Why has the state’s public sector grown so much and held up so well? Don Baylor, a senior policy analyst for CPPP, said the biggest reason is rapid population growth, which has both spurred demand for public services and generated taxes to pay for them. (As the Journal story noted, more than half of the government jobs created over the past decade are in public schools.) In addition, the state, which escaped the worst of the housing bubble, didn’t start to feel the recession’s effects until fall of 2008—not long before federal stimulus kicked in. And though natural resources play a diminishing role in Texas’s economy, a boom in the oil and gas industries has helped support state and local budgets.
But Texas’s public sector won’t be insulated much longer. As many of the stories mentioned here report, Perry and the state legislature recently approved a new two-year budget that cuts state spending by 8 percent, with $5 billion in cuts from education alone. (Like the recent federal debt ceiling deal, it was an all-cuts, no-new-taxes package.) Time will tell what the impact on employment is, but CPPP projects the loss of more than 5,000 state jobs, with another 49,000 jobs in K-12 schools at risk unless local districts raise property taxes to make up for lost revenue.
For a number of reasons, it’s vital that the press tells this story—and that it keeps a close eye on Texas as these developments play out. On one level, it’s an accountability story: Does the tale Perry tells about his tenure check out? On another, it’s a chance to re-examine past debates: If the federal government had continued to support other state and local governments with extraordinary aid, what might the unemployment picture look like?
But most importantly, it’s a test of an economic strategy that Perry says he wants to bring to the White House. If Texas’s private sector proves strong enough to pick up the slack even as the state slashes public employment, it’ll be a point in his favor. If not, there will be more questions about the Texas miracle.