Issues in Texas State Financing

Learning Objective

By the end of this section, you should be able to:

  • Analyze the eectiveness of the state's financing of public services and continuing issues in state financing in Texas


This section discusses continuing issues in Texas state financing.

Ongoing Issues in Texas' Finances

Texas is a large, growing state with a long international border, susceptible to hurricanes and overly dependent on the fortunes of the oil and gas industry, even as concerns over climate change make the future of the fossil fuel industry uncertain.

As today’s college students become tomorrow’s voters and elected ocials, there are a number of nagging problems that will need to be faced.

Texas continues to fund a lot of its public school obligations, as well as community colleges, with local property taxes, a system that depends on the government assessing the value of every piece of real estate and capital equipment in its jurisdiction and deriving a fair value every year. Harris County had to resolve more than 388,000 property tax protests in 2017, removing more than $5.8 billion from the property tax rolls. Property tax value reflects the value of an often speculative investment more than the taxpayer’s ability to pay.

Meanwhile, Texas voters approved a state constitutional amendment in November, 2019, to prohibit the imposition of a state income tax – an “insurance” measure sought by Texas Republicans who see the possibility of Democratic legislative majorities in the future. The income tax prohibition could only be removed by another constitutional amendment, which would take a two-thirds vote of the House and Senate and a majority of voters in a subsequent election.

Finding the right sources of revenue for Texas, and the right mix of state and local funds for public and higher education, will be a key budget issue for years to come.

Health care will be another major issue. Paid largely with federal funds, health care closely rivals education to be the state’s largest single spending area. With Texas’ rejection of Medicare expansion during the Barack Obama administration, Texas counties, public and private hospitals, insurance companies and service providers were left to pay the tab for Texas’ increasing indigent health care needs.

Texas has chosen not to follow the lead of all of its bordering states in its continued rejection of casino gambling. While Texans undoubtedly gamble, they travel to Louisiana, Arkansas, New Mexico, and Oklahoma, or do so illegally, depriving Texas of a lot of potential revenue. Colorado was among the first states to legalize the recreational use of marijuana, an enterprise that has netted more than $1 billion annually for a state with a budget a fraction of Texas’ size.

As college replaces high school as the minimum level of education required for a decent job in many fields, how will Texas find the higher education capacity to accommodate an increasing number of high school graduates, and how will the state accommodate those who cannot aord the rapidly rising cost of tuition, fees, textbooks and housing?

Texas legislators do many things, but the only thing they are constitutionally required to do each session is to adopt a budget. As expected, it is always the most important and most dicult task taken on by the legislature, although it is seldom the issue that generates the most constituent interest and media attention. More attention and scrutiny from ordinary Texas is the beginning of any long-term solution to the state’s budget challenges.

Licensing and Attribution


State Financing in Texas. Authored by: Andrew Teas. License: CC BY: Attribution