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| Why Texas Is No Longer Feeling Miraculous | Why Texas Is No Longer Feeling Miraculous |
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| AUSTIN, Tex. — Call it the season of Texas’ discontent. Of course there was Hurricane Harvey, which blasted the coastline, leaving cities flooded and an estimated $180 billion in damage. But Harvey is just the headline. | AUSTIN, Tex. — Call it the season of Texas’ discontent. Of course there was Hurricane Harvey, which blasted the coastline, leaving cities flooded and an estimated $180 billion in damage. But Harvey is just the headline. |
| There’s also the dysfunctional, ideologically driven State Legislature, which spent the last weeks of this year’s session debating, of all things, who gets to use which bathroom. Then there’s the oil and gas sector, which, as it has so many times before, expanded into a bubble and then, as global energy prices sank, popped, taking thousands of jobs with it. | There’s also the dysfunctional, ideologically driven State Legislature, which spent the last weeks of this year’s session debating, of all things, who gets to use which bathroom. Then there’s the oil and gas sector, which, as it has so many times before, expanded into a bubble and then, as global energy prices sank, popped, taking thousands of jobs with it. |
| Texas’ woes are interconnected. Rising energy prices allow politicians to take their hands off the legislative wheel. Less attention to smart, controlled growth at the state and local level allowed unchecked sprawl along the coast. And now declining revenues will make it harder for the state to address its very real needs, assuming the Legislature can get its act together. The silver lining to this tale? It finally seems to be dawning on people that low taxes, less regulation and more oil are no substitute for actually governing. | Texas’ woes are interconnected. Rising energy prices allow politicians to take their hands off the legislative wheel. Less attention to smart, controlled growth at the state and local level allowed unchecked sprawl along the coast. And now declining revenues will make it harder for the state to address its very real needs, assuming the Legislature can get its act together. The silver lining to this tale? It finally seems to be dawning on people that low taxes, less regulation and more oil are no substitute for actually governing. |
| If this doesn’t sound like the Tall Tale of the Texas Miracle of just a few years ago, that’s because it’s not. Way, way back — in early 2015 — Gov. Rick Perry rode out of office with his head held high: The boom years had created over 1.4 million jobs since the end of 2007. We had escaped the housing bust, oil and gas prices were rising and the state’s economy had diversified and profited mightily from free trade. Texas was the promised land, reminiscent of Davy Crockett’s observation that our state “is the garden spot of the world.” At the height of this latest Texas miracle, the cost of living was so low and there were so many jobs that 1,000 people flocked here every single day. | If this doesn’t sound like the Tall Tale of the Texas Miracle of just a few years ago, that’s because it’s not. Way, way back — in early 2015 — Gov. Rick Perry rode out of office with his head held high: The boom years had created over 1.4 million jobs since the end of 2007. We had escaped the housing bust, oil and gas prices were rising and the state’s economy had diversified and profited mightily from free trade. Texas was the promised land, reminiscent of Davy Crockett’s observation that our state “is the garden spot of the world.” At the height of this latest Texas miracle, the cost of living was so low and there were so many jobs that 1,000 people flocked here every single day. |
| Times, however, have changed. Two years ago Texas had one of the nation’s lowest unemployment rates; today it is in 28th place. Though it is now at 4.4 percent, it was as high as 5 percent a few months ago, and there’s a good bet it will bounce back up, and likely higher, soon. | |
| The reason: the oil patch. When oil fetched $100 per barrel, we fracked away, even in our own suburbs. Roughnecks rented trailer spots in front yards and showered towns from Odessa to Victoria with money. A drive across West Texas’s vast, oil-rich Permian Basin in late 2015 revealed equipment crowding roads. Now much of that equipment is idle, and energy companies are planning on $40 a barrel as far as they can forecast. | The reason: the oil patch. When oil fetched $100 per barrel, we fracked away, even in our own suburbs. Roughnecks rented trailer spots in front yards and showered towns from Odessa to Victoria with money. A drive across West Texas’s vast, oil-rich Permian Basin in late 2015 revealed equipment crowding roads. Now much of that equipment is idle, and energy companies are planning on $40 a barrel as far as they can forecast. |
| The Lone Star State also slipped in the business rankings. For the first time in years, Texas tumbled out of the top two most desirable states for business in CNBC’s annual survey of executives. No. 1? Washington State. The reason, executives said, was a stalled state economy — because of the oil slump. Governing magazine ranked the Texas economy 21st; in 2013, it was third. WalletHub has Texas in 20th place. | The Lone Star State also slipped in the business rankings. For the first time in years, Texas tumbled out of the top two most desirable states for business in CNBC’s annual survey of executives. No. 1? Washington State. The reason, executives said, was a stalled state economy — because of the oil slump. Governing magazine ranked the Texas economy 21st; in 2013, it was third. WalletHub has Texas in 20th place. |
| It’s not just the oil slump. Even though we don’t have a state income tax, we have high sales and property taxes. WalletHub ranks our effective tax burden 30th in the country, basically tied with Massachusetts. And the state isn’t about to help: The Legislature can’t even figure out how to fund public schools. | |
| Will business turn up its nose at Texas? It already has. Yes, Toyota’s new North American headquarters is in Plano, outside Dallas. But General Electric was looking to move its headquarters from Connecticut to North Texas, too. Instead, 800 G.E. employees are going to Boston. The reason? Massachusetts may be home to high taxes and high regulations, but it’s also a pro-trade and pro-smart growth. Texas, meanwhile, is home to Representative Jeb Hensarling, the chairman of the House Financial Services Committee and an ardent opponent of the Export-Import Bank, on which G.E. and many other companies depend for export assistance. | Will business turn up its nose at Texas? It already has. Yes, Toyota’s new North American headquarters is in Plano, outside Dallas. But General Electric was looking to move its headquarters from Connecticut to North Texas, too. Instead, 800 G.E. employees are going to Boston. The reason? Massachusetts may be home to high taxes and high regulations, but it’s also a pro-trade and pro-smart growth. Texas, meanwhile, is home to Representative Jeb Hensarling, the chairman of the House Financial Services Committee and an ardent opponent of the Export-Import Bank, on which G.E. and many other companies depend for export assistance. |
| And what are the chances that Amazon, now in the hunt for a second headquarters site, will choose Dallas, which has thrown its 10-gallon hat in the ring? Whatever the city can offer, the state taketh away in the form of do-nothing legislators and governor who sport, as their recent crowning achievement, an Arizona-style law that allows the police to question people’s citizenship and immigration status. The law immediately stalled in the courts. | And what are the chances that Amazon, now in the hunt for a second headquarters site, will choose Dallas, which has thrown its 10-gallon hat in the ring? Whatever the city can offer, the state taketh away in the form of do-nothing legislators and governor who sport, as their recent crowning achievement, an Arizona-style law that allows the police to question people’s citizenship and immigration status. The law immediately stalled in the courts. |
| The governor, Greg Abbott, also called the legislature back into a special session in part to pass a North Carolina-style bill regulating which public bathroom transgender people could use. It lost, but not before it had pitted Republicans against AT&T, American Airlines, Dell, Google, the major oil companies, Southwest Airlines and the Texas Association of Business. | The governor, Greg Abbott, also called the legislature back into a special session in part to pass a North Carolina-style bill regulating which public bathroom transgender people could use. It lost, but not before it had pitted Republicans against AT&T, American Airlines, Dell, Google, the major oil companies, Southwest Airlines and the Texas Association of Business. |
| Texas Republicans, somehow, have become the anti-business party. “Most of the threats to the future of Texas are self-imposed: Inadequate education and infrastructure funding can stifle growth,” said M. Ray Perryman, an economist who describes himself as a fiscal conservative. “Discriminatory social legislation can irreparably damage the business climate, and hard-line immigration posturing is counterproductive.” | Texas Republicans, somehow, have become the anti-business party. “Most of the threats to the future of Texas are self-imposed: Inadequate education and infrastructure funding can stifle growth,” said M. Ray Perryman, an economist who describes himself as a fiscal conservative. “Discriminatory social legislation can irreparably damage the business climate, and hard-line immigration posturing is counterproductive.” |
| Mr. Abbott hasn’t shown much interest in toiling in the garden of economics, anyway; where Mr. Perry doled out some $500 million in incentives to companies to move, stay or grow in the state, Mr. Abbott has parsimoniously offered enticements often measured in the several hundred thousand dollars (except for Toyota, which got $40 million in incentives from the state to move to Plano). | Mr. Abbott hasn’t shown much interest in toiling in the garden of economics, anyway; where Mr. Perry doled out some $500 million in incentives to companies to move, stay or grow in the state, Mr. Abbott has parsimoniously offered enticements often measured in the several hundred thousand dollars (except for Toyota, which got $40 million in incentives from the state to move to Plano). |
| And then came Harvey. In addition to the immense human suffering, applications for unemployment benefits have spiked to Great Recession levels. If the federal government comes through with all the money, then those costs would eventually be zeroed out as money pours into rebuilding. But that’s a huge if, given the politics of Washington, the highly politicized history of recent hurricane relief and the fact that only $15 billion has been approved. Of that, only $1 billion has been dispersed; almost a third of that will be needed just to clean up trash. | And then came Harvey. In addition to the immense human suffering, applications for unemployment benefits have spiked to Great Recession levels. If the federal government comes through with all the money, then those costs would eventually be zeroed out as money pours into rebuilding. But that’s a huge if, given the politics of Washington, the highly politicized history of recent hurricane relief and the fact that only $15 billion has been approved. Of that, only $1 billion has been dispersed; almost a third of that will be needed just to clean up trash. |
| The tale of the Texas Miracle was a big fat lie: Plentiful oil, low regulation and even lower taxes are not a panacea. Sure, they don’t hurt. But they don’t help, not without consistent, well-considered state policy to attract and build businesses. | The tale of the Texas Miracle was a big fat lie: Plentiful oil, low regulation and even lower taxes are not a panacea. Sure, they don’t hurt. But they don’t help, not without consistent, well-considered state policy to attract and build businesses. |
| Still, there is hope. Harvey is forcing Texans to rethink our political dogma of small government at any cost. Harris County, which surrounds Democratic Houston and includes bedrock Republican suburbs, has placed everything on the table to prevent disasters in the future: from radical rezoning to land conservation and a giant Dutch-style engineering project to protect the region from another direct hit. That will take at least tens of billions of taxpayer dollars. | |
| Even the state’s right-wing lieutenant governor, Dan Patrick, has found religion, singing the praises of expensive engineering. Mr. Abbott is being too clever by half so far, refusing to tap the state’s $10 billion rainy day fund while asking for the federal government to pick up the entire tab for the hurricane. Though as a politician he has done nothing but oppose the federal government, his re-election may end up hinging on how effective he is at bringing home the federal bacon. The same is true of the state’s junior senator, Ted Cruz, notorious for opposing aid to areas hit by Superstorm Sandy. | Even the state’s right-wing lieutenant governor, Dan Patrick, has found religion, singing the praises of expensive engineering. Mr. Abbott is being too clever by half so far, refusing to tap the state’s $10 billion rainy day fund while asking for the federal government to pick up the entire tab for the hurricane. Though as a politician he has done nothing but oppose the federal government, his re-election may end up hinging on how effective he is at bringing home the federal bacon. The same is true of the state’s junior senator, Ted Cruz, notorious for opposing aid to areas hit by Superstorm Sandy. |
| Yes, Harvey has flooded the garden of the Texas economy. But the garden was already unkempt. And fall, in Texas, is a good time to start over with honest perspiration. To quote that most famous Texas gardener, Lady Bird Johnson, “Where flowers bloom, so does hope.” | Yes, Harvey has flooded the garden of the Texas economy. But the garden was already unkempt. And fall, in Texas, is a good time to start over with honest perspiration. To quote that most famous Texas gardener, Lady Bird Johnson, “Where flowers bloom, so does hope.” |