Tightening the Tolerence

Those in mechanical engineering understand that tolerances are important. In all types of machines and electronic gadgetry, the tolerance of operating parameters is central to functionality and product life. Known tolerances ensure you get a good end result. A few Texas Legislators understand this principle. They are applying it to State Budget growth.

Most anyone that is paying attention, understands that loose tolerances have played a big role in sinking the mortgage market in the U.S. Widen the tolerance on mortgage qualifications got plenty of people in trouble, and now the whole banking industry is volatile, as is the U.S. economy.

Texas is different. While we can certainly consider that past Legislatures have done a good job managing state monies, we should also consider the role that property taxes may played in stabilizing Texas' mortgage market.

Texas was 44th in home ownership rates among the states in the 2006 Census Data. The national average was 70% for 2006, while Texas was at 66%, and West Virginia was best at 78%. Texas' economy has been good, many people have bought Texas homes in recent years, and builders were certainly building houses. With the circumstances being favorable as they were, why are we so low in the ratings? Better yet, is that even a bad thing?

Property Taxes are a significant factor in the cost of home ownership in Texas. That factor can make it harder to qualify and might be keeping people out of home ownership. And again, is that a bad thing? With the recent mortgage crisis, the higher property tax rate, may have kept some people out of home ownership, who would now be under foreclosure.

The point is that tighter tolerances are good. Texas Representative Ken Paxton and Senator Dan Patrick have filed bills that will constrain state budget forecasting measures to metrics that are more stable, realistic, and predictable (i.e. population growth, plus inflation). House Bill 994 , would tighten the tolerance on budget projections, and help keep state spending on a prudent track. Along with a host of supporting organizations and colleagues, Representative Paxton & Senator Patrick should be applauded.

God Save Texas.