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The "Texas State Government" is a noun, and it is proper to capitalize it. Just as you would capitalize the name of a person.
The Texas government has the same amount of federal power that any other state enjoys.
writing a constitution.
To allow the government of Texas to become a state of the United States of America.
Regarding authority, yes. A U.S. State Government (such as the State of Texas) administers the State in which is located. By contrast, the Federal Government of the United States of America administers the whole country.