California Bad, Texas Good?

S

Satchel

2,500+ Posts
Hardly. From Business Iinsider:
There's One Huge State Budget Crisis That Everyone Is Refusing To Talk About
Joe Weisenthal and Gus Lubin | Jan. 3, 2011

You know the story and you know the names: states like Illinois, New Jersey, New York, and California are supposed to be in huge financial trouble thanks to bloated governments, business-unfriendly regulations, and strong public sector unions.

After a crisis-free 2010, investors are expected to punish these hotbeds of bad governance in a muni bond market rout, at least if pundits like Meredith Whitney are correct.

But there's one state, which is fairly high up on the list of troubled states that nobody is talking about, and there's a reason for it.

The state is Texas.

This month the state's part-time legislature goes back into session, and the state is starting at potentially a $25 billion deficit on a two-year budget of around $95 billion. That's enormous. And there's not much fat to cut. The whole budget is basically education and healthcare spending. Cutting everything else wouldn't do the trick. And though raising this kind of money would be easy on an economy of $1.2 trillion, the new GOP mega-majority in Congress is firmly against raising any revenue.

So the bi-ennial legislature, which convenes this month, faces some hard cuts. Some in the Texas GDP have advocated dropping Medicaid altogether to save money.

So why haven't we heard more about Texas, one of the most important economy's in America? Well, it's because it doesn't fit the script. It's a pro-business, lean-spending, no-union state. You can't fit it into a nice storyline, so it's ignored.

But if you want to make comparisons between US states and ailing European countries, think of Texas as being like America's Ireland. Ireland was once praised as a model for economic growth: conservatives loved it for its pro-business, anti-tax, low-spending strategy, and hailed it as the way forward for all of Europe. Then it blew up.

This is the sleeper state budget crisis of 2011, and it will be praised for doing great, right up until the moment before it blows up.
(Disclosure: The author went to UT-Austin, and goes back there a few times per year.)
 
Satchel,
The only funny thing about that article is that is says that the GOP is Texas is against 'raising revenue.' That sounds pretty funny to me. If the author thinks that against a state income tax means 'against raising revenue' then that is a bit funny.
There is a budget crisis here, and I do indeed find it odd that the national news doesn't mention it. I think the best thing we can do is to de-unionise teachers in the state, and make teaching a 'right to work' just like other jobs in the state.
Other than that, we are going to have to look at some new taxes to get more revenue down to Austin. The problem I have with a state income tax, is not having one that would be very low, but rather enacting one would mean there is always the temptation to raise the rates.
I remember it said that when the Federal income tax was enacted they never thought it would get above something like 3%.
 
Only the citizens of Texas can approve a state income tax. The lege can't do it by itself...

I guess if they somehow manage to get an amendment on the ballot that says "vote yes to **** the evil, stupid, puppy killing (yes, you Bob Stoops), baby shaking, football hating rich ******** by making them pay X% of their income in taxes" then you might get something to pass...
 
I know my representative campaigned on not raising taxes and only balancing the budget with spending cuts. People lap that **** up even though it is impossible in Texas.

The Link
 
a local republican who ousted a dem in november said she would vote against any tax increase and we could balance the budget by cutting waste and fraud. And she wants the state to fund some more local anti gang inititiatives.

these people live on mars.

california is in a hole because they have a lot of government services and overpaid civil servants with big pension responsibilities.

texas has little government services and relatively few public employees and low taxes. And a bunch of brain dead legislators.

How about a tax cut? That solves all problems, no?
 
Tx is bad but nowhere near the economic disaster that california or illinois are. the cities in tx are bad. houston has some of the highest paid employees in the nation.
 
Further evidence, as if we needed it, that there is a balance between taxing and spending. You can't do too much, or too little, of either- and sticking to only one of the two never works.
 
Beginning in 2012, there will be no revenue for building any new highways in Texas. Expect to see nothing other than toll roads:
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if they werent robbing the gas tax pool there would be plenty.
 
The writers have misconstrued some of the facts. First, the $25 billion deficit is a projected shortfall for the 2012-2013 biennial budget, which will be written during the upcoming legislative session. The 2012-2013 budget will be in the ballpark of $180-190 billion, not 95 billion as the writers assert. $25 is a big problem no matter how you slice it, but relative to 190 is very different from relative to 95. By comparison, in the *current* budget cycle (2010-2011), the Comptroller has stated that we must fix a $1 billion deficit. So as of right now we are doing (relatively) okay.

Second, the $25 billion figure is an estimate without a source. I've seen stories with figures ranging from several billion to over 30 billion. The Comptroller hasn't estimated revenues for 2012-2013 yet, so it's a bit early to tell, but fair to say the projected shortfall will be large. Given that the current shortfall is a revenue problem thanks to a crappy economy, there's reason to believe Texas can rebound if the economy ever improves, and close the gap by increasing revenues on a better economy rather than on higher tax rates.

Third, Texas has a rainy day fund with a balance of about $9 billion.

Finally, the reason Texas is not in the same conversation as the Californias and New Jerseys has a lot to do with not just the deficit but with debt. The state of Texas has about $38 billion in debt (with another $16 billion or so authorized but not issued), compared with $80 billion in California (with another $50 billion authorized but not yet issued). The CA economy is 50% larger than Texas, with twice the debt. Another useful measure is state debt as a percentage of its residents' personal income: MA 9.2%... NJ 7.2%... NY 6.5%... CA 5.6%... TX 1.4%.

We have big problems to deal with, to be sure. But it's not erroneous to suggest that keeping spending, borrowing, and taxes low has benefited Texas, especially relative to its more profligate peer states.
 
Interesting article on The Revenue Guestimate in the Texas Tribune.

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The revenue isn't dropping by $25 MM over the next biennium, which says that it's a spending problem not a revenue problem. That doesn't mean nothing should be done on the revenue side, but it does indicate that it's the spending side that's spiraling out of control.
 
I've heard twice in this thread "its a spending problem, not a revenue problem."

So, what is your answer to the problem of paying off debts from earlier years, and overcoming an annual interest payment that can or already has become so overbearing that it consumes more than 15% of your annual revenues? And this assumes you're capable of passing a balanced budget from this point forward- and, you're not.

You really think saving a few million here and there is enough to pay off billions of dollars, or $13 trillion for the Fed's case, and reducing the annual interest burden on the budget of 15% or so? No one said a tax increase, or gas tax is permanent. You can be skepticall all you want- but, in the mean time, we have interest payments to pay.
 
Well, we can just hike the fees on everything imaginable and take pride in the fact that we still didn't raise taxes.
 
So, what is your answer to the problem of paying off debts from earlier years, and overcoming an annual interest payment that can or already has become so overbearing that it consumes more than 15% of your annual revenues?
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although it wont help anyhting other than my piece of mind but the legislators responsible for the overspending...really stealing...should be held personally accountable. ken lay was demonized for less.
 
The Link The Texas Omen

i know, i know.. it's Krugman. But i don't see anything egregious in his op-ed other than a snarky jab at the GOP and it's touting of Texas, but let's face it, the GOP has been in charge in this State for awhile. I am OK with acknowledging their successes as long as we can be real about acknowledging their failures.

from the article:
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all states are overrun with too much government, gop or otherwise. texas has some of the best school districts in the nation, it also has some of the worst. i didnt know krugman thinks spending 8500 per student is not enough. maybe he prefers the success stories on the east coast where they spend upwards of 20,000 per student without much success. frankly, i think our education system is pitiful. it's a damn shame that i pay property taxes and cant send my kids to public school where i live because the district is a joke. private school is the only option if you care about your kids education.
 
Charge rent to the homeless who live under state bridges. Those loafers are the reason we have these problems to begin with.

yippee.gif
 
Yo, that is basically the same article as the first one posted except at least Krugman didn't display an ignorance of the actual numbers. He did however choose the highest potential shortfall which few believe will be the actual number.

This is another article that reads like a liberal hack just praying in desperation that conservatism will not succeed in our nations greatest state.

Krugman ignores the Rainy Day Fund and the Permanent School Fund and he makes disingenuous statements about public-sector workers.

At least he was right about this,

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HornWinger-

What did Krugman get wrong specifically? I'm interested- I read the article and would like to hear how he is off other than his name, his newspaper and perceived political views.
 
Teacher associations in Texas are not technically unions but they operate basically the same. So he is technically correct about union contracts but disingenuous in his argument because most teachers in Texas have contracts that act basically in the same way.

He compares us to NY, Cal and NJ but conveniently leaves out the $10 billion dollars we have socked away. That changes the equation and is once again disingenuous.

He argues our population is increasing so fast that we have to keep creating jobs, like that make the jobs created in Texas not real or not significant.

Lastly, Republicans in Washington have not declared Medicare, SS or defense off limits. In fact, Paul Ryan has laid out a plan to specifically address these issues.

The whole article skirts around the edges of the truth to try and paint the picture worse than it really is.

He could have made the same arguments, been more genuine about them and still claimed that Texas is going to be a test to see if conservatism really works.
 
It still amazes me that Satchel goes through all the trouble of inputing the bold and italics formatting for his article, yet is too lazy to post a link.
 
To add to what Horn Winger said:

All the article really says is the state govt. is not big and powerful enough to suit Krugman.

"Deficit" implies there is not enough money to meet obligations - some kind of shortage. Not true. We have a balanced budget each biennium. There is no getting around it. Talk of a "structural budget deficit" and persistent deficits is babble.

He implies that population growth in Texas is a bad thing, meaning state finances would be in better shape if people were moving out. Like Michigan? And California?
 
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