are working feverishly to reduce our dependence on oil and make more efficient use of the oil we have. The oil spill off of the Gulf of Mexico in 2010 provided a stark reminder of the potential environmental impact of our reliance on oil and raised many questions about the continued viability of oil as a source of energy and revenue in Texas and around the nation. As other sources of energy become more reliable and less expensive, and the world becomes more educated regarding the true cost of reliance on fossil fuels (global warming, ecological damage) Texas must reconfigure its economy to adjust to the loss of revenue and jobs by either expanding its economy or producing oil in a manner that is more environmentally sound and economically efficient (or both).

Natural Gas. While Texas is associated with the oil industry, the same fields that produced oil also produced natural gas. For years, natural gas was considered a worthless byproduct of the oil industry. However, in the middle part of the 20th century, companies began to process natural gas as an energy source in its own right and currently, the state produces almost a third of all natural gas used in the United States. While natural gas supplies about one percent of the state's revenues (through severance taxes), its impact on the economy in terms of jobs is much greater. However, the production of natural gas has some of the same "downsides" as oil with wide variations in cost and possible negative impacts on the environment and it is considerably more volatile (it can explode!) than oil. Further, its impact on the ozone and global warming is not significantly different than that of oil and other fossil fuels and there is potential to increase both air and water pollution.

Coal. While oil and natural gas production is associated with Texas, the mining of coal generally is not. Rather, it is more often associated with states like West Virginia, Pennsylvania and the Dakotas. However, some coal is mined in the state- but it is the lowest grade (unlike the "clean" coal mined in other states) which is worst for the environment. The environmental impact of coal production (fatal accidents, black lung disease and water pollution) and burning (air pollution, acid rain and global warming) - especially the kind mined in Texas, means that it may not be as cheap as the price would suggest.

Nuclear Power. Texas currently has two nuclear power plants- one just outside of Ft. Worth (Comache Peak) and one outside of Houston (South Texas Nuclear Project)- these two plants supply about ten percent of the state's electric needs. The challenges facing the nuclear industry are different than those facing coal, oil and natural gas. When the plant is operating as it should, the impact on the environment is negligible. It is safe, efficient and environmentally friendly. HOWEVER, the potential for major catastrophes are greater than in the other areas of energy. As accidents in other countries have shown, a mistake at a nuclear plant can mean significant loss of life and changes to the environment and surrounding areas that make it useless for decades.

Renewables (Solar, water and wind). Many view the future of energy in terms of resources that rely on the environment rather than compete with it- solar energy, wind power and hydro (water) electricity. Given the hot dry climate of many parts of Texas, the state would seem ideal for both solar and wind energy and in fact wind powered energy has been a part of Texas for more than a century. However, the equipment to harness the wind and the sun is expensive and many companies or industries cannot afford the initial investment with no guarantee that they can make their money back. The state can encourage the development of these newer sources of energy by providing tax breaks and incentives, but with the strong economic and political presence of oil and natural gas, such policy is generally unpopular, especially with Republicans currently controlling Texas government.

As you might guess, there is often a clash between those who want to take full advantage of the state's energy resources and those who want to protect its environment. Everyone is for energy independence and everyone is for a clean environment- the problem is how to balance the two. Historically, the state has leaned on the side of energy, often acting as if resources like oil and natural gas would never run out and their depletion would have no negative impact on the environment. Regulation of the industry was, and is, relatively limited (especially compared to more liberal states like California and New York).

The first air and water regulations were established in the 1950s and had limited enforcement and limited effect. In 1993, the legislature combined several environmentally friendly programs into the Texas Natural Resources Conservation Commission. In 2002, the TNRCC was reorganized into the Texas Commission on Environmental Quality (TCEQ). However, given Texas' focus on individual rights and economic development, the effects of the TCEQ (and the TNRCC before it) have been rather limited. Through interest groups, lobbyists and political contributions, companies have been able to limit the impact of the TCEQ and its environmental regulations.

Despite, and perhaps because off, these rather limited environmental efforts, pollution remains a significant problem for the state, especially cities like Houston, Dallas/ Ft. Worth, Austin and San Antonio. All of these areas have too much air pollution according to the US Environmental Protection Agency. The same can be said for the state's water supply, with much of it considered hazardous. However, until the problem becomes immediately dangerous, one can expect the business friendly legislature and executive to err on the side of the energy industry, sometimes at the expense of the environment.

What do you think legislators would do if there were a large energy accident such as a natural gas explosion?

Public Policy: Health and Welfare Policy

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Am I My Bothers Keeper? Maybe, Maybe Not

As noted earlier, Texas remains a very conservative state, especially as Republicans have taken greater control in recent years. This means that poverty and welfare are often viewed more in terms of how to get people off welfare and save taxpayer money than in terms of meeting the needs of the state’s large and increasing poor population. A 2010 study found that more than one in six Texans live below the poverty line (fifth highest proportion in the nation), with a much higher percentage in rural areas and along the border with Mexico. Seventeen of the 100 poorest counties in America are in Texas. Further, a quarter of all children in Texas live in homes with incomes below the poverty level.

Given the dominance of the traditionalistic and individualistic cultures in the state, it should be no surprise that welfare benefits are among the lowest in the country. The average welfare benefit for a single-parent family of three is $260 per month, lower than all but four other states (Alabama, Louisiana, Mississippi and Kentucky). That amount is about 16 percent of the federal poverty level. When it comes to health care, Texas is in even worse shape. A 2010 study found that a quarter of all Texans (6.1 million people) had no health insurance, leading the nation in both the number and the percentage. Further, the state offers little in the way of assistance outside of the federal Medicaid Program (to provide health care for the poor) and the smaller Children's Health Insurance Program (CHIP). In light of the recent recession, Texas has decreased the number of people eligible for these programs dramatically in recent years and in 2012, Governor Perry was one of several Republican governors who refused to expand Medicaid as a part of "Obamacare" even though the federal government promised to cover the entire cost of the expansion. With the growing number of poor people in the state struggling to find work that will pay a living wage, these problems are likely to continue.

Key Terms:

Temporary Assistance for Needy Families (TANF) - This 1995 program replaced the Aid for Families with Dependent Children (AFDC) which was traditionally known as "welfare." TANF is provided for families with dependent children (under 18) who are deprived of financial support, but is quite limited in scope.

Medicaid. This program, established in 1965, is designed to provide health care for those below a certain income level.

Children’s Health Insurance Program (CHIPS) is a 1997 program that provides health insurance to children in families that may be below or above the poverty level, but who cannot afford insurance for their children.

Food Stamp Program (Now called SNAP- Supplemental Nutrition Assistance Program) was established in the 1960s to help the poor purchase healthy food and to assist farmers by purchasing their products.

In 2003, the Texas Legislature passed and the governor signed a major reorganization of programs designed to meet the needs of the poor-twelve agencies were consolidated into four new departments under the new Health and Human Services Commission. These positions are under the control of the governor and, not surprisingly, the focus of the reorganization was as much to save money as to provide better services (we are a traditionalistic state after all!). As the need for these programs has gotten greater (with the recession), the resources and the political will to fund them has gotten lower. The Republican-controlled government, guided by the individualistic and traditionalistic cultures, have limited to incentive to fund these programs at anything more than the minimum level.

Public Policy: On the Road Again!

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Transpiration Policy

While it is often overlooked, public policy relative to transportation is critical to a state's success. If there are not adequate roads or railways to get products or produce to market, they cannot be sold. If there are not adequate airports or waterways (ports), the state cannot participate in the growing international economy. However, if a state is not careful, its transportation system can use too much energy and be detrimental to the environment. As the second most populous state in America with an economy larger than most nations around the world, transpiration policy is absolutely critical for the state. Its network of highways, railways, waterways and airways are critical to its economic success.

Texas has almost 80,000 miles of roadways, from two lane rural routes to six and eight lane highways. While these roads help the economy move, there are significant costs. On a human level, highway accidents resulted in more than 3,000 deaths in Texas in 2009 and many more serious injuries. Every foot of road means less land for use in agriculture and industry and makes it more difficult for the land to absorb ground water and run off and raised the ground temperature. Finally, trucks and automobiles are the single largest contributor to air pollution in the state, endangering health and the environment.

In responding, the state has really three options:

1) Build more roads

2) Make Cars more efficient.

3) Create alternatives to automobiles

While each of these approaches is feasible and reasonable, each has costs and benefits. While Texans may want more roads, money spent to build more roads is money not spent on other things like education, public safety and social programs. While people indicate they would like safer and more fuel efficient cars, they are often not willing to give up the size and speed necessary to make it happen (or invest the initially higher cost). Finally, while public transpiration is a good idea, many Texans do not want to give up the independence that comes with driving your own vehicle on your own schedule.

In many ways, one can expect Texans to cling to their cars like they cling to their guns and the Bible!

Public Policy

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The Future of the Lone Star State

While the myth of Texas lives on (see the beginning of the course), the reality would suggest that Texas is an ever-changing state. The Texas of tomorrow will bear some resemblance to the Texas of yesterday, but not a lot. Consider the following:

The Political System. It is likely that Republicans will continue to do well in the political system. However, one may expect Democrats to rebound and make the state two-party competitive for the foreseeable future. This will be particularly true if the growing number of Hispanic voters shift solidly to the Democratic side (in light of immigration reform efforts, this seems to be a reasonable assumption). While Republicans are in control, that does not mean government will shrink-indeed the projected population growth suggests that budgets will continue to grow.

The Economy. A couple of factors will drive the future of the Texas economy. First, as goes the Mexican economy, so goes the Texas economy. More than half of all exports in Texas go to Mexico. If Mexico's economy remains strong, it will buy more Texas goods. Second, like the rest of the country, Texas will continue to see a decline in agricultural jobs, with growth in the service industry (low-paying) and technology-driven (high-paying) jobs. Third, the ability of Texas to compete in this new economy will depend on the education system. It will require a first-class education system that reaches all students.

Population Growth. One will expect Texas to continue its population growth, especially around its major urban areas. One will expect a population of more than thirty-two million by 2020, with the bulk of this growth coming from immigration of both legal and illegal aliens from Mexico. By 2020, one would expect Hispanics to make up around 40% of the state’s population, not as much as whites (about 45%), but close. This has implications for economics, politics, and education.

In conclusion, Texas is facing some significant challenges as it faces a changing twenty-first century world with a nineteenth century government. As people demand more government services, the state may find it difficult to maintain its conservative outlook and low tax status without running a significant deficit. Hold on-it may be a bumpy ride!

See the next page to see how Texas compares!

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Percentage of the State's Budget Spent on Education, 2013

One of the best ways to judge the importance of children and education in a state is to look at the percentage of the state budget that a state spends on education. A high proportion usually means that education takes a higher priority than other issues like public safety, welfare, or tax cuts. High spending on education also reflects that a high proportion of the population is young. We also know that states that spend more on education usually have to spend less on welfare and public safety later, because educated citizens are less likely to be on welfare and less likely to commit crimes. Utah, which has the highest proportion of spending on education is a perfect example of these relationships- it has the highest proportion of children to be educated and among the lowest crime rates and expenditures on public safety. Texas, at 40.4% is ranked fifth. Part of the reason for this is the high proportion of school aged children in the state. Unfortunately, the positive effects are not felt here in that we still have a high crime rate and high expenditures on public safety. Why do you think that might be?

Source: Morgan, Kathleen O’Leary and Scott Morgan, eds. State Rankings 2016: A Statistical View of the 50 States. Lawrence, KS: Morgan Quitno Press, 2016, p. 136.

State Per Capita Welfare Spending, 2013

Because of Federal laws, every state must provide some type of public assistance for those unable to provide for themselves financially. However, in recent years, the federal government has given the states increasing freedom to determine just how much they want to give and for how long. Therefore, there is significant variation in how much money a person on welfare (Aid for Families with Dependent Children- AFDC) can receive from state to state. Obviously, this difference partly reflects differences in cost of living across states, but also reflects differences in ideology, political culture, and economics across the states. Not surprisingly, Texas is near the bottom, with only five states spending less per capita on welfare. This is not a surprise in that Texas has a relatively low cost of living (relative to non-Southern states) and it is conservative with a traditionalistic/individualistic culture.

Source: Morgan, Kathleen O’Leary and Scott Morgan, eds. State Rankings 2016: A Statistical View of the 50 States. Lawrence, KS: Morgan Quitno Press, 2016, p. 525.

How Much More Did Poor People Pay in Taxes than Rich People in 1999?

In every state, there is a difference between the rich and the poor in the proportion of their income paid in taxes to the state government. This difference is known as tax regressivity. The higher the difference between the rates paid by the poor and the rates paid by the rich, the more regressive a state's tax system is considered to be. A regressive tax system means the poor pays a larger portion of their income in taxes than do the rich. Generally, regressive states are those states that rely on sales taxes, lotteries, and excise taxes (taxes on beer, alcohol, cigarettes and gas). Regressive states are generally traditionalistic and conservative. Given these qualities, it should be of no surprise that the wealthy fair very well in Texas relative to the poor. Texas has the 6th most regressive tax system in the country, falling behind Tennessee and four other states. This makes sense because Texas has no income tax, relies heavily on sales taxes, lotteries and excise taxes, and is conservative and pro wealthy by political culture. Is it fair for the wealthy to pay a lower proportion if they pay a higher dollar amount?

  Source: Hovey, Kendra A. and Harold A. Hovey. CQ’s State Fact Finder 2002: Rankings Across America. Washington, D.C.: CQ Press, 2002, p. 161.

Projected Budget Deficits as Percentage of Expenditures, 2003

Imagine what it would be like if your income for next year was projected to be third less than you expected! What would you do? Cut Spending? Borrow money? Get another job to increase your income? That is indeed the case that California and Alaska face, with both running over a third behind projected income. Other states, including Texas, are also in trouble. The problem is further compounded by the fact that more than eighty percent of the states are forbidden by law or constitution from borrowing money to cover debt. That leaves only two options, both painful- either cut services that votes are used to or raise taxes. How would you like to have to make that choice?

Source: Center for Budget and Policy Priorities. (webpage: http://www.cbpp.org/12-23-02sfp.htm)