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Saturday, December 3, 2022
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Think Texas: Guaranteed Basic Income a Bad Use of Tax Dollars

Column, Think Texas

Dollars Closeup Concept. American Dollars Cash Money. One Hundred Dollar Banknotes. | Image by Virrage Images, Shutterstock

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The Dallas Morning News refers to it as couch-cushion money, but the $20 million of “unallocated sales tax revenue” the City of Dallas found recently still seems like a lot of money. The City plans to make “lasting investments” in South Dallas, but one scheme for the funds — a guaranteed basic income for a few Dallas families — is not only a bad idea, it may be unconstitutional.

Dallas plans to send out monthly checks for $250 to 325 families as part of a trendy “universal basic income” plan, much like one enacted last summer by the City of Austin (and about 30 other cities in recent months).

But that’s a gift — from government. And the Texas Constitution bans those.

The Texas Constitution in Article III, Section 52 prohibits the Legislature from authorizing political subdivisions to lend their credit or to grant public money — unless that money is used for a public purpose.

“The clear purpose of the constitutional provisions is to prevent the gratuitous application of public funds for private use,” the Texas Municipal League explains. “The Constitution, however, does not invalidate an expenditure that incidentally benefits a private interest if it is made for the direct accomplishment of a legitimate public interest.”

The key question is whether the public interest goal is “directly accomplished” by the expenditure.

The Dallas City Council thinks so; in the words of one city official, “We know that when families have more money in their pocket to be able to live and survive, that’s a benefit for everyone.”

Fortunately, the Texas Supreme Court has provided a three-part test for whether an expenditure is permitted under Section 52:

  • The purpose of the payment is to accomplish a public purpose, not benefit a private party;
  • The entity must retain public control over the funds to ensure the public purpose is accomplished and the public’s investment is protected; and
  • The entity must ensure that it receives a return benefit.

All three criteria must be met before an expenditure of taxpayer funds can be considered valid. In Dallas’ case, none of them are met.

The guaranteed basic income is the most materialistic — and therefore limited — approach to fighting poverty. If the poor are poor simply because they don’t have enough money, then sure, this might work. But poverty — and people — are more complex than that. “Poor” doesn’t equal “broke.”

There are better uses for taxpayer funds than sending checks to a very limited few. City Hall could start with cutting property taxes, which have wildly outgrown population and inflation in the past (i.e., 56.5% vs. 6.4% between 2016 to 2020). Or it could use the surplus to pay down debt, which rose to $6.7 billion in fiscal year 2021. Or it could reduce the City’s unfunded pension liabilities, which stood at $1.2 billion as of July 2022. Or a myriad of other things.

The Dallas City Council is expected to handle taxpayer money with care and utilize those funds in ways that benefit everyone. Its guaranteed income program is a failure on both accounts.     

James Quintero is the policy director for the Texas Public Policy Foundation’s Government for the People initiative. The Foundation’s mission is to promote and defend liberty, personal responsibility, and free enterprise in Texas and the nation. The Dallas Express is proud to present original content from leading thinkers across Texas.

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