Texas Budget Crisis: “America’s Ireland”?

Business Insider makes a number of errors in its analysis of Texas’ budget deficit. We’ll take the major one first: “…the state is starting at potentially a $25 billion deficit on a two-year budget of around $95 billion.” Actually the two-year budget is around $185 billion. On a minor note, it says “…the new GOP mega-majority in Congress is firmly against raising any revenue.” That may be true, but I think they meant the Legislature.

However, the main point of the article isn’t far off:

So why haven’t we heard more about Texas, one of the most important economy’s [sic] in America? Well, it’s because it doesn’t fit the script. It’s a pro-business, lean-spending, no-union state. You can’t fit it into a nice storyline, so it’s ignored. But if you want to make comparisons between US states and ailing European countries, think of Texas as being like America’s Ireland. Ireland was once praised as a model for economic growth: conservatives loved it for its pro-business, anti-tax, low-spending strategy, and hailed it as the way forward for all of Europe. Then it blew up.

I doubt Texas will blow up. But there’s no doubt that cutting ten percent or more of spending is going to leave a lot of blood on the floor. Good thing Rick Perry got his book out in November while nobody was looking. I do wonder how his $4.2 million grant to David Nance fit in with the state’s new austerity needs.


  • Amy S

    We have so many slush funds in Texas it’s not funny. Didn’t voters just approve a very similar one for curing cancer(or maybe this is the same one).

    Low taxes is relative, yes there’s no personal income taxes, but our property and sales taxes are higher than many states. And don’t even say there’s no business income tax, it’s just called by a different name. Our small business Franchise taxes came to 24% of our net – in a true income tax scenario this would be lower because we would have been able to deduct things like, oh, say worker’s wages, and taxes already paid to the state, to lower our total liability. But because it is a gross margin tax, many of the expenses that go into operating a business are non-deductible. I predict there will be many businesses that lost money this year and will still pay the Franchise (faux Income tax) on their business.

    So don’t tell me there’s low taxes in Texas, only for some who are too large or too small.

  • JR

    I have to agree about the “low taxes” farce perpetuated by the State of Texas and my fellow Texans.

    We may have lower direct taxation (state income tax), but the indirect (sales, tolls) taxation is a burden.

    And we get what we pay for. Look at our schools and infrastructure. Good for the haves. Bad for the have-nots.

  • Enrique De La Fuente


    The $185 billion is a little miss leading.

    44 percent, or about 80 billion is from General Revenue. 36 percent is from Federal funds, or about $65 billion.

    About $6.4 billion is for dedicated funds, and $29 billion is other stuff.

    It is the $80 billion where the cuts are going to made.

    So Business Insider was not entirely wrong, you are not entirely correct.

  • Neal

    Business Insider may have made some good points in this particular piece, but generally speaking it is a crap site. Expect an article next week headlined “10 Reasons Why Texas is the Most Awesome Place in the World” or something like that. Regular readers of BI will know what I’m talking about.

  • Sammy

    After living in CA for awhile, it’s laughable for anyone in Texas to whine about being overtaxed. We are taxed extremely low, and we definitely get what we pay for.

  • Rigal

    Oh please compared to California almost all states have higher taxes. Texas still has higher overall taxes than AK, FL, NH, CO, WY, ID, SD, and TN.