Texas Miracle? Not So Much

The recent Regular Session of the Legislature has cast extra doubts on the validity of the so-called Texas Miracle, according to a piece by Ross Ramsey, in the Texas Tribune. Advocates employing the miracle narrative have long argued that low taxes and favorable treatment of business have engendered the best economic alternative to other states such as California and Massachusetts.

A previous blow to those hawking the miraculous was the decline in oil and gas activity a few years ago, though some of this business has returned recently. Due to the downturn, lawmakers found themselves with less revenue to spend on such things as education—another prime driver of economic activity for states.

As for the recent Session, Mr. Ramsey cites the passage of the “bathroom bill” and “sanctuary cities” legislation as particularly unfavorable to business growth. Normally the business community pulls a lot of weight in the Texas Legislature, but in 2017 social conservatives exerted more influence, especially in the Senate, led by Lt. Gov. Dan Patrick. You could easily discern the ideological split within the Republican Party in disputes between the Lieutenant Governor and Speaker of the House Joe Straus, who unapologetically maintained alliances with Democrats in that chamber.

There are plenty of good signs in Texas economically, as many companies choose to relocate here. But if Texas acquires a reputation for intolerance, CEOs from other regions will discover that their employees won’t want to come to the Lone Star State, the Tribune article indicates. Picture young individuals in the tech industry, for instance, who tend to be liberal on social issues.

Texas remains a low-tax location overall, but the Legislature’s failure to address school finance in any meaningful way remains a dark spot. We have no personal income tax, but other taxes do not compare so favorably. And folks who want to relocate will insist on good public schools and robust institutions of higher education with reasonable tuition. Absent true miracles, this means taxes.