Texas weathers nation’s economic storm
State’s strong economy means good news for business opportunities for product, service providers
More than half of the states across the nation are facing budget shortfalls, some in the billions of dollars, as an economic downturn settles in nationally and globally. But because Texas has worked to diversify its economy, the Lone Star State’s economy remains among the strongest in the country.
“The diversity of the state’s economy is allowing Texas to withstand the current instability seen in the national economy. And that is good news for vendors,” said Mary Scott Nabers, president and CEO of Strategic Partnerships, Inc., an Austin-based government relations procurement consulting firm.
In California, lawmakers are dealing with a budget deficit of more than $22 billion for Fiscal Year 2009, which started in June. In New York State, where spending has outpaced revenue generation, the state is dealing with a $4.9 billion deficit this fiscal year, while Florida lawmakers wrestle with a $3.4 billion deficit. Some states will have to borrow money at higher interest rates than usual, others are looking at massive spending cuts and still more are tapping into reserves such as their Rainy Day Funds to make ends meet.
These budget deficits are widening and revenues are deteriorating – but not in Texas.
When the Texas Legislature convenes in January, lawmakers will have a benefit most other states don’t have – a budget surplus that is being estimated at up to $10.2 billion and nearly $7 billion in its Rainy Day Fund. That means an abundance of business opportunities for vendors and service providers.
How has Texas managed to stabilize its economy so that it weathers national financial storms?
· The state has low taxes, no income tax, and reasonable regulations, which makes it an attractive place to do business; both CNBC and CEO Magazine ranked Texas the best state in the nation for business in 2008; The Financial Times recently named Texas the number one state economy in the nation;
· Increasing demands for oil and gas have meant additional revenues for this major oil-producing state;
· Sales tax revenues remain strong;
· Texas is a pay-as-you-go state, which mandates a balanced budget and no deficit spending;
· The state has a $200 million Texas Emerging Technology Fund that invests in companies and universities to help attract high-tech jobs and help start-up companies get off the ground and the state’s Texas Enterprise Fund helps recruit and bolster business in the state, resulting in 51,600 new jobs and $13.6 billion in capital investment in the Texas;
· Texas has created 1.2 million net new jobs in the last five years, with nearly half the jobs created in the United States in the past year created in Texas;
· The Texas unemployment rate is well below the national rate and while national unemployment rates are turning negative, Texas’ employment growth continues, with 252,000 jobs added over the past 12 months.
“Simply put,” said Nabers, “This means that as 2008 winds to a close, Texas – more than any other state – is a prime focus area for business opportunities for vendors.”