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The State of our Economy

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I recently kicked off a tour across Texas to talk about the state of our economy and a few important fiscal challenges we are sure to face in the future. I think it is important for Texas taxpayers to understand the facts, figures, and trends fueling our economy and ensuring our strong fiscal health.

The Texas economy is strong. Unemployment is only 7%, more than a point better than that of the entire country. The number of Texas workers reached an all-time high of 10.65 million in December 2011. Texas employers replaced all 427,600 jobs shed during the recession as our economy rebounded more quickly than the US as a whole, and continues to add jobs. Nationally, through March 2012 only 41% of recession-hit jobs have been recovered.

In addition, we’ve had twenty-five consecutive months of growth in sales taxes and our rainy day fund is a healthy $6.2 billion. In many ways, it is good to be a Texan. For example, the construction business in our state is booming. In 2011, Texas’ total construction employment increased by 27,100 workers, which represents a 4.8% growth from 2010. In fact, without the growth in Texas construction jobs in 2011, the national construction industry would have seen another year of job declines. Most of the jobs were added in heavy and civil construction, as well as utility construction work by specialty trade contractors.

Construction earnings also rose by 5.6% from the fourth quarter of 2010 to the fourth quarter of 2011. The state contributed to that increase in economic activity by spending $3.8 billion on highway construction and maintenance in 2011, up 12% from 2010. The total the state spent on roads represents about 4% of our annual expenditures. We will see this increase in earnings persist as we continue to improve and expand our Texas roadways and highways. However, while our economy is expanding, a growing population and demand for public services, as well as an increase in federal regulatory burdens, could pose challenges to the economic growth we are currently experiencing.

For example, the federal health care reform law will drive Texas Medicaid spending sharply upward. By 2014, Texas’ Medicaid population is projected to grow by more than 75%, from 3.5 million to 6.2 million recipients. By 2023, we expect to see Medicaid consume more than 37% of general revenue, with public education receiving about the same share. That means three-fourths of state spending will be on just two services, leaving other state needs fighting for a share of the remaining quarter.

Fortunately, there are things we can all do in our own neighborhoods to help the economy. Get engaged. Find out what you can do to institute smart practices in your community or the public sector. Look for ways various levels of government can cooperate with each other to save money.

For example, in one Dallas-area suburb, school district officials collaborated with city officials to house district and city offices and the police department in the same building. The measure saved about $4 million in combined construction costs and another $50,000 annually in district operating costs.

Keeping this economy strong is up to all of us. Let’s work together and continue to make Texas the economic model for the rest of the country

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