Economy

New Labor Force Data Reveals Which Texas MSAs are Booming

Earlier today, the Bureau of Labor Statistics (BLS) released new labor force and unemployment data for major metropolitan areas around the U.S., and the figures offer a revealing look at which labor markets in Texas are booming. According to the BLS, the ten metropolitan areas in Texas with the lowest unemployment rates (not seasonally adjusted) for September 2014 included: Midland (2.6%); Odessa (3.1%); Amarillo (3.6%); Lubbock (3.8%); College Station – Bryan (3.9%); San Angelo (3.9%); Abilene (4.0%); Victoria (4.0%); Austin – Round Rock – San Marcos (4.2%); and Longview (4.4%). The statewide average (not seasonally adjusted) for the same period was 5.0%. In terms of the sheer number of jobs added, the Houston – Sugar Land – Baytown experienced the second largest year-over-year employment increase nationally with 119,400 net new jobs added. This was second only to the New York – Northern New Jersey – Long Island area (+130,500), according to the BLS. The impressive new jobs data should offer jobseekers much encouragement about the state of the economy and the direction of the state overall.

October 29, 2014
Taxes & Spending

Quintero: Soaring property taxes force families to flee Austin schools

This commentary originally appeared in the Austin American-Statesman on October 28, 2014. Austin interim schools Superintendent Paul Cruz recently updated the community on the health and outlook of the state’s fifth largest school district, and the prognosis was far from perfect. Among the major challenges facing the Austin district, both now and moving forward, is declining student enrollment. The district estimates that there are 1,200 fewer students this school year compared to one year ago, and projections suggest that the district will continue to shrink over a 10-year period. In his address, Cruz was quick to identify a driving force behind the decline: housing affordability. “As housing costs soar, some of our families are being displaced and moving outside of Austin,” Cruz said in his address. And, of course, he’s right. Owning and renting a home in the Austin area has become an expensive proposition. So much so that a growing number of families and single parents, as well as their children, are fleeing to places beyond the city limits where the cost of living is considerably lower — and where the cost of government, a la the property tax, is much more reasonable. While Central Texans are no strangers to high and fast-growing property taxes, the burden has become much more pronounced in recent years, to the point where the average family, in many cases, can no longer afford to live here. Consider some recent tax data from the city of Austin. According to the city’s proposed budget for 2014-15, the average home in the Austin area has a taxable value of $196,500. For a home of this value, the projected property tax bill, including homestead exemptions, is thought to look like this: City of Austin: $945 Travis County: $750 Austin Independent School District: $2,221 Austin Community College: $182 Healthcare District: $203 For many middle- and fixed-income Austinites, property taxes on the order of $4,300 annually or $358 monthly simply cut too deep into the family budget or are altogether unworkable. And, troublingly, things are likely to get worse. Future prospects don’t look good for taxpayers, either. Several big tax-and-spend proposals are on deck awaiting voter approval across the next several years, including the Austin rail bond election, several Austin Community College proposals, a potential Travis County bond election, and a tax rate election being considered by the Austin school district. And if you think that these are being pitched to voters haphazardly, think again. Local governments are organizing to maximize their chances to raise your taxes and go deeper into debt. From the city’s proposed budget: “The region’s taxing entities are also working together to coordinate with regard to the timing and scope of prospective bond or tax rate elections.” This sort of coordination does not bode well for those already concerned about the heft of the region’s tax burden. High and fast-growing property taxes in Central Texas represent a major stumbling block that we, as a community, must begin to address if the Austin school district is to attract students, if homeowners and renters are to live without financial hardship in Austin, and if the local economy is to continue to attract employers and investment. To that end, it’s time that our local leaders begin discussing real reforms, such as revenue restrictions and tax-and-expenditure limitations, to keep Austin affordable. Quintero is the director of the Center for Local Governance at the Texas Public Policy Foundation.

October 29, 2014
Taxes & Spending

Texas’ Local Debt Hits $328 Billion — That’s $12,400 Per Person

Article originally appeared in Forbes on Spetember 2, 2014 Cities, counties, school districts, and special districts in Texas are drowning in debt. The latest information from the Texas Bond Review Board suggests that total local debt, including principal plus interest, in the Lone Star State grew by $5 billion in fiscal year 2013 to roughly $328 billion. In only the last five years, local debt has increased by a staggering $30 billion. Texas’ local debt per person—ranked as the 2nd highest among the top 10 most populous states in a September 2012 Texas Comptroller report—is more than $12,400 per Texan. Yet even with such large obligations, past trends suggest this local debt will likely get much, much bigger on its own. From 2001 to 2011, the compounded growth rate of population and inflation increased by just 53 percent. By comparison, local government debt outstanding (principal only) rose by 122 percent over the same period, meaning that local debt growth is outpacing population and inflation by a factor of almost 2.5-to-1.   The evidence is clear when it comes to local debt: we have a Texas-sized debt problem, and it’s unlikely to get better without key reforms. If there is no meaningful change to the status quo, then Texans can expect that local property taxes will continue to rise—necessarily so in order to pay for higher debt service. These higher taxes will be a strain on family budgets and slow future economic growth. How should state and local policymakers provide reasonable solutions to slow the growth of local debt? There are a few possible answers, and it all starts with education. Right now, ballot propositions worth millions or billions of taxpayer dollars must include only two pieces of information—a very general description of the project and the principal amount that the local entity wants to borrow. That’s simply not enough information to make an intelligent decision about something that could have long-lasting fiscal and economic consequences. The Legislature, or local officials acting on their own, should begin offering voters basic financial information at the ballot. Not so much that they overwhelm voters, but enough so that Texans know the amount of the entity’s current debt level, the effects on their taxes, and the expected total payment of principal and interest payment. Education shouldn’t be limited to only the ballot box. Voters should also be provided with this basic financial information online. That, of course, means that a local government seeking to borrow money should have a website. Surprisingly, despite the fact that they have the power to tax and borrow, not all local governments do. Education means little if local governments are just finding creative—and costly—ways to get what they want. That’s why policymakers should consider banning the use of exotic public financing devices that enable local governments, and particularly school districts, to get around existing debt limits. One such instrument that is very common in Texas is what’s known as a capital appreciation bond (CAB). CABs allow local governments an opportunity to borrow now and push payments off for decades. This causes future taxpayers to bear the burden, many of whom aren’t even born yet. The Legislative Budget Board, the state’s main budget authority, criticized this buy-now, pay-later approach for its “crippling repayment obligations” that can result in as much as $10 being owed for every $1 borrowed. This style of borrowing is making a bad situation even worse. Another effective way to control the growth of local government debt is to activate Texans in “home-rule” cities. These Texans, along with their local officials, have the ability through the petition process to amend their city’s charter to include things like spending limits, debt limitations, and other fiscally sensible reforms. Considering that as much as one-third of all local debt is held by cities, this is an effective way for interested, local parties to directly resolve the debt issue. Texas’ local debt problem didn’t appear overnight and it will probably take quite some time before it can dig itself out of the hole. But with these reforms in place, local governments in the Lone Star State can begin to dig themselves out.

September 2, 2014
Load More