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
Higher Education

Harvard Law Professors Condemn University’s War on Young Men

This commentary originally appeared in Forbes on October 23, 2014. In age when ideology increasingly trumps the impartial quest for truth on our college campuses, 28 Harvard University law professors are to be commended, for—to borrow William F. Buckley, Jr.’s famous phrase—“stand[ing] athwart history, yelling Stop, at a time when no one is inclined to do so, or to have much patience with those who so urge it.” Harvard’s motto is Veritas, Latin for “Truth.” Given its high visibility, Harvard habitually takes a good deal of flak from higher-education reformers—for valuing faculty publications more highly than teaching, for political correctness, and for rampant grade inflation, among other practices. Such critiques are demanded by a true survey of the detrimental example Harvard sets for all the little would-be-Harvard institutions who look up to it for guidance. But the same insistence on the truth should compel us to praise those Law School faculty members who are demonstrating that they possess the intellects to understand and the moral courage to “stand athwart” the totalitarian-tending project of radical feminism, as embodied in the university’s new “Sexual and Gender-Based Harassment Policy” announced in July. Last week, these 28 law professors—among them, Alan Dershowitz and Charles Ogletree—penned an open letter to the Harvard administration castigating it for imposing a sexual harassment policy that “will do more harm than good.” The letter could not be more pointed. It blames the new policy for violating “many of the most basic principles we teach,” among which are “due process of law, the substantive law governing discrimination and violence, appropriate decision-making, and the rule of law generally.” Harvard’s administration, these law professors charge, has adopted “procedures for deciding cases of alleged sexual misconduct which lack the most basic elements of fairness and due process, are overwhelmingly stacked against the accused, and are in no way required by Title IX law or regulation.” Among the violations they find in the new policy are an inadequate “opportunity to discover the facts charged and to confront witnesses”; the “lodging of the functions of investigation, prosecution, fact-finding, and appellate review in one office,” which is “itself a Title IX compliance office rather than an entity” that might be “considered structurally impartial”; and the “failure to ensure adequate representation for the accused.” Moreover, Harvard, they charge, has wrongly “expanded the scope of forbidden conduct” in a manner that “goes significantly beyond Title IX and Title VII law,” setting in place “starkly one-sided” rules that fail to address “unfortunate situations involving extreme use and abuse of alcohol and drugs by our students.” The War on Young Men that the new policy embodies is one of the more curious results of the Sexual Liberation movement launched on campuses in the ‘60s. Until that time, universities took seriously their role ofin loco parentis (Latin for “in the place of a parent”). This meant curfews, single-sex dorms, prohibitions on alcohol consumption, and the like. All that fell by the cultural wayside in the ‘60s with the rise of sex, drugs, and rock ‘n roll, which have come to be viewed almost as inalienable rights. But when you put young men and women together, and add alcohol and drugs, sex is going to happen, and—surprise—it is not always going to proceed according to Marquess of Queensberry rules. In response to this dilemma, in loco parentis on campuses has now given way to in loco tyrannicus—to vague dictates regarding sexual conduct that are enforced in an oppressive manner on those already presumed guilty. If the ideologues of the ‘60s “liberated” the sexual passions, today’s feminist ideologues on campus have forged new fetters from principles antithetical to individual liberty and due process of law. As a parting shot—and a stinging one, at that—the law professors appear to unload on Harvard president Drew Faust, who boasts that the new sexual harassment policies “will significantly enhance Harvard’s ability to address these incidents when they occur.” The law professors see through this façade, raising the age-old legal question of cui bono—“Who benefits?” “We recognize,” they conclude, “that large amounts of federal funding may ultimately be at stake.” That is, Harvard and other universities may be rushing to institute these illiberal policies in order to satisfy—and thus continue to receive federal funding from—the Obama administration, with its equally illiberal sexual-harassment agenda, as announced in the Department of Education’s “Dear Colleague” memo. The law professors find themselves forced to remind their university’s president of the ultimate price of her Faustian bargain: “Harvard University is positioned as well as any academic institution in the country to stand up for principle in the face of funding threats. The issues at stake are vitally important to our students, faculties, and entire community.” In all, the letter provides a model defense of the rule of law, on which individual liberty relies. The letter also provides a model of academic dialogue. In the Nicomachean Ethics, Aristotle sets the tone for what academic discourse should look like at the very moment that he disagreed fundamentally with Plato: “Dear is Plato,” writes Aristotle of his teacher, “but dearer still is the truth.” In an age when postmodern critiques of the very possibility of objective truth abound in academia, it is more than encouraging to see these members of Harvard’s law faculty take what some suspect is the minority position at too many elite colleges—namely, that freedom under law is what distinguishes civilization from barbarism, even and especially when the barbarians are convinced of their high-mindedness.

October 27, 2014
Criminal Justice

Derek Cohen and Deborah Fowler: Texas Legislature Should Decriminalize Truancy

This commentary originally appeared in Dallas News on October 23, 2014. Most youths across the state will have an enjoyable, productive school year as they progress toward a well-deserved summer vacation. Others, however, will end up on the wrong side of the law. Their offense? Playing hooky. Texas is one of only two states (the other is Wyoming) that employ the criminal justice system to punish truancy. The Texas Education Code — the body of law that regulates the activity of all educational institutions in the state — empowers school districts to file a criminal complaint against a child as young as 10 who has missed three days of school. After 10 missed days within a six-month period, however, the district’s discretion is removed and it is required to file against the child. This is known as “Failure to Attend School,” or FTAS, a Class C misdemeanor that can carry up to $500 in fines and leave an indelible mark on the child’s criminal record. These fines are levied all too often on low-income families who don’t have the savings to pay them. If a child or parent is unable to pay the $500, or if the child misses one more day after adjudication, he or she can face jail time for the violation of a valid court order. In addition to the burden this places on families, the criminalization of truancy is a drain on limited court resources. Adding to the frustration and confusion, the Texas Family Code already has a provision dealing with truancy. This is the Conduct Indicating a Need of Supervision section, which directly mirrors the language in the Education Code. However, this statute prosecutes students only through the juvenile court, eliminating the concern that this will lead to an adult record. Further, FTAS misdemeanors saddle children with a criminal record that can keep them from future civil or military service. The sealing or expunction of these minor offenses stand to cost hundreds of dollars more in court costs and legal fees for individuals who, usually, are among those least able to afford it. The Texas Legislature should move quickly to remove the criminalization of skipping school from the Education Code and allow school districts to find a truancy reduction method that works best for them. Dallas and Fort Bend counties each have established a “truancy court,” a specialized docket that processes only kids who skip school. While the numbers seem to show the courts’ efficacy in reducing dropouts, credit belongs more to the specialized retention programs that judges are ordering truants to attend. The current process that forces children into these programs serves only to saddle these youngsters with a criminal record for minor misbehavior. Motivations are called further into question when one considers that judges have the authority to assess fines and court costs which, in turn, help support the courts’ operating costs. In 2012 alone, the Dallas County Truancy Court collected almost $3 million in fines from truants and their parents. Lawmakers should strongly consider removing the failure-to-attend provision from the Education Code. Not only is it redundant to the CINS truancy offense, it is a far too easy way for a child to begin adulthood with a criminal record. Education is extremely important, both for individual and group success. Skipping school can cause a juvenile to miss important learning and development milestones. However, using the coercive mechanism of the state to enforce school attendance is, at best, overkill. Better options exist that can address the complex problem outside of the criminal justice system. School boards and administrators should be allowed to innovate and find what works best. A mandatory referral to the criminal courts represents the worst specter of government intrusion. Texas children deserve better. Derek Cohen is a policy analyst for the Center for Effective Justice at the Texas Public Policy Foundation. Reach him at [email protected]. Deborah Fowler is deputy director for Texas Appleseed. Reach her at [email protected]. Dianna Muldrow, a law student and intern at the TPPF, also contributed to this piece. Background — Advocacy groups, including Texas Appleseed, filed a federal complaint in June 2013 alleging that the criminalization of truancy and Dallas County court fines amount to cruel and unusual punishment. The filing said 4,806 warrants had been issued and 1,737 served in fiscal 2012. — Three days later, Dallas County Judge Clay Jenkins, who oversees the courts, said constables would stop making truancy-related arrests at school while changes were made in response to the complaint. Among the changes considered: asking districts to file no more than one case per student. — The GOP-led Legislature passed a bill last year to put more responsibility on school districts to improve truant students’ attendance through detailed improvement plans and other measures before pursuing criminal charges. The bill was vetoed by Gov. Rick Perry, who cited conflicts with other laws and other problems. — In January, the Justice Department issued new, nonbinding guidelines that essentially urge schools to deal with disciplinary issues, such as truancy, without resorting to the court system.

October 27, 2014
Health Care

Toxic “Consumer-Friendly” Insurance Laws More Bane than Boon to Homeowners

This commentary originally appeared in the Heartland Institute on October 22, 2014. Reflexively responding to the 2008 financial crisis, many government regulators moved to reduce the burden of toxic assets in the financial market, after widespread speculation instigated a credit crunch and contributed to the economic slowdown. Yet, despite the consensus that it was these firms’ inability to shed these assets which instigated their failure, many state governments continue to use “consumer interests” as a justification to forcing other industries — in this case, home insurance companies — to shoulder more toxic assets. Perhaps surprisingly, Texas is one of those states forcing businesses to make bad investments Under the Texas Insurance Code, home insurance companies are not allowed to decline to renew a homeowner’s insurance contract once it expires, unless the policyholder has submitted three or more claims. The ban excludes any claim resulting from natural causes, and it applies even when the policyholder overused or abused the claims process. A Bane upon Consumers, But Not a Boon Due to these narrow parameters, it has become nearly impossible for insurers to reach the state’s statutory threshold, obliging them to maintain policies that pocket more money than their premiums cover — in other words, a toxic asset. Although this restriction may seem like a boon to homeowners, since it shields them from the loss of their insurance, non-renewal laws inflate insurance premiums for most consumers by forcing insurers, and therefore their customer base, to bear the costs of certain high-risk policies. But, isn’t that how insurance works, smoothing over high risks clients by submerging them within a pool of safer policies? Not precisely. While it’s true that insurers  rely on “the law of large numbers” to diffuse their clients’ risk, there is logic behind insurance companies management of that risk, and calculation of customers’ monthly premiums.  Theoretically speaking, a home insurer pools together customers with similarly situated risks and properties. This not only allows the company to calculate its population-to-risk ratio more accurately, but also helps ensure that homeowners pay only for the risks that they themselves incur, keeping their premiums low. Market Distortion Field Non-renewal laws disrupt this ideal actuarial practice by preventing the insurers from self-correcting their risk pools, when a policy proves more expensive than originally anticipated. This inability to self-correct puts both insurers and their customers in an awkward position. Insurance companies have a legal obligation to stay solvent. At the same time, non-renewal laws bar them from dropping unsound policies. Since lowering their risk exposure is not an option, the only way left for them to balance their books is to increase their cash flow — in practical terms, across-the-board premium increases — or lowering their business costs by providing fewer services to customers. This is where we see parallels to last decade’s credit crunch. The overabundance of toxic assets in a market crowds out the availability of a product or service. Companies become so overexposed that they do not have the resources to invest in new customers, even when there is little likelihood of losing money. Universal Laws In retrospect, that’s why the collapse of subprime mortgages caused a sudden credit shortage. The mortgages lost so much value that the banks could not afford to broaden their loan exposure, regardless of someone’s good credit. Instead, consumers had to accept higher interest rates and stricter terms in order for the banks to extend credit. Differing in degree but not kind, non-renewal laws mimic the subprime mortgage failure. The toxic policies crowd out the availability of cheap insurance and clog up what otherwise would be a flexible market. Insurance companies are not immune to the laws of economics, as overburdening an industry with toxic assets hurts consumers, who ultimately bear the costs of the added vulnerability. The situation in which Texas insurance companies are placed is no different, as the regulations are directed this time at how consumers protect their homes, and not how they finance it.  Kathleen Hunker ([email protected]) is a policy analyst with the Texas Public Policy Foundation’s Center for Economic Freedom. Internet Info: “Non-Renewal of Policies in Texas’ Homeowners Insurance Market,” Kathleen Hunker, Texas Public Policy Foundation, http://www.heartland.org/policy-documents/non-renewal-policies-texas-homeowners-insurance-market

October 24, 2014
Taxes & Spending

Contributing Factors to the Lone Star State’s Success

Contributing Factors to the Lone Star Success Do you like to keep more of your hard-earned money? In Texas, you can because there is no personal income tax. Compared with Oregon (9.9 percent), the District of Columbia (8.9 percent), New York (8.8 percent), Minnesota (9.8 percent), and California (13.3 percent), Texans start with more money in their pocket. For those in the Golden State, workers paying the highest personal income tax rate will end up paying 2 ½ months worth of their income towards this tax, which is even longer if you include federal income taxes according to the Tax Foundation’s Tax Freedom Day. Check out the video below for a brief explanation of how the Lone Star State doesn’t break your piggy bank.     Any financially independent individual will agree saving money is the key to financial stability and success. No one can predict the future, so it’s important to keep a rainy day fund for when money is most needed. The same idea should translate over to governments; however, most states do a poor job of managing their money. Money set aside for emergencies in Illinois, California, New York, and Texas are $0, $1, $1, and $6 billion, respectively. Watch the video below to learn how only one state is making financially sound decisions—Texas.     Would you rather live in a cramped apartment with a view of the building next door or a spacious home with a view of green plains? Since 2006, more people are moving to Texas attracted by a lower tax burden, friendly business atmosphere, and affordable home prices. Check out the video below to see how there is more bang for your buck when it comes to housing in Texas.       Since the last recession, Texas has had a robust recovery creating an environment for entrepreneurs to add over one million new private sector jobs in the process. Watch the video below to see how Texas is the leading example of success for other states to follow.      With all this success, there is no doubt that Texas is the land of opportunity. Let’s continue to build on this success by implementing sound fiscally conservative policies next session. 

October 23, 2014