“Texas is somewhat insulated from the nation’s economic problems” – Per Texas Comptroller
February 27th, 2009 categories: Assessing the Local Market
Here’s an interesting article posted by the West Kerr Current:
Texas Economy in Better Shape Than Most States’, says State Comptroller
By Clint SchroederWest Kerr Current
Texas Comptroller Susan Combs told a group of Kerr County residents Friday that Texas is in far better economic shape than most states, but won’t come through the current crisis completely unscathed.
Combs, speaking at the YO Ranch Resort Hotel and Conference Center in Kerrville, made her case.
“Texas is honestly, truly different, and I’m not being a Pollyanna,” she said.
Combs said the state diversified its economy after the crisis in the oil and gas industry here in the early to mid-1980s.
“We lost a couple of hundred thousand jobs and we had had overpriced housing, we had a housing bubble,” she said. “We went through all of that, and I think basically everybody said, ‘Never again!’
“Our state now is the second most diverse by economic measures in the country, second to California, and we are more diverse as an economy than Canada or Mexico,” she said.
As a result, Texas is somewhat insulated from the nation’s economic problems.
“I kind of like to say if the country is having pneumonia, we may have a case of the sniffles but we are not going to be in deep trouble,” Combs said.
She pointed out that Texas never got the overheated housing prices and didn’t get into subprime mortgages.
“We did not get crazy, and our community banks by and large have been absolute stalwarts,” she said. “They have done well, obeyed the rules.”
About one of 1,200 homes in Texas face foreclosure, she said, compared to one in 76 in Nevada or one in 200 in Florida.
“It’s all absolutely attributable to their nutty, insane housing prices. We have not done that,” she said.
Combs also said sales taxes have been a “rocket ship,” with 12 percent increases in recent years, sliding to 10.9 percent and last year to 6 percent. She is projecting 2.9 percent for the next biennium.
“You’re going to see sales tax increases decline,” she said. “People just aren’t going to be shopping as much. If you are in a somewhat struggling small sales business, it may be tough for you.”
High-end food enterprises will have a tougher time, she said, and people will move to general merchandise instead of specialty stores.
She also noted the state has lost jobs, about 27,000 in December, an abrupt change from creating 10,000 jobs a month — and that after generally creating 20,000 new jobs a month.
“I expect us to see a tough job time in Texas through the first two quarters of the year, which will take us through June, leveling out July-August, then picking back up again,” she said.
Combs said job losses could come in construction, which has slowed down both in residential and commercial sectors. Dallas could be hit in the financial sector, and Austin in high tech.
“I think it’s going to be relatively shallow in scope and relatively short-lived duration,” Combs said. “I know some people have already experienced some trouble starting two or three months ago, but the state of our economy is nonetheless so robust.”
She added that Texas is doing better than other places because, “We’re smarter. Unlike other states, we don’t think you can get something for nothing. We are really well grounded in standard economics.”
Combs credited legislators with the state government being in good financial shape.
“Your state government did not get nuts,” she said. “Your state government did not go on a spending spree. Your state government did not encumber all of your future assets, so that’s been very, very important to the state.”
She said the state has about $2 billion in surplus funds available, $3 billion in the property tax relief fund and $6.7 billion in “rainy day funds” from the oil and gas severance tax established in the 1980s.
“I don’t know what they’ll (legislators) do, but they’re not going to be a California where they can’t pay their bills,” she said, adding the state doesn’t allow deficit spending.
“I want to commend them for their consistently conservative view,” she said.
Combs also called attention to new information available on the comptroller’s office website. One called “Where the Money Goes” details where every state dollar is spent and which is refreshed every 24 hours.
There also is TxSmartBuy.com, a site where local and state governments can make purchases using the state’s buying power to obtain the best value.
“We want to make it easy for all the engines of taxpayer money to be the most efficiently spent,” she said.
Kerr County Judge Pat Tinley introduced Combs, who is from a West Texas ranching family. She was educated at Vassar, spent time on Wall Street, and earned a law degree from the University of Texas.
She served in the Texas House for two terms, working on property rights legislation, was an assistant district attorney in Dallas County, took office in 1998 as Texas agriculture commissioner and was elected Texas comptroller in 2006.
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