For Immediate Release
June 9, 2009
Circumstances changed; our economic foundation hasn't
By Susan Combs
Texas Comptroller of Public Accounts
Now that the Texas Legislature has departed town, we are reminded how quickly circumstances change.
Only five months ago, as state lawmakers were about to convene, President Bush held his final press conference, the Detroit auto show opened to great fanfare and a judge said Bernie Madoff could stay out of jail - for now.
That was Jan. 12, the day that I performed my duty as the state's chief financial officer and told Texas lawmakers that they would have 10.5 percent less money to spend than two years ago.
One of my jobs is to predict the future - where the Texas economy will go over the next two years. Fortunately, I've got an excellent staff of revenue estimators to call on.
In January, the ripples of the global recession were just lapping at our boots and Congress was a month away from passing what became the American Recovery & Reinvestment Act.
Over the next five months, more Texans lost their jobs, but our jobless rate continued to trail the nation's. Housing construction fell, but our foreclosure rates did not spike. Sales tax revenues tumbled from their double-digit growth, but we had accounted for that.
Lawmakers approved a $182.3 billion appropriations act to fund state government for 2010-11- without cutting services or raising taxes. And, agree with it or not, they did it with $12.1 billion in federal stimulus dollars.
Just as important, they left our Rainy Day Fund untouched and we expect it to grow to $9 billion by the time they return in 2011.
They're likely to need it.
Even in good times, our revenues strain to pay for our expenditures. But, watching what's happening around the country, Texas is in an enviable position.
Unlike California, we're not considering double-digit budget cuts despite historic levels of federal subsidies. And unlike Michigan, we’re not trying to diversify our economy as a once-dominant industry struggles to survive.
Been there, done that.
Texas is in an enviable position because of what we learned during the oil bust of the 1980s.
Today, our economy is more diversified than Mexico's or Canada's. And that Rainy Day Fund was created in response to that watershed moment in the 1980s.
Still, Texas is not immune to a global recession.
A Chrysler bankruptcy threatens about 50 Texas dealerships. We're still waiting to see the full impact of General Motors going through bankruptcy. Our jobless rate may inch up before it finally drops.
But Texas has the right business mix to rebound sooner than later.
Circumstances changed after January 12, but our economic foundation hasn't. Texas remains solid enough to weather these times.
As the state's chief financial officer, Comptroller Susan Combs on June 8 certified that the state will have enough revenue to support the 2010-11 General Appropriations Act.