Texas Economic, Labor Market, and Fiscal Situation Vance Ginn, - - PowerPoint PPT Presentation

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texas economic labor market and fiscal situation

Texas Economic, Labor Market, and Fiscal Situation Vance Ginn, - - PowerPoint PPT Presentation

Mar 18, 2024 138 likes •556 views

Texas Economic, Labor Market, and Fiscal Situation Vance Ginn, Ph.D. Director, Center for Economic Prosperity & Senior Economist Updated Monthly December 2018 #LetPeopleProsper vginn@texaspolicy.com | www.texaspolicy.com | @vanceginn

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Texas’ Economic, Labor Market, and Fiscal Situation

Vance Ginn, Ph.D.

Director, Center for Economic Prosperity & Senior Economist Updated Monthly – December 2018 #LetPeopleProsper

vginn@texaspolicy.com | www.texaspolicy.com | @vanceginn

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Outline

Information on Texas’ economy, labor market, and

fiscal situation.

Updated monthly with latest jobs data and

periodically with other economic and fiscal data.

18-group Conservative Texas Budget Coalition’s

2019 legislative priorities for prosperity.

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Economic & Fiscal Situation

Texas is 10th largest world economy, excluding CA:
Economy grew faster in 2017 after slower 2015 & 2016
Federal tax & regulatory reforms likely support growth
Federal Reserve tightening credit: rates too low for too long
Falling oil prices (~10% of real private economy/+20% in 80s)
2015 Texas Legislature:
Passed 2016-17 conservative budget
Left billions of dollars on table & $10 B in Rainy Day Fund
Passed $4 B in tax and fee relief
2017 Texas Legislature:
Sustained 2016-17 conservative budget with supplemental
Passed 2018-19 conservative budget
Spent $1 B in RDF & Delayed $1.8 B transportation funds
Did not raise major taxes or fees

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Institutions Matter: Texas Model Works

Source: TPPF, Do Institutions Matter for Prosperity in Texas and Beyond?

Measure U.S. Texas Florida California New York Economic Freedom of North America (2018) 6th (World) 3rd 1st 47th 50th State Business Tax Climate Index (2018)

15th

4th 48th 49th State-Local Spending Burden (2016)

37th

48th 6th 3rd State-Local Tax Burden (2016)

46th

34th 6th 1st Exports to Foreign Countries (2017)

1st

8th 6th 4th

Avg. U-3 Unemployment Rate (2000-17)

6.4% 5.8% 6.3% 7.7% 6.2%

Avg. U-6 Underutilization Rate (2003-17)

11.6% 10.5% 12.0% 14.3% 11.1%

Avg. Labor Force Participation Rate (2000-17)

65.0% 66.1% 61.7% 64.6% 62.1%

Avg. Employment-Population Ratio (2000-17)

61.0% 62.3% 58.0% 59.9% 58.3%

Avg. Emp-Pop 25-54 year old Ratio (2000-17)

77.6% 77.3% 77.5% 75.2% 76.1% Total Civilian Emp (12/07-12/17), exclude TX +5,723,000 +2,024,000 +979,000 +1,564,000 +132,000 Total Nonfarm Emp (12/07-12/17), exclude TX +7,424,000 +1,790,000 +728,000 +1,523,000 +804,000

Avg. Top 10% Income Shares (2000-15)

47.8% 47.0% 55.0% 50.2% 57.1% Supplemental Poverty Measure (2015-17) 14.1% 14.7% 18.1% 19.0% 15.5%

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U.S. Labor Market Sends Mixed Signals

Source: U.S. Bureau of Labor Statistics

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Texas, America’s Jobs Engine

Data are Cumulative Monthly Total Civilian Employment from the U.S. Bureau of Labor Statistics from 12/2007 to 11/2018.

Texas has created 22% of total U.S. employment increase since pre-Great Recession

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Texas has Created 19% of All Nonfarm Jobs Since Great Recession Started

Data are Cumulative Monthly Total Nonfarm Employment from the U.S. Bureau of Labor Statistics from 12/2007 to 11/2018.

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Texas Created 365,400 Net Nonfarm Jobs In the Last 12 Months

Seasonally adjusted nonfarm employment data are from the U.S. Bureau of Labor Statistics.

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Texas' Unemployment Rate At or Below 5% for 52 Straight Months

Seasonally adjusted nonfarm employment data are from the U.S. Bureau of Labor Statistics.

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Mostly Lower Unemployment Rates in Texas Since Great Recession

Source: Dallas Fed, Texas Economy Starts 2018 Firing on All Cylinders

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Texas’ Labor Force Participation Rate Remains Above Others Since 2009

Seasonally adjusted nonfarm employment data are from the U.S. Bureau of Labor Statistics.

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Texas' Employed Population Rate Remains Above Others Since 2008

Seasonally adjusted nonfarm employment data are from the U.S. Bureau of Labor Statistics.

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Texas' Prime-Age Employed Population Higher than Others Since 2009

Seasonally adjusted nonfarm employment data are from the U.S. Bureau of Labor Statistics.

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Diversified Texas Economy Continues Robust Job Creation Across Sectors

Source: Dallas Fed, Your Texas Economy.

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Texas’ Metros Continue Positive Job Growth

Source: Dallas Fed, Your Texas Economy.

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Job Growth Across Wage Quartiles, 2000–14

Source: TPPF, A Labor Market Comparison: Why the Texas Model Supports Prosperity

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Not Just Low Wage Jobs: Job Growth Across Wage Quartiles from 2005–2014

Source: Dallas Fed, Annual Report 2015

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Income Inequality Lower in Texas than Other Large States and U.S. Average

Source: Mark Frank, Sam Houston State University

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Texas Economic Challenges

Mining industry 1980s:
21% of real private economy; 5% of labor force
But mining industry today = falling oil prices:
~10% of real private economy; ~2% of labor force
More diversification from market activity, NAFTA,

pro-growth policies

Federal cuts in taxes & regs support growth
But slower global growth & federal government

policies may be impediments, like trade & debt

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4.7 million barrels of oil/day is highest since at least 1981

Source: Dallas Fed, Your Texas Economy.

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Record High Texas Median Home Price

Source: Dallas Fed, Your Texas Economy.

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Texas is America’s Export Leader for 16 Consecutive Years

Source: Dallas Fed, Your Texas Economy.

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Fiscal Prospects Support Opportunity

No recent examples of consecutive conservative

budgets, defined as growth less than pop+inf:

2003 dealt with a $10 billion shortfall and passed a

conservative budget but massive spending increase in 2005

2011 passed a budget below pop+inf but delayed payments

for Medicaid & education led to a large increase in 2013

2015: Passed potential 2016-17 conservative budget,

provided tax relief, and left money on the table

2017: Sustained 2016-17 conservative budget, passed

potential 2018-19 conservative budget, and did not raise major taxes or fees

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2018-19 Total Approps: $218.4 B with $1.8 B transportation fund delay (4.46% increase)

$58.5 B, Other $79.5 B, Health & Human Services $80.4 B, Education $71.8 B, Federal Funds $106.6 B, General Revenue $33.6 B, Other $6.4 B, GR- Dedicated

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Rainy Day Fund: CRE $12.5 billion 85th Legislature Appropriated $990 M

Source: Texas Comptroller, Legislative Budget Board, and TPPF

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Revised July CRE Estimates 2018-19 Available Fund Balance of $2.7 Billion

Source: Texas Comptroller, Certification Revenue Estimate

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Texas Comptroller’s Revised 2018-19 CRE

2018-19: $2.7 B expected ending balance
“economic expansion exceeding our expectations”
8% Official Spending Limit by LBB

$ in Thousands FY2016 (CRE) Actual FY2017 (CRE) Actual FY2018 (CRE) Estimated FY2019 (CRE) Estimated Real GDP 0.0% 1.5% 4.5% 4.2% Nonfarm Employment 1.3% 1.6% 2.4% 2.5% Unemployment Rate 4.6% 4.5% 4.0% 3.5% Taxable Oil Price $41.40 $48.77 $60.00 $64.00 Sales Tax $28,245,801 $28,900,035 $31,724,257 $33,506,194 Franchise Tax $3,881,176 $3,242,219 $3,621,406 $3,840,610 Total Tax Collections $48,476,226 $49,643,422 $55,280,645 $58,267,570 Total Net Revenue $111,280,871 $111,195,221 $111,468,208 $113,080,421

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BUT…Texas has Challenges

TPPF’s Texas Prosperity Promise
Eliminate Property Taxes: Start with school M&O
Education: Student-centered funding, Freedom
Spending: State & local spending limitations
Accountability: End tax-funded lobbying &

government collection of union dues

Self Governance: Prioritizing civics education
Other issues
Fiscal: Spending, Taxes, Corporate Welfare
Education: Funding, Choice, TRS, Teacher Pay
Regulation: Occupational Licensing, Local Zoning
Energy: Oil & Gas, Resilient but Not Immune
Federal: Debt, Regulation, Trade

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State Spending Problem

Source: TPPF, Real Texas Budget: 2018

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How Education Funding Works

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Education Spending Up Over Time

Source: TPPF, Texans Need More Education for Their Money & TEA

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Little Change in State Share Ed Spending

Source: TEA

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Texas Should Spend More Wisely

Source: TPPF, Texans Need More Education for Their Money

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Too Many Abuses of Funds Across State

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Texas Property Taxes are Too High

Source: Tax Foundation, State-Local Tax Burden Rankings

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Local Spending Problem

Source: TPPF, Abolishing the “Robin Hood” School Property Tax

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Eliminate Property Taxes

1) Limit Spending: State 4% biennial & Local 2.5% annual 2) Buydown School M&O Property Taxes

Source: TPPF, Abolishing the “Robin Hood” School Property Tax

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18 Groups in Conservative Texas Budget Coalition Legislative Priorities for Prosperity

Pass another Conservative Texas Budget
Strengthen tax and expenditure limit
Eliminate property taxes—Start with school M&O
Eliminate business margins tax
Create a Tax Relief Fund
Increase budget transparency
More at conservativetexasbudget.com

Excessive taxes and debt are always & everywhere a government spending problem. Limit spending to let people prosper.

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Taking these steps will secure that the American Dream is not dead – it has simply moved to the Lone Star State.

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Texas’ Economic, Labor Market, and Fiscal Situation

Vance Ginn, Ph.D.

Director, Center for Economic Prosperity & Senior Economist Updated Monthly – December 2018 #LetPeopleProsper

vginn@texaspolicy.com | www.texaspolicy.com | @vanceginn