Texas is deep in the red. And it’s one of the better states.

I didn’t know this until today, but Texas is expecting a $25 billion deficit. FT.com reports:

Rick Perry may have won his third term as Texas governor this month, but the prize is a state budget deficit analysts estimate has grown as high as $25bn.

The projected deficit, to be announced in January, would leave Texas with tough decisions about how to meet spending commitments, as its constitution requires a balanced budget. It faces scaling back already lean budgets for education, healthcare and public safety.

The Dallas Morning News quoted senior legislative staff this month saying the deficit has gone as high as $25bn and could rise if the economy does not pick up.

“It’s going to be a really bad couple of years for public schools,” said Mark Jones, political scientist at Rice University. Education accounts for 55 per cent of state spending, he said.

Other areas highly dependent on the state are healthcare, accounting for 25 per cent of spending, and public safety, accounting for roughly 10 per cent.

Richard Murray, political scientist at the University of Houston, said the state had not fully recovered from the cuts made in 2003. For example, 26 per cent of Texans are uninsured – a higher percentage than in any other state. The estimated average salary of public school teachers ranks 39th among states, with state and local expenditures per pupil in public schools ranking 44th.

Given an increasingly elderly population, large numbers of uninsured and a rise in those using public education, Mr Murray said drastic cuts would be needed.

What is shocking is that Texas’s economy has been better than most. Texas experienced a 1.6 percent increase in jobs over the last year while the U.S. as a whole only saw a 0.2 percent increase. In fact, half of all jobs created were in Texas. Texas has an unemployment rate of just 8.1 percent versus a U.S. average of 9.6 percent.

If fast growing Texas is having trouble balancing its budget, think about all those underperforming states.

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