Low Tax Texas Facing Massive Budget Deficit

Texas also has a $4.3 billion deficit from last year. OOPS.

http://impactnews.com/central-austin/293-recent-news/11160-texas-has-43-billion-deficit-from-2010

Paul Krugman was right! Don't mess with Paul...

http://www.businessinsider.com/texas-budget-shortfall-2011-1

You're kidding right? It's widely acknowledged that the four states in the worst fiscal shape are CA IL NJ NY. Which of those are low tax states?

No, its acknolwedge by right wingers. The fact is Texas's controller says it faces a $27B deficit out of $95B.

Sorry, $27B out of $99B of spending. (two years) California (18 months) faces a deficit of $25B out of $128. So...hmmm...let me do the math...crecsent is a fricking idiot.

The only idiot is the one who thinks a 1-yr deficit is the only way to measure fiscal health.

because CA NY et al have already cut enormously and TX has much further room to raise taxes

and because the four high-tax states have much larger debt/GDP ratios.

The four states with the highest debt to GDP (or really GSP) are Kentucky, Rhode Island, Nevada, and Massachusetts. New York is fifth...but Texas is SEVENTH. California is TWENTY SEVENTH. you fricking liar and a moron.

http://www.usgovernmentspending.com/state_summary.php?chart=Z0&year=2011&units=p&rank=D

He's not a liar, he's just factually challenged.

You forgot those unfunded pension/post retirement liabilities.

http://www.forbes.com/forbes/2010/0208/debt-recession-america-wyoming-california-debt-weight-scorecard.html?boxes=custom

Of course, that's a totally different metric than the debt/GDP ratio, but it's an interesting analysis nonetheless.

Thanks for adding some actual data to the conversation.

Some people consider it standard to include unfunded liabilities to a debt ratio.

Sure, but these rankings aren't based solely on debt (with or without unfunded liabilities) to GDP ratios. They include factors like population and economic growth projections.

I didn't say they were. I didn't say those 4 had the highest debt/GDP ratio; I said they had much larger debt/GDP ratios. My debt includes unfunded liabilities.

Thank you for misreading and misunderstanding.

Hey, look how quickly we've gone from useful data to silly unsubstantiated comments.

So where's a list of GDP : debt ratios showing where Texas and the high tax states stand that includes the unfunded liabilities? You seem to be asserting that Texas would do better in such an analysis, but there doesn't seem to be any data to substantiate this claim.

http://www.forbes.com/2010/01/20/states-debt-pensions-interactive-map.html

mouse over it yourself

Debt inclusive of unfunded liabilities ranges from 40-140% higher in the 4 states than TX.

It's actually impossible to tell from just those numbers since those are per capita numbers.

It's a bit of work, so I only checked New York, but according to my calculations Texas's debt+unfunded mandates:GDP is 22.4% using this data while New York's is 24.0%. So Texas is slightly lower, but not so much as I'd get real excited about it.

and what about the other 3 states, or did you choose New York conveniently?

Uhh, as I said "it's a bit of work" so I didn't spend the time to look up populations and compute the other states. I chose New York because that's where I live. If you want to do the math to try and prove your point, you can do it yourself.

Like the whole article says, there are a lot more reasons why Texas is #4 in fiscal safety and New York is #49 and the other 3 states I mentioned near the bottom also. Debt/GDP is one of them; that may not apply to TX vs NY in particular but other points do, including population migration, unemployment, greater pensioner ratios, credit ratings.

It all goes into the ranking- TX 4, IL 46, CA 47, NY 49, IL 50

If it so pleases you, the debt/GDP ratios for the other 3 states are CA 35%, IL 46%, NJ 41%, all of which are 50% or more above Texas' position.

"Like the whole article says, there are a lot more reasons why Texas is #4 in fiscal safety and New York is #49 and the other 3 states I mentioned near the bottom also. Debt/GDP is one of them; that may not apply to TX vs NY in particular but other points do, including population migration, unemployment, greater pensioner ratios, credit ratings."

Seriously, that's why 10 posts ago I said "that's an interesting analysis; however it's a different metric than you originally proposed" and then mentioned some of the very factors you now re-iterate. I'm glad you've now caught up to that point in the discussion.

Crescent, you are SOOOOO disingenuous its sad. You post an article from a YEAR ago, when Texas had a much better budget outlook. Now, a YEAR later, Texas's budget deficit, as either a percentage of GDP or of normal state spending, is FAR worse than Californias. The article you posted has horribly outdated data.

Tell me how one bad year would change Texas' ranking? #4 to #7? Would it fall to California's #47?

We've established clearly here that a one-year deficit is very small issue compared to total debt, total unfunded liabilities, and other factors like credit rating. You, having no other arguments, simply repeat one that has been debunked.

I don't believe Texas' situation is far worse than California's. California has already endured difficult cuts, raised taxes, and borrowed to the hilt. Texas has far more room on all those accounts.

What a shock I couldn't quite find those figures referenced in the first note.
The direct link above:

> " AUSTIN – When state legislators re-convene, they will have a budget shortfall that could soar as high as $27 billion, according to estimates released on Monday.
> According to an independent estimate, the state needs $99 billion to fund all of its current programs for two years.
> Comptroller Susan Combs projects the state will take in only $72 billion. Without dramatic cuts, that leaves a shortfall of $27 billion, and that means the list of cuts is expected to be a long one."

In fact, this is not the controller saying there is a $27 billion deficit. This is the article saying the controller's revenue estimate is $72 billion using another estimate of the costs.

I found another link that says:

The state will collect $77.3 billion in general revenue during the next two-year budget cycle, according to Comptroller Susan Combs. She estimated the Rainy Day Fund will have $9.4 billion in it at the end of the 2012-2013 biennium and that the size of the current deficit is $4.3 billion. This leaves lawmakers with a net of $72.2 billion to spend.

Two years ago, the comptroller estimated the state would bring in $76.7 billion in general revenue; the economic downturn turned that number into $72.2 billion.

The numbers led groups on the left and the right to estimate the state's 2012-13 budget shortfall at anywhere between $15 billion and $27 billion.
http://www.texastribune.org/texas-legislature/texas-legislature/texas-legislature-returns-to-austin/

Take the middle of these two figures - $21 billion over the $99 billion - the percentage vs California is very similar.

Texas also has a greater percentage of uninsured residents despite passing a major tort reform law. Teas is just further proof that small govt. and low tax policies do not work.

Liability Limits in Texas Fail to Curb Medical Costs
Costs Have Outpaced National Average, Uninsured Rate Remains Worst in Country and Doctor Shortage in Rural Areas Has Grown More Acute
Despite rhetoric to the contrary, the data show that the health care system in Texas has grown worse since 2003, when the state instituted liability caps. This finding is crucial because the Texas experiment is being held up as a model by proponents of proposals to limit patients' rights that are now pending in Congress.

http://www.citizen.org/publications/publicationredirect.cfm?ID=7721

> Teas is just further proof that small govt. and low tax policies do not work.

Don't work for whom?

the people of Texas

Texas is in trouble because Texas sucks.

High taxes clearly weren't good for NYC, we're running massive deficits.

High taxes don't cause deficits.. spending does.

No, spending less than you take in causes deficits.

You can create a deficit by either spending too much, or taking in too little.... which is a factor of both taxes and revenue.

"We've established clearly here that a one-year deficit is very small issue compared to total debt, total unfunded liabilities, and other factors like credit rating."

You have asserted, we have not established. You have moving targets here in any event.

Coming from a guy who lied about saying "Texas's controller says it faces a $27B deficit out of $95B" or $99b?

It's beyond intellectually dishonest to use a false statement and declare that alone means Texas is in worse shape than California and ignore credit rating, pensions, past cutting, etc.

For example, GO bonds from NYS require the interest (now) than GO bonds from Texas. Just looked it up on Bloomberg. A few months ago, Texas's spread to USTs was MUCH better than NYS's. Ergo the "market" is saying Texas and NYS are equally risky. And about the same as Florida.

You know who has lower yields than all of the above? "Taxachussetts." FAR FAR lower? Maryland.

So this whole "red states" are better meme is false. There are legitimate concerns over CA, but in the last few weeks the muni and muni CDS markets have teh Texas and CA markets moving closer, and Mass still better than either.

Why are muni markets and muni CDS good indicators of a state's real fiscal situation? Aren't they actually indicators about people's fears about a state's real fiscal situation? The distortion possibilities are immense.

All you are basically saying is that Texas is getting worse. Fine. Doesn't mean the actual fiscal situation is as bad as California's. Look to a set of direct statistics, not the CDS market.

I said the muni (cash) AND CDS market. Texas needs to charge more interest than Mass and the same as NYS.

somewhereelse: "No, spending less than you take in causes deficits."

For whom? That sounds like quintessential Democratic sound fiscal policy, as we had during the Clinton boom years. A deficit of deficits, perhaps, and I'll take that.

This comparison TX vs NY cash munis is not meaningful. There have been few times in the last 4 years when the Texas 30-yr yield has been below the New York one. Given different times when this precious 1-yr deficit varied btwn the two states, I don't think these trading values mean what you want them to mean. There is probably a liquidity premium on New York state debt.

give it up crescent--markets price/value most efficiently--you are a free market guy, no?

alan--is it not bizarre that only a decade ago we were actually paying down US Treasury debt--pundits were predicting that agencies would be the benchmark of the future--this was the fiscal state of affairs handed to bush/cheney--who blew it up--so ironic the gop soundbitery about deficits and cost cutting and greed government and union workers--and teachers, and doormen---fing thieves all of them

Its not a liquidity premium, dummy, if it JUST happened over the last few weeks...or if North Dakota debt trades at 100 BP lower than either.

> give it up crescent--markets price/value most efficiently--you are a free market guy, no?

Sometimes they do, sometimes they don't. 2008 isn't good evidence of always rational.

I think you meant to answer "Sometimes I am, sometimes I'm not."

"Record Pace for German Growth

Germany's economy in 2010 grew at its strongest rate since the country's reunification, propelled by exports and rising investment, the Federal Statistics Office said...."

http://online.wsj.com/article/SB10001424052748704803604576077153669304190.html?mod=WSJ_hp_LEFTWhatsNewsCollection

MEANWHILE ultra-low tax Ireland, Iceland, Estonia, Latvia...

Is it not interesting (yes it is) that the Wall Street Journal (!!!!) and the HERITAGE FOUNDATION rate high-tax Canada, Denmark, and New Zealand as more "economically Free" than the U.S. or that the US is #9 on the list (still.)

http://si.wsj.net/public/resources/images/ED-AM861_miller_NS_20110111093202.jpg

Read it and weep. Crescent.

http://money.cnn.com/2011/01/19/news/economy/texas_budget_deficit/

>rate high-tax Canada

You should check your facts on the direction of corporate taxes in Canada:
http://www.canadabusinesstax.com/2009/04/business-income-tax-rates/

don't see what your point is. The deficit is $15-27b as I said.

"You should check your facts on the direction of corporate taxes in Canada: "

you frciking [fill in the blank]. Including ALL taxes, not just corporate taxes. Canada has higher overall taxes than the US, no matter how you measure it - as a percent of GDP, personal income, whatever. Even for corporations - they pay MORE than just corporate income taxes. They pay value added, payroll, property, and a whole host of other taxes. You then add back various deductions and credits...and Canadian companies in ACTUAL dollars pay almost twice as much as the US corps as a percent of GDP, and well just look at this graph

http://cloudfront.mediamatters.org/static/images/item/fox-20090331-taxrate.gif

Not to mention that Canada has SOCIALIZED MEDICINE. AHHHH!

So thanks huntersburg for pointing to one of the most Socialized countries in the world as an example we should follow. I never knew you were a Socialist.

I heard that Canadians have to wait up to 18 months for a routine browlift, eyetuck and liposuction refresher.

I'm just glad I live in the U.S. of A.! Num-ber 8! Num-ber 8!

Am-muurrh-ica! Fuck yeah!

Funny thing, crescent22. Moody's will now include unfunded pension liabilities in their overall debt by state. Guess what? All-in, California and NYS are not in the top ten worst anymore. Who moves in? A few red states, including Oklahoma, Kentucky, and Mississippi (at #2, no less.) On a per capita basis, the top ten also now excludes the CA/NY poster children, but DOES include red states Alaska, Kentucky (again), Mississippi, and Louisiana.

The chart show that MOST of the "low deficits" up until now of Oklahoma, Louisiana, Alaska, Kentucky, and Mississippi has been because they have MASSIVELY under-fuinded their pensions, whilst NY and CA have fully funded them.

So using crescent22's own logic, the red states are no better than the blue states.

See: http://www.nytimes.com/2011/01/27/business/27pension.html?ref=business