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New Paths in Rural Texas

Faced with the decline of oil and gas production and the unpredictable nature of agriculture, Texas’ rural counties must blaze new paths to economic prosperity. Yet no “one-size-fits-all” approach is likely to work. Instead, the emerging rural economies of the 21st century resemble a patchwork, a wide variety of approaches designed to allow rural inhabitants to survive and prosper in the land they love.

Economic Development in Rural Texas
Economic development in rural Texas depends on many factors and requires the resources of many groups. Private businesses, government and local economic development organizations all have a hand in creating and maintaining economic viability in rural Texas.

Agencies and organizations such as the Texas Department of Economic Development (TDED) Office of Rural Affairs, Texas Economic Development Council (TEDC), Texas State Office of Rural Development (USDA), Texas Rural Communities, Texas Rural Leadership Program, and the Texas Rural Development Council (TRDC) assist rural communities in a variety of ways. Rural communities can get help with program and grants, leadership training and development, and community revitalization and strategic plans for economic development.

For example, the TRDC provides hands-on teams to assist rural communities with their economic development strategies. The TRDC Resource Teams, in partnership with the Resource Conservation and Development, (RC&D) Councils, Councils of Government (COG’S), Housing and Urban Development (HUD) Community Builders, and County Extension Agents are “committed to providing rural communities in Texas with a community-based planning and assessment process involving interviewing a large number of people in the community, recording their suggestions and having the team of experts write-up implementation plans for community use.”[205]

These efforts can translate into opportunities for economic development funding and other assistance at both the federal and state levels. The community of Comanche in Comanche County, after participating in a Resource Team visit in 1999, was awarded the Enterprise Zone designation in July 2000, making them eligible for benefits through the Federal Empowerment Zones Program administered by the USDA. Comanche also received a Texas Workforce Commission grant of $385,000 for training workers in four industries in Comanche and De Leon. The city of Hearne in Robertson County, which participated in a Resource Team visit in 1995, has received a $250,000 grant from the Texas Department of Transportation to restore the Hearne Railroad Depot. The Union Pacific Railroad has also expanded operations in Hearne, including construction of a new office building.[206]

State Efforts in Promoting Rural Development
Creating opportunities for economic growth in rural areas is a challenge in every state. The competition for new business activity is everywhere and cities, both large and small, must work hard to bring jobs to their communities. The more advantages a community can offer, the better its chance of attracting new businesses. In sizing up communities, businesses look at the skills and educational levels of the labor force, economic base, local features, as well as what business incentives, such as tax breaks, might be offered.

Texas is already attractive to businesses because it is a pro-business, right-to-work state. This means that the state doesn’t zone, nor does it have subdivision or building regulations—these are decisions left to local governments—and workers have the freedom to work wherever they want. Texas also doesn’t have a corporate or personal income tax. These incentives give Texas communities a competitive advantage in attracting business when competing with communities in other states that don’t offer similar incentives.[207]

In order to learn more about how Texas compares to other states in the area of rural economic development, the Comptroller’s office took a look at what the state was doing to make its rural areas more attractive to businesses, as well as what other states with large rural populations were doing.

In researching other states, it was decided that it would be best to look at states that had rural qualities most like Texas. To gain the broadest perspective of rural states, several criteria were used. Comptroller staff looked at the states that were closest in population to Texas, and had high non-metro population percentages—at least 15 percent of the total state population. States with the highest non-metro populations were also included, with the exception of a few like Alaska and Wyoming that have total state populations of less than one million. Additionally, states bordering Texas were included so that what our neighbors had to offer rural developers could be considered. (See Exhibit 76.)In all, 20 states were contacted, the top ten in population with a comparatively high non-metro population, the four states bordering Texas, and the six states ranking among the highest in non-metro population with total populations of more than one million. According to the Census, Texas had a 1999 population of over 20 million. Of that, more than 15 percent of the population, or 3.1 million people lived in non-metro counties, and more than 77 percent of the counties in the state were considered rural by the USDA, using the scale described earlier. Texas has the highest total non-metro population of any state in the country.

Exhibit 76
Rural State Population
State 1999 State Population 1999 Non-Metro Population Non-Metro Percent of Population Number of Rural Counties Rural Percent of Counties
Mississippi 2,768,619 1,880,636 67.9% 75 91.5%
Idaho 1,251,700 843,856 67.4% 42 95.5%
Arkansas 2,551,373 1,528,377 59.9% 64 85.3%
West Virginia 1,806,928 1,049,467 58.1% 43 78.2%
Iowa 2,869,413 1,581,822 55.1% 89 89.9%
Kentucky 3,960,825 2,045,340 51.6% 98 81.7%
Nebraska 1,666,028 796,781 47.8% 87 93.5%
New Mexico 1,739,844 748,154 43.0% 27 81.8%
Oklahoma 3,358,044 1,324,183 39.4% 63 81.8%
Indiana 5,942,901 2,084,604 35.1% 55 59.8%
North Carolina 7,650,789 2,512,589 32.8% 65 65.0%
Georgia 7,788,240 2,406,149 30.9% 117 73.6%
Louisiana 4,372,035 1,084,054 24.8% 40 62.5%
Virginia 6,872,912 1,496,398 21.8% 74 54.4%
Ohio 11,256,654 2,146,659 19.1% 49 55.7%
Michigan 9,863,775 1,726,685 17.5% 58 69.9%
Washington 5,756,361 978,876 17.0% 27 69.2%
Illinois 12,128,370 1,875,613 15.5% 74 72.5%
Pennsylvania 11,994,016 1,859,955 15.5% 34 50.7%
TEXAS 20,044,141 3,084,018 15.4% 196 77.2%
Sources: U.S. Census Bureau, U.S. Department of Agriculture and Comptroller of Public Accounts.

The survey was used to determine the importance of rural development to rural states and the various strategies other rural states had for helping attract business to their respective rural areas. Most of the surveyed states were unable to differentiate between rural incentives and urban incentives, and most states couldn’t provide definitive answers when asked how much funding went specifically for rural development in a given year. Most often, the explanation for this was that rural development wasn’t usually tracked at the state level because so much of the funding was handed out from the local level, and came from local tax incentives, similar to what occurs in Texas.

The survey’s findings showed that rural development, though very important to most states, was often not given much more attention than was development in any other area. The most common types of rural development incentives cited by state officials were workforce training, tax credits and infrastructure improvements. (See Exhibit 77.)

Exhibit 77
Economic Development in Other States
State Promotes Rural Development Importance of Rural Development State-level Rural Development Funding in 2000 Most Effective Rural Development Tools
         
Mississippi NR NR NR NR
         
Idaho Yes Very Important Very little solely for rural areas; less than 10% of economic development budget. Workforce development training, telecommunication enhancements and other infrastructure improvements. Currently asking Legislature to implement specific initiatives for rural populations under 10,000. Currently do not have an appropriation for economic development. Quarter-cent local sales tax for discretionary purposes, including economic development.
         
Arkansas NR NR NR NR
         
West Virginia Yes Very Important Total spending for statewide community and economic development funding was $88 million, but there isn't a break out for what percent of that was rural funding. Since approximately 70% of our state meets the [1990] Census Bureau definition of rural (outside places of less than 2,500 people) we estimate that around 75% of that was rural funding. The WV Supertax Credit offsets up to 80% of State Corporate Net Income and Franchise Tax for companies creating at least 10 jobs in the state; the Governor's Guaranteed Workforce Program provides training grants up to $1,000 per employee for new or expanding businesses; a loan program for small businesses, and a training program exclusively for small businesses. The state does not offer counties a local sales tax option.
         
         
         
Iowa Yes Yes $3.2 million; used for building projects, leadership development, telecommunications feasibility studies, community betterment, etc. NR
         
         
         
Kentucky Yes Very Important NR Good workforce, access to markets, sound infrastructure and business-friendly environment. The Kentucky Rural Development Act (KREDA) allows a manufacturer to recover a portion of new investment in land, building and equipment, via a 100% credit against the state income tax from the new business activity and a 4% wage assessment against the payroll of the new employees for up to 15 years.
         
Nebraska Yes Very Important Unable to determine. Tax incentives can't be distinguished between urban and rural. Recruitment and expansion incentives. Corporate income tax credits, sales tax credits, property tax credits (up to 15 years) for major ($3 million+) investments in employees, property and equipment. Incentives are based on performance of companies and their impact on economies.
         
New Mexico Yes Very Important $3 million In-plant training, which provides funds to companies for recruitment and expansion.
         
Oklahoma NR NR NR NR
         
Indiana Yes, but not Very Important No funding specifically dedicated for rural development. NR
         
         
North Carolina NR NR NR NR
         
Georgia Yes Somewhat NR Varies, incentives provided mainly by local governments.
    Important    
         
Louisiana NR NR NR NR
         
Virginia NR Very Important NR NR
         
Ohio Yes NR NR The state provides loans and grants for industrial park development. The state also supplements federal funding of economic development initiatives in 29 of its rural counties. Plans are currently being made to further assist economically distressed rural areas.
         
Michigan NR NR NR NR
         
Washington Yes Very Important $3 million Local sales tax incentive (.08%), sales tax exemption on new construction and new equipment for manufacturing, and tax deferral for job creation and retention.
         
Illinois NR NR NR NR
         
Pennsylvania Yes Very important NR Water and Infrastructure funding, tax free development in designated distressed areas. Manufacturing sales/use tax exemptions, lack of corporate income tax, enterprise zones, tax abatements and local economic development sales tax option.
         
TEXAS Yes Very important $236.6 million in 1999 local economic development sales tax and $202,000 for direct rural program expenditures. Manufacturing sales/use tax exemptions, lack of corporate income tax, enterprise zones, and tax abatements, local economic development sales tax option.
NR = No reply received.
Source: Texas Comptroller of Public Accounts.

One thing that gives Texas a competitive edge in attracting new business is that the state does not have a corporate or personal income tax. Of the states surveyed, only two others—New Mexico and Washington—are similar.[208] As a matter of fact, Texas ranks almost last—48th and 49th respectively—in state tax collections per capita and per $1,000 of personal income.[209]

The tool that generates the most money for economic development in Texas rural areas is the local sales tax, which can be used for various means of economic development by any city that votes to collect it. In 1999, this tax brought in total revenues of almost $241 million to cities throughout the state.[210] Washington and Idaho were the only states surveyed that reported a similar incentive. (For more on the local sales tax for economic development, please see the following section.)

Texas also provides a long list of other economic development tools. Among them:

  • Smart Jobs Fund, a business incentives program that provides funds for job training;
  • Skills Development Fund, which provides grants to public communities to form partnerships for custom job training between local colleges and technical schools and area companies and labor unions;
  • Texas Enterprise Zone Program, which gives state incentives such as tax refunds and tax reductions to businesses that meet program requirements for economic creation;
  • Texas Capital Fund Program, which provides funds for companies who build in small communities, that may be used to offset infrastructure and real estate costs.

Additional initiatives provided by the state include bonds, property tax exemptions, and in-state tuition incentives for employees of qualified businesses.

Exhibit 77 summarizes other findings from the survey.

Local Sales Tax
Since 1989, rural areas throughout the state have had the opportunity, through local option elections, to increase their local tax rates to finance manufacturing and industrial development through what is known as the 4A sales tax, or quality of life improvements such as parks or community pools, through what is known as the 4B sales tax.

Of the 1,194 incorporated cities in Texas, 196 have passed the city tax under 4A, and 323 have passed 4B. Of these, 94 and 141 respectively were passed in rural Texas counties.[211] The majority of cities in rural counties that have increased their rates are located in Type 6 Hometown counties (located next to metro areas with populations between 2,500 and 19,900). (See Exhibit 78.)

Exhibit 78
4A and 4B City Sales Tax in Rural Counties
County Type Number of 4A Cities Number of 4B Cities
Type 4 "Bedroom Counties" 2 1
Type 5 "Lone Star Counties" 2 1
Type 6 "Hometown Counties" 41 77
Type 7 "Small Town Counties" 32 34
Type 8 "Satellite Counties" 5 15
Type 9 "Lonely Counties" 12 13
Total Cities in Rural Counties 94 141
Total Cities in Texas 196 323
Source: Texas Comptroller of Public Accounts.

According to Leland Beatty, former director of Texas Rural Communities, Inc., these economic development taxes have been used as successfully “as the local leadership was resourceful.”

To oversee the way in which the revenues from the additional sales tax are used, a city is required to create an economic development corporation. In most cases, the opportunity to create economic development taxes is limited to cities located in counties with populations of less than 500,000 or 750,000 respectively, depending on if it is a 4A or 4B sales tax.[212]

Rural Development Doesn’t Come Easy
Increasing economic development in small cities is usually a slow process because many obstacles must be overcome. According to officials in the Office of Rural Affairs at the Texas Department of Economic Development (TDED), finding niche markets for individual areas can be a daunting task. Niche markets, such as tourism or outdoor recreation, allow rural communities a certain amount of economic independence from the more traditional yet volatile rural industries of agriculture and oil and gas. Other barriers to economic growth in rural areas can include lack of financial resources and equipment, inadequate housing, scarce basic health care, and a heavy community dependence on a single industry such as petroleum or agriculture.

A USDA Economic Research Service study of factors related to local and regional economic growth concluded that “attractiveness to retirees, right-to-work laws, excellent high school completion rates, good public education expenditures, and access to transportation networks” were all associated with improved county earnings. The mix of industries active in a county was also important.[213]

Comptroller research staff contacted several communities in the state to learn about their local economic development initiatives and found that many try to capitalize on existing community characteristics. For example, Littlefield, an agricultural community of about 6,500 people in the Southern Plains region of the state, has recently become home to two new dairies that employ about 50 people in the community. The new dairies also have positively affected existing local businesses. Ofana Donnell, the city’s economic development coordinator, stated that everyone from pipe and concrete companies, to equipment dealers and plumbers have reaped new business from the dairies.

Levelland, a larger city in the same region, has attempted to benefit similarly through vertical integration in agriculture and petroleum markets. Assistant city manager, Rick Osburn, said the city is also taking advantage of job opportunities in neighboring Lubbock. According to Osburn, Lubbock businesses have begun to expand into the surrounding rural areas to take advantage of the available workforce.

Snyder, Texas: West Texas Hot Spot for Economic Development

Snyder, Texas once was just a town that revolved around oil and agriculture. Now it is becoming a focal point of economic development in West Texas thanks to the Development Corporation of Snyder (DCOS) whose aim is to boost Snyder’s manufacturing sector jobs from 300 to 2,000. The town, located halfway between Abilene and Lubbock, is home to about 12,000 residents. Snyder is attracting new industries while many other rural west Texas towns are only just now thinking about it, due in part to the work of the DCOS and its executive director John DeLille. DeLille said a group of about a dozen area citizens began the economic development effort years ago, and they continue to support it today. In 1992, Snyder’s citizens approved using a three-eighth’s cent increase in their local sales tax for economic development and in turn created the DCOS.[214]

Snyder sets itself apart from other small towns in the area because it is home to Western Texas College (WTC), as well as a new $9 million, 300-acre Snyder Industrial Park. DeLille said the relationship between the college and the business partners is important because education is the basic foundation of industrial development.[215] In 1997, WTC received two job-training grants from the State of Texas totaling $700,000. The industrial park is located on Highway 84 and has a 50-room motel, renovated truck stop and food court nearby. The latest technology is also available to new businesses locating there including, high-speed fiber optic communications, multiple T-1 lines, and televideo conference locations.

The DCOS, a non-profit public corporation governed by the Development Corporation Act of 1979, created the park. An adequate supply of water and competitive utility costs are also attractive elements that should draw more business to the facility.

The DCOS also can be credited with attracting Lorber Industries of Texas Inc., a $19 million, 70,000 square foot state-of-the-art cotton yarn spinning mill and the first manufacturer in the new Snyder Industrial Park. The California-based company chose this location because of its proximity to the cotton fields.[216]

Arnold Lorber, the president of Lorber Industries said some of his colleagues thought he chose a poor location because they thought it was isolated and it could be difficult to get parts and labor, but he said these factors haven’t been a problem. The plant has a payroll of more than $2 million and employs about 70 workers, but plans for expansion are on the horizon. Employment could rise to 500 workers with a payroll of $10 million, if the plant expands to a fully vertically integrated textile facility with a bleaching and dying facility and knitting mill.

Another prospective resident of the industrial park is Y-Z Industries, formerly a machine shop serving the oil patch, which now manufactures equipment to put odor into natural gas for leak detection. Y-Z plans to expand its local workforce of 72. Other plans being finalized include a brick and tile manufacturing plant that will be located on the site of an old brick plant that closed in the 1970s. Attracted by an abundance of clay, the brick manufacturing plant is expected to employ about 50 workers.[217] Snyder is also home of the Price Daniel Unit of the Texas Department of Criminal Justice, which opened in August 1989. The 599-acre unit houses about 1,300 minimum-security prisoners and has about 470 employees.[218]

It appears most rural cities use similar methods to attract new business. According to Laure Vincent, executive director of Highground of Texas—a marketing coalition representing 54 counties in the southern plains—they promote their existing resources and way of life through mailouts, and attract business with beneficial tax structures and by sending proposals to companies they hear about from local contacts, TDED and electric cooperatives.

In addition to publicly funded organizations, private companies also aid in economic development in local communities. Most investor-owned utilities provide economic development services for their customers to help bring industrial and commercial establishments to the areas they serve. David Evans, an economic and business development executive for Texas Utilities Electric/Lonestar Gas (TU), said TU employs 12 people in its economic development division to help recruit businesses to its service area, which consists of more than 100 counties. They work as part of a network that includes TDED, the Texas Department of Agriculture and real estate brokers. Evans said one example of a business that TU worked to recruit to Texas was a feed company from South Dakota, which was relocating. The company, Hubbard Feeds, recently built a new plant in Buffalo, Texas and employs 40 people.

In summary, rural development in Texas depends on the availability of resources. Cheryl Hinckley, executive director of the Texas Rural Development Council—which matches the resources of all levels of government and the private sector with local development strategies—said economic success in rural Texas should continue as technology improves. She said, “It will give rural areas the access they need to important resources. It will be the key to a movement back into rural areas where more and more small businesses will be established, most likely to support larger economies in individual areas, such as tourism and agriculture.”

Rural Texas Connects—Isolated No More
The rural lifestyle is becoming less isolated through technology. The Internet is providing opportunity for rural residents to enjoy the benefits of a rural lifestyle by tapping into many activities formerly available only in urban areas. The once clear-cut differences between rural and urban are being blurred.

“Texas has become the runaway leader in attempts to bring Internet access statewide,” according to Gene Krick, executive director of TeleCommunity Resource Center. Communities throughout the state are setting up community networks to provide local residents access to the Internet. The Rio Grande Free Net, named by Texas Monthly as one of the top 100 Web sites in Texas, has more than 8,000 registered users and has provided Internet access to more than 38,000 people in West Texas, southern New Mexico, and Juarez, Mexico. More than 350 public access terminals are available for residents at El Paso County public libraries and schools.

In La Grange, a plan is underway to improve local fiber-optic infrastructure to enable access to major education and medical institutions as well as other resources. The Strategic Access: La Grange, Texas (SALT) project has support from local partners as well as the Lower Colorado River Authority (LCRA) and the Texas A&M Institute for Scientific Computation.

Rural and under-served communities have access to a number of resources that provide information and assistance in creating community networks. The TeleCommunity Resource Center (TCRC) is a non-profit program to provide encouragement and assistance for local Internet projects. Texas Rural Communities, Inc. (TRC), another non-profit entity, provides training in local communities to allow them to take advantage of Internet services.

The information highway headed to rural communities is a two-way street. Not only do local residents have access to education, shopping and health opportunities that were previously unavailable, rural communities are getting the word out about local attractions that some urban dwellers crave.

Texas Rural Communities, Inc. provides a Web site that includes the BluebonNet program and The Smartest Little Towns in Texas. The BluebonNet program provides links to more than 40 bed and breakfasts throughout rural Texas with an opportunity for online reservations.

The Smartest Little Towns in Texas includes links to more than 50 towns–the link to each town may include additional links to local museums, restaurants, shops, libraries, chambers of commerce or festivals. In addition, each town includes links and information about surrounding communities and attractions. New towns and bed and breakfasts are added as the communications infrastructure improves throughout the state.

Rural communities in other states have been just as innovative, in some cases adding online sales to the local sites. In Indiana, an online farmer’s market provides consumers all of the advantages of an open-air farmer’s market, without the open air. Farmers, ranchers, home crafters and artists sell their products such as specialty foods, produce, livestock, farm supplies and crafts directly to the Internet shopper.

There are even Web sites on the Internet to promote the rural lifestyle, by providing information and assistance on how to make a living in rural areas. Many of these sites have links to rural organizations and government agencies to help people make the change—from sites on homesteading to sites on market gardening.

Small towns across Texas are determined not to “get left in the dust.” Gregory L. Rohde, assistant secretary for U.S. Department of Commerce communications and information, testified before Congress in early 2000 on the “Digital Divide” that exists in rural America.[219] Rohde claims there remains “distinct disparities” in personal computer ownership and Internet access especially in rural areas. His testimony included the following points about rural households compared to urban households.

  • Rural households are less likely to own computers.
  • Rural households are significantly less likely to have home Internet access, at every income level.
  • Rural persons use Kindergarten-12th grade school more as a point of Internet access.

Additionally, the Commerce Department reported that urban families earning more than $75,000 were 20 times more likely to have home Internet service than poor rural households. The rural divide—slow and costly Internet connection—could keep rural residents as information have-nots, though new wireless networks may help address this problem.[220]

Driving home the point, Jeffrey Sutton, Crockett County Judge, noted at a recent meeting on rural development that in his area of the state—where agriculture is based mainly on sheep and goat ranching, and hunting—is more “Frontier Texas,” than rural. He said that the difference is that rural areas have access to services, such as higher education, and frontier areas don’t. As county judge, Mr. Sutton has served on a committee that looked into problems in rural communities that contribute to population loss. They found that in order for areas such as his to survive, telecommunication, education and health care are of paramount importance.

Of these, telecommunications can lead the way for all of the other things. He said children need the Internet for studies, it can also be used for distance learning, which is much more realistic than driving 120 miles round trip to the nearest university (San Angelo State) to get a degree. The internet also provides access to healthcare and a multitude of other services that would help rural areas to compete in the marketplace.[221]

Broadband and Rural Economic Development
Why Broadband?
As Internet technologies continue to evolve and allow more rapid downloading and uploading of information, richer media and increasingly interactive content can be delivered to users.

For rural areas, access to high-speed Internet technologies holds the promise of connecting rural citizens and local businesses to avenues of commerce, education, services and entertainment from which they have traditionally been isolated by distance. The apparent elimination of distance through technology can also help attract new businesses to rural communities. Through the Internet, Texans can shop in stores throughout the world from the comfort of their home, market their goods to a company in Thailand, and attend a college in a different city or state. They can even work from home, sending and receiving information at rates similar to those in a networked office environment. These opportunities, however, do not yet exist in all parts of Texas.

Broadband is significantly faster than traditional dial-up services delivered over telephone modems, and allows data to be transmitted rapidly both downstream to the user, and upstream from the user to another location. The availability of broadband technologies to both home and business Internet users has rapidly increased throughout the state over the last few years. But these technologies are being deployed at slower rates in rural areas than in more populous urban and suburban areas.

Broadband/Advanced Services Technologies
The Federal Communications Commission (FCC), in its Deployment of Advanced Telecommunications Capability: Second Report, provides an overview of the network infrastructure that is required to provide advanced services, including terms such as backbone, middle mile, last mile and last 100 feet. The backbone provides a “long-distance, high capacity, high-speed transmission path for transporting massive quantities of data.”[222] Backbone infrastructure consists of buried fiber optic lines along public rights of way (created for railroad, telephone and electric-utility companies), but can also be provided using satellite and radio systems. Backbone infrastructure has been built predominantly by large telecom providers such as AT&T and Sprint.

Middle mile facilities are relatively high-speed transmission paths, like a divided, multi-lane highway, providing the connection between the backbone and “last mile.” They are generally fiber optic lines, but can also be constructed using microwave and satellite links. Middle mile facilities are also located, like backbone infrastructure, primarily along public rights of way. This infrastructure was originally constructed by telephone and cable companies to provide basic telephone and cable services, and much of it is leased to Internet Service Providers (ISPs).

Last mile infrastructure connects the middle mile with the end-user’s terminal, and is exemplified by cable modem service or Digital Subscriber Line (DSL). Last mile infrastructure is the key to access to broadband technology for local users.[223]

Last mile facilities generally fall into four main technological categories: wireline, cable, wireless and satellite. Each has different advantages and disadvantages depending on the area served. DSL, a wireline technology, and cable modem technologies are the two most common sources of broadband service delivery to residential customers, and both are primarily offered in urban and suburban areas. Wireless and satellite technologies are also rapidly emerging as providers of broadband service.

Wireline
The deployment of Internet access to households generally began through wireline technologies, in the form of a traditional analog phone wire modem, through which data can be transferred at a rate of 56 kbps. Higher-speed wireline services are delivered via Integrated Services Digital Network (ISDN) and Digital Subscriber Line (DSL) technologies.

The most commonly known type of DSL technology is ADSL (asymmetric digital subscriber line) which allows the customer to have an internet connection on at all times, without the need for an additional phone line. ADSL is available to customers within 18,000 feet of a phone company’s central office or remote terminal. ADSL services are provided based on monthly charges, and installation services can vary from free to about $100.

There are serious impediments to the distribution of wireline technologies, specifically DSL, to all potential end-users. One of the most significant is the above-mentioned distance sensitivity; a customer must be within 18,000 feet of a carrier’s central office or remote terminal. Although 80 percent of subscribers meet this distance requirement, this is a major factor blocking DSL deployment in sparsely populated rural communities.[224]

Cable
Unlike wireline technologies, where a variety of options exist, cable modems are the primary cable technology for high speed connections in residences. According to the Texas Public Utilities Commission (PUC), “cable modem service, while offered on the same basic network architecture used to provide multi-channel video service, typically requires significant equipment upgrades and enhancements to support advanced services.”[225]

While the cable technologies have the potential for very high speed transmissions, cable modem Internet access is “shared,” meaning that it is affected by the number of users on a common node, and transmission speeds cannot be guaranteed. Like ADSL services, cable modem service is usually charged as a monthly fee to customers, with installation fees ranging from free to about $100.

Fixed Wireless Technologies
Wireless technologies represent an emerging area of broadband service provision, and are considered by the FCC to have the “potential to deliver high-speed services to residential, rural and otherwise underserved areas, and to increase competition in the last mile.”[226]

A fixed wireless system operates by transmitting and receiving signals between a customer’s radio transmitter/receiver (transceiver) and a provider’s central antenna site. The radio waves traveling between the customer’s transceiver and the central antenna serve the equivalent network purpose as copper telephone wires or a cable system. The central antenna then links into a public switched telephone network.

Wireless technologies are promising providers of advanced services to rural and underserved areas. The costs of wire installation and maintenance associated with wireline and cable service are not required with wireless. In addition to being less expensive, this allows the service to be deployed rapidly. The FCC reports that it can also be very cost-effective as deployment can occur on a customer-by-customer basis. “[O]nce a wireless provider has installed its antenna in an area, it completes the last-mile connection by installing an on -premises transceiver only for those customers who have actually subscribed to its service.”[227]

However, there are some significant challenges to broad-based wireless technology deployment. One of those challenges is that many types of wireless technologies have line-of-sight requirements—an unobstructed line of site must exist between the transceiver and the antenna—that can be difficult in certain topographical areas. Many wireless technologies are also affected by atmospheric conditions, as well. Finally, wireless technologies require access to unlicensed spectrum and the increase in wireless networks has in turn increased the demand for this spectrum. Ultimately, this may increase the costs associated with wireless broadband service provision.

Satellite Technologies
New broadband satellite systems are being developed that can offer service comparable to current broadband wireline and wireless services. Currently, residential satellite offerings are capable of providing high speed access downstream to the customer, but can only send information and data upstream via a standard dial-up telephone connection. However, the FCC states that many satellite service providers have “announced plans to begin offering residential service with the downstream and upstream paths both provided by satellite.”[228]

Satellite technologies have some of the same limitations as wireless technologies, including line-of-sight requirements and sensitivity to atmospheric and weather conditions.

Current Access and Penetration in Texas’ Rural Areas
Throughout the nation, broadband services are being deployed more rapidly in urban and suburban areas than in rural areas. This year, the FCC conducted its first nationwide, systematic survey of high-speed service subscription, entitled the “Broadband Survey.” Based on this survey, and other data collected, there is evidence of a great disparity in the access and subscription to high speed services between high and low population density areas nationwide.

In Texas, this phenomenon also exists. As part of the Texas Public Utility Commission’s Report to the Legislature on Advanced Services in Rural and High Cost Areas, a study was conducted of Internet use in Texas by the Telecommunications and Information Policy Institute (TIPI) at the University of Texas. The results of this survey include the following key findings:

  • Most people in Texas connect to the Internet using dial-up modems from home. More people in urban areas have access to cable modems or DSL connections than do those in rural areas. Significantly more rural users than non-rural users gain access to the Internet using some sort of dial-up connection.
  • Rural households are as interested in broadband connectivity as non-rural households.
  • Rural areas in Texas lag only slightly behind more populous areas in Internet usage with 55 percent of rural respondents in Texas using the Internet compared to 60.2 percent of nonrural respondents.[229] Additionally, the study found that rural residents report that they not only have less Internet access, but that it is too expensive.[230]

Overall, Texas data generally compares favorably with national studies looking at computer use and Internet access. According to the TIPI study, 60.1 percent of the Texans currently use computers to access the Internet, and 47 percent of Texans access the Internet from home with some regularity, compared to 42 percent of U.S. households that have home-based Internet access. Texas data, however, indicates higher usage of the Internet in Texas’ rural areas than across the nation.

Rural areas in Texas lag behind non-rural areas in terms of the type of Internet connection people have access to in their homes. Nearly 81 percent of people living in rural counties reported using a dial-up connection to access the Internet, with 6 percent indicating the use of broadband technologies such as cable modems or DSL. In non-rural counties, 77 percent of respondents access the Internet at home through a dial-up modem, while nearly 12.5 percent use cable modems or DSL, nearly double that of rural respondents.

In addition, there are eleven telephone exchanges in Texas that do not even have access to a local dial-up ISP: Big Bend National Park, Comstock, Delores, Falcon, Heath Canyon, Knippa, Langtry, Modena, Orla, Sheffield and West Marietta.[231]

While there are several efforts underway to improve access to advanced services throughout the state of Texas, one in particular that has shown evidence of improving at least basic access throughout Texas is the Texas Infrastructure Fund (TIF). The TIF fund was established by HB 2128 during the 74th Legislative Session. The PUC states “the mission of TIF is to help Texas deploy an advanced telecommunications infrastructure by stimulating universal and scaleable connectivity for public schools, higher education, public libraries, and nonprofit healthcare facilities.”[232] Priority in TIF funding is given to rural and underserved populations. By the end of fiscal year 1999, the TIF board had provided funding to 562 of 578 rural school districts.

Some Texas rural communities have been especially successful at leveraging external and internal resources to provide advanced services to their citizens: Commerce, LaGrange, Hamilton and Dell City.[233]

Commerce—In late 2000, Commerce received a $500,000 TIF grant to establish a community network, which will be based on DSL provided by Koyote Communications via an interconnection agreement with Sprint. The PUC reports that the goals of the network are: “to maximize options for broadband user access; establish the infrastructure for the Northeast Texas Technology Academy; and to establish a state model for using advanced technologies to enhance economic development for rural communities.”[234]

LaGrange—The LaGrange Community Computer Network also received a TIF community networking grant to provide access to education, information and communication resources. Local partners include the Colorado Valley Telephone Cooperative, Verizon and various local governmental agencies.

Hamilton—Private donations in Hamilton have helped more than 60 percent of the households to become wired. A particularly powerful example of the role of advanced services in Hamilton is that although the local hospital cannot afford to retain a radiologist on staff, its CAT scans are read by consultants in Nashville via the Internet.

Dell City—The Dell City project resulted from a coalition of organizations and individuals seeking grants to create a local network. According to the PUC, “with the help of a local telephone cooperative, cable was installed between the Dell City schools, Fabens Independent School District, the regional educational service center and the University of Texas El Paso,” enabling the network system to be used for staff development and teleconferencing activities.[235]

Broadband as an Economic Development tool for Rural Communities
Rural broadband access is a key to economic vitality, as were the “interstate highways that bypassed many rural Texas towns.”[236] Advanced services technologies hold the promise to erase distance as a boundary and make it possible for rural communities to participate in the Internet economy in a number of ways that would not have been possible before.

People often seek to live in rural communities because of favorable cost-of-living and quality of life issues. But by doing so, they can face a significantly smaller pool of local employment opportunities. In contrast, many urban and suburban communities currently have low unemployment rates. In addition, many employers, for reasons ranging from retention efforts to the changing nature of work, are willing and able to provide their employees with the opportunity to telecommute for at least a portion of the work week. Broadband technologies make telecommuting more viable than ever: not only can employees rapidly send documents back and forth, they can also participate in meetings, real-time, from remote locations.

Traditional economic development efforts to attract new businesses are increasingly reliant on telecommunications infrastructure, and this is no different for rural communities that wish to market their quality of life amenities to a company. Advanced services can also profoundly change the business environment for existing local merchants. E-commerce transactions allow rural businesses to compete for business worldwide and expand their pool of customers, no longer limited to marketing to just their local community. Even one of the most traditional of rural industries, agriculture, is expected to increasingly conduct business via e-commerce transactions.[237]

Broadband technologies are also changing education, an important tool in economic development. A recent study by the Comptroller’s office found that for every $1 in state appropriation for higher education, there is more than a $5 return to the state’s economy. Texas has recognized the important role that technology can play in education through the development of the TIF fund which has contributed to the deployment of Internet connectivity throughout the state’s schools and colleges. Beyond connectivity, a recent report by the national, bipartisan Web-based Education Commission suggests that U.S. classrooms without broadband access will fall behind those with it in the coming years. They base their findings on the tremendous educational resources and learning opportunities supported by technology that can transmit audio and video without delay.

Clearly the implications for rural schools are significant. For example, just like the Hamilton hospital without certain medical specialists, small rural districts often do not have many of the education specialists—for example, Advanced Placement teachers—that are the norm in urban and suburban districts. Broadband technologies would allow rural students to enroll and participate in classes not normally taught in their school buildings via distance learning.

Telemedicine also illustrates the considerable improvements to rural communities’ quality of life that technology can bring. The PUC states “telemedicine enables patients and providers to interact with health care professionals located miles apart. It increases patients’ access to specialists through video-imaging and real-time collaboration using computer and telecommunications technology. Telemedicine also brings continuing medical education and training to isolated providers.”[238] Finally, as more government services move online, rural areas must not be left behind in their ability to participate in and enjoy the benefits of these services.

Texas policymakers recognize the urgency of broadband access and that communities without it will be left behind in the same way that many communities’ economic viability diminished when interstate highways passed them by. Ensuring access to broadband throughout Texas will require the dual assistance of policies encouraging deployment and technological advances that may make access in sparsely populated areas more viable.

Capitalizing on Every Opportunity
As rural areas have channeled greater efforts into diversifying their economies by building on their strengths, several industries have developed naturally in areas where rural Texas has a particular advantage.

Recreation: One increasingly popular use for rural land is recreation, as the state’s predominately urban population seeks a respite from the hectic pace of city life. One North Central Texas banker noted that in his area, “the land’s production value is well below its recreational value.” Seventy-five Texas counties reported some type of recreation cash receipts to the Texas Agricultural Extension Service in 1999, up from 68 in 1995.[239]

Edwards County, on the western edge of the Texas Hill Country, provides a useful case study of a traditional, agricultural economy undergoing tremendous change. Low agricultural prices, low oil and gas prices, and declining production of both are causing significant changes in land ownership and use.

The thin, rocky and dry rangeland of Edwards County is perfectly suited for raising sheep and Angora goats, and the county once was a major national producer of wool and mohair. But these industries have fallen on tough times, particularly since the 1995 elimination of the National Wool Act and its incentive payments for wool and mohair producers.

Between 1994 and 1999, Edwards County’s cash receipts for mohair and wool fell by 60 percent, from over $5.5 million to $2.1 million. The loss of such mainstay industries, however, has helped transform Edwards County into a center for recreational land use, as traditional ranches give way to “ranchettes” used for weekend or seasonal retreats.

A decade ago, Edwards County had only about a dozen real estate subdivisions; today it has about 40, each containing tracts averaging 150 acres. In all, these “recreational” developments account for some 10 percent of the county’s land area. Rancher/developer consortiums are springing up in which ranchette owners agree to allow someone else’s cattle on their property to earn the agricultural property tax exemption.

Retirement Haven: The Texas Hill Country has long been a favorite retirement region of the state. From Wimberly to Kerrville to Marble Falls, senior citizens have flocked to the area’s oak-covered rolling hills. Nearly one-third of the population of Kerrville is over the age of 65.[240] Seniors like this quiet town because of its close proximity to both Austin and San Antonio.

Marble Falls is another popular retirement destination in Texas. These central Texas towns are doing all they can to cater to the “senior market;” golf courses and resorts with full amenities are abundant, as are social activities for the over-55 crowd. Area properties can fit all sizes of pocketbooks, from modest cabins for less than $80,000 to million-dollar homes.

Tourism: Rural Texas offers a wide variety of tourist attractions and activities, from “dude” or guest ranches offering western-theme activities to “antiquing,” pick-your-own fruit and vegetable operations, eco-tourism and even historical re-enactments, which are becoming increasingly popular at the state’s historical landmarks.A prime example of a small town that has found a unique source of income is Canton in the heart of Van Zandt County. While Canton receives revenue from both oil and agribusiness, its “First Monday Trade Days” really put it on the map. No one in Canton seems to know exactly when “Trade Days” began, but locals say it started about 150 years ago as a social gathering that involved trading commodities such as hounds and horses. Today, “First Monday Trade Days” is nationally known and attracts about 1.8 million visitors a year to shop and explore among several hundred acres of dealers offering antiques, arts and crafts and a variety of other items.[243]

Another town that has capitalized on the antique market is Round Top. A pint-size town with a population of 82, Round Top is one of the state’s smallest incorporated cities in Texas, but this hasn’t stopped the town from becoming a major tourist drawing point. The twice annual (April and October) Round Top Antiques Fair attracts as many as 100,000 people. In 1967, Ima Hogg, the daughter of a former Texas governor, donated a 215-acre Round Top complex called Winedale to the University of Texas at Austin. Winedale now hosts an annual Shakespeare Festival. Round Top also hosts the International Festival-Institute, which was founded by pianist James Dick.[244]

Today the Festival-Institute occupies a collection of buildings on an 80-acre campus, with concerts scheduled year round. Other area attractions include more than 50 antique shops and a handful of restaurants, one of which, Royers Cafe, has been profiled by Southern Living, Texas Monthly and USA Today. Royers also has published a cookbook and sells thousands of its famous pies via mail order.

Texas is home to about 1,000 festivals and fairs each year. Small-town festivals have been around for decades, but today many towns count on their festivals to attract needed revenue. Festival themes range from goats and oatmeal to cow chips and mosquitoes; whatever the town chooses to celebrate. The Watermelon Thump in Luling, for instance, has been held for 47 years. Its watermelon seed-spitting contest and other events regularly draw 30,000 visitors to a town with a population of less than 5,000.[245] Although festivals and fairs attract tourists for short visits, many towns hope that visitors will like what they see and will return again or even consider relocating.

High Fashion in Rural Texas

Double D Ranchwear, Inc. is a premier designer and manufacturer of upscale women’s Texas inspired clothing and home collection that had sales of $12.5 million in 1998. Double D Ranchwear, stands for Doug McMullen and Daughters. Once the family was full-time ranchers, with a ranching heritage dating back to the Texas Land Grants of the 19th century, but this activity now takes a back seat to their fashion business. What makes this company unique is its location in rural Yoakum, Texas - population 6,000. Yoakum is actually not an unusual place for this business because the town calls itself the “Leather Capital of the World” and much of the clothing is made of leather or has leather trim.[241]

The business got its start when Cheryl Matusek, one of the daughters, made a coat out of a Pendlelton wool blanket she purchased while on a ski trip. Her father encouraged her to reproduce and market the coat. The business started in the family garage in 1989, and the orders for their clothing exceeded their wildest dreams. Today, the company operates five factories for cutting and sewing designs and is represented at 1,500 stores throughout the U.S., as well as Mexico, Canada, France and Brazil as well as through many Internet retailers.

Each year, the company turns out about 60 different clothing designs, and annual special previews of the new Double D collections are held in Yoakum. The firm has an outlet store and employs about 30 people in the town, according to the Yoakum Chamber of Commerce. In 1996, Double D received the prestigious Western Image Award for Manufacturer of the year and Cheryl Matusek has been called the most talented designer in Texas.[242]

Hunting and fishing: Hunting leases have become the salvation of many marginal farming and ranching operations. Increasingly, ranchers are tempted to sell off their livestock and obtain certification as a game preserve for an agricultural tax exemption.

Edwards County rancher and county attorney Allen Moody says that the opening day of hunting season in his county “makes the D-day invasion look like a lawn party.” In 1999, 219 out of 254 counties reported more than $291 million in agricultural cash receipts from hunting, up from $198 million in 1995. Frio, Webb and Kerr counties reported over $10 million each for hunting receipts in 1999.

You know you’re in deer hunting country when you drive through Llano, Texas in the fall and winter; draped across the main road of this town of 3,000 residents is a sign reading “WELCOME HUNTERS.” The Llano area claims to have the highest density of white tail deer in the U.S., with more than 40 local ranches offering deer hunting.

Five days of hunting at the beginning of the season costs about $1,200 per person. The opening weekend of the hunting season signals a boom for Llano. Area deer processing facilities soon begin turning away customers. Hunters also purchase gasoline, food, drinks and deer corn. During deer season, it is often difficult to find a parking space in Llano. In 1999, $3.75 million in agricultural cash receipts for hunting was reported in Llano County.

In Uvalde County, wild hog hunting is pumping badly needed dollars into the local economy. Wild or feral hogs are generally regarded as a nuisance, as well as source of diseases like pseudo-rabies and swine brucellosis that can affect livestock.

Not to be confused with the javelina, feral hogs are actually domestic hogs gone wild. First introduced to Texas by Spanish explorers and later early Texas pioneers, these hogs escaped or were allowed to roam free and, once they were no longer in captivity, quickly reverted to their native state. The Texas Department of Parks and Wildlife estimates that about 1.5 million wild hogs roam the countryside in rural Texas. Wild hogs are classified as a non-game, non-protected species, and may be hunted year-around with no limit by anyone with a Texas hunting license.

Several ranchers near Sabinal in the eastern part of Uvalde County are capitalizing on the pesky critters by organizing feral hog hunts. One rancher, Maurice Chambers, says he is making $20,000 a month from wild hog hunts. Sabinal even sponsors a Wild Hog Festival to celebrate the animal.

In East Texas, fishing has become an important part of the rural economy. According to the Texas A&M University’s Department of Wildlife and Fisheries Science, in 1996, fishermen spent $2.9 billion on sport fishing in Texas, with each angler spending an average of $140 per freshwater fishing trip.

Fifty-eight counties reported a total of $132 million in agricultural cash receipts for fishing in 1999, including coastal counties. Cameron County at the southern tip of the state reeled in $67 million from fishing receipts.

Sam Rayburn Reservoir located in deep East Texas is the largest man-made lake in the state, covering 114,500 acres. Nearby towns like Jasper receive an annual economic boost of some $9 million thanks to fishing-related spending on motels, restaurants, fishing tackle, service stations and fishing guide services.

Rising from Ruin

About five years ago, an Archer City banker said local residents would be kidding themselves if they thought there’d be a dress shop and jewelry store left in the city in 15 years.

So who’s kidding whom in Archer City, a rural North Texas town that has risen from ruin more than once in the past three decades? Archer City was established in 1880 and thrived on ranching and oil until the last two decades of the 20th century, when farmland values declined, the price of oil collapsed, discount stores in nearby Wichita Falls threatened local merchants, and city tax revenues shrank.

Enter Larry McMurtry, Archer City native and Pulitzer Prize-winning author. In 1971, The Last Picture Show, based on McMurtry’s novel, was filmed in Archer City. In 1989, Texasville, the sequel, was filmed in town bringing a brief financial bonus to residents and nearby visitors who served as “extras” in the movie— over 7,000 extras were used for the crowd scenes.

By the mid-1990s, visitors again traveled to Archer City, this time to buy books. McMurtry’s Booked Up warehouses continue to draw visitors from all over the world to browse some 500,000 rare and used books, first editions and out-of-print publications. On a typical weekend, 100 people visit Archer City to view and purchase books in the four warehouses that surround the Archer County courthouse.

The Royal Theater—the movie house immortalized in McMurtry’s novels—burned in the mid-1950s, but plans are under way to turn the building shell into a venue for theater, film and literary festivals and workshops. More than 90 percent of the funds needed for the renovation have been raised.[246]

The city’s latest ascent comes with the April 1999 announcement by Panda Energy International Inc., of Dallas to construct a power plant in Archer County between Archer City and Wichita Falls. Construction will generate 350 jobs and a payroll of $30 million. Once in operation, the facility will employ about 45, with an estimated payroll of $2.3 million.[247]

Birding: Bird watching, or birding as it is called today, has become a popular activity in Texas, which is home to more than 600 species of birds. According to the Texas Parks and Wildlife Department, tens of thousands of birders visit Texas each year.

The Great Birding Classic takes place in April along the Texas coast, and in 1995, Texas Parks and Wildlife and the Texas Department of Transportation launched the new Great Coastal Birding Trail, connecting more than 50 birding trails between Beaumont and Brownsville.

The Rockport-Fulton area in Aransas County is one of the state’s largest birding regions, a nationally known birding hot spot. The Aransas National Wildlife Refuge is the wintering ground for the rare whooping crane, and 500 other species have been recorded in the area. Rockport capitalizes on its birding resources and the town’s Web site even has a special birding section. About 75,000 tourists visit Rockport each year, making tourism a mainstay of the economy for this small town of about 6,000.[248]

The prison boom: Once shunned, prisons are now among the most sought-after employers in rural Texas. In fiscal 1999, the Texas prison population stood at more than 146,000, more than double the level of just six years earlier.[249]

During the 1990s, the Texas Department of Criminal Justice (TDCJ) spent more than $2 billion building new prisons. In August 1998, TDCJ approved $100 million for new cells for violent prison gang members at facilities in Amarillo, Iowa Park near Wichita Falls and Woodville near Lufkin.

The need to house the state’s growing inmate population has created rich opportunities for a number of small Texas towns. The Dallas Morning News reported in 1997 that “every town in Texas, it seemed, was hungry for a new prison to bolster the fading oil and farm industries.”

The competition for prison facilities, however, can be fierce. Towns must spend millions on land, roads, water and infrastructure improvements. Dr. Timothy Flanagan, a criminal justice expert at Sam Houston State University in Huntsville, says that economic conditions changed minds about prisons. “Prior to the 1990s, people thought about prisons the way they thought about toxic waste dumps and mental hospitals.” Yet prison payrolls have boosted the economies of struggling towns with their jobs, and spurred growth in other industries such as construction and retail.