Texas Economic Boom Bringing New Growth Problems

Tuesday, 29 Apr 2014 12:58 PM

By Melissa Clyne

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Texas’ low-tax, low-spending maxim has been a boon to the Lone Star State’s economy, but officials are now grappling with how to handle the breakneck growth, The Wall Street Journal reports.

According to Gov. Rick Perry, the "Texas Miracle" — the state’s population has grown at more than twice the rate of the United States over the past decade — proves that job creation is spurred by lower taxes and lighter regulation, according to the Journal.

Texas has more than 26 million residents and is expected to climb to 40 million by 2050, according to the Journal. U.S. Census Bureau data show that more people — 1.3 million — moved to Texas between 2010 and 2013 than any other state.

Roads, water supplies, power grids and schools are all strained as a result.

"And they'll continue to be stressed unless we invest more heavily, said Texas state demographer Lloyd Potter.

The Census Bureau reported last year that eight of the 15 fastest-growing large U.S. cities and towns for the year ending July 1, 2012, were in Texas, including areas of Midland, Houston, and Austin.

The state economy barely contracted during the economic downturn, shrinking only by 0.5 percent in 2009 before expanding by 4.1 percent the following year. Between 2010 and 2013, the Journal reports, Texas has surpassed every other state in terms of growth except for North Dakota, which is feeling the benefits of an oil boom.

"Texas, too, has benefited from a renaissance of oil and gas drilling tied to hydraulic fracturing," according to the Journal. "It also has added jobs in construction, technology, and healthcare."

Data from the research organization Tax Foundation, according to the Journal, found that Texans paid just 7.5 percent of their income in state and local taxes in 2011, far less than California’s 11.4 percent and 9.2 percent in Florida.

But officials are grappling with how to keep pace with growth while also staying true to its small government, low taxes mantra.

The state ranked 45th in the nation in per-capita highway expenditures in 2012 and last year, the Journal reports, the Department of Transportation unpaved some rural roads damaged by oilfield traffic because repairing them was too costly.

Water levels are at crisis levels. Federal Reserve Bank of Dallas President Richard Fisher has recommended that the state issue a 100-year bond "to tackle its long-term water needs."

Perry has supported ballot measures to fund road and water projects by shifting existing state funds, while Texas lawmakers are searching for ways to fund the growing pains without raising taxes.

"We all want to go around and beat our chest that Texas is the best place to do business, but we need to pay for the infrastructure needs that go with growth," said Republican Texas Sen. Kevin Eltife of Tyler.

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