Finding a job in Texas just got harder.
Last month, the Texas Workforce Commission reported that the state’s economy shed 25,700 jobs in December 2008. Among the hardest hit industries were manufacturing and trade, transportation, and utilities which lost a combined 16,100 jobs.
The state’s unemployment rate rose to 6 percent, its highest level since July 2004, and is projected to reach 6.6 percent later this year.
December’s sour employment figures mark the second consecutive month that seasonally adjusted non-farm employment fell. The national recession and falling oil and gas prices, it seems, have finally begun to take their toll on the Texas economy with more trouble on the way.
Comptroller Susan Combs’ recent assessment of the Texas economy warns that 111,000 jobs will disappear over the first two quarters of this year before the job market begins to rebound in the fourth quarter. The economic recovery, however, hinges on whether or not businesses have the confidence to begin hiring again in the months ahead. Based on the results of one recent survey, things aren’t looking too good.
The Federal Reserve Bank of Dallas’s Texas Manufacturing Outlook Survey, which polled over 100 Texas manufacturers, found that 47 percent of business executives felt their companies faced a “dismal outlook” moving forward while 55 percent of respondents were concerned about “worsening market conditions.”
With employers skittish and unemployment certain to rise over the next few months, the need for more pro-growth policies couldn’t be more real. The economy is going to need smart public policy that frees Texas businesses, workers, and families from the costs of big government.
Fortunately, a number of promising bills are working their way through the Legislature.
Several legislators have already filed proposals to increase the exemption for the state’s new margin tax from $300,000 to $1 million, allowing more small businesses and entrepreneurs – the heart of the state’s economy – to keep more of what they had earned. The timing of this bill couldn’t be better as many small businesses are just trying to keep their doors open.
Another encouraging piece of legislation is House Bill 508, authored by Representative Lois Kolkhorst. The bill would authorize the Comptroller’s office to investigate the effects of replacing Texas’ property taxes with a broad-based sales tax. Although the bill would only authorize a study and does not guarantee any future tax relief, alternatives to the property tax system need to be reviewed.
Texas businesses and homeowners pay some of the highest property taxes in the nation – the state ranked 13th nationally in per capita property tax collections for fiscal year 2006, according to the Tax Foundation. If Texas is going to successfully attract businesses and jobs, we must address the issue of ever-escalating property taxes.
One of the most important bills in the upcoming session is House Bill 994 by Representative Ken Paxton, which would change the state’s constitutional spending limit away from the growth in personal income to the sum of population growth plus inflation.
This measure is important because it effectively caps the cost of state government per person. Growth in the state’s budget must be closely guarded to avoid higher taxes in the future, and let businesses who are looking to relocate or expand know they are welcome in Texas.
Bringing jobs back to Texas is going to require smart, forward-thinking public policy that emphasizes low taxes, fiscal discipline, and limited government. How closely lawmakers choose to follow that model will dictate much of the coming economic recovery and how quickly all of us see an improved job market.
James Quintero is a fiscal policy analyst at the Texas Public Policy Foundation, a non-profit, free-market research institute based in Austin.