Standard & Poor's Bets Texas Economy Will Recover Quickly
The financial services company Standard & Poor's (S&P) is showing some love for the Texas economy today by granting the state's government bonds an AA+ rating.
In a press release, S&P analyst Horacio Aldrete-Sanchez said it was because the Texas economy is large, diversifying, and growing faster than the country's as a whole.
[W]e expect that Texas' economy will recover earlier and at a faster rate than most other states' given its continued population growth and relatively low cost of doing business, which we expect will contribute to gradual employment gains in 2011, particularly in the health, education, and services sectors.
Aldrete-Sanchez said S&P held off on an AAA rating because of Texas' "structural budget imbalance." He's referring to the state's decision in 2006 to cut property taxes by one-third and offset that reduction in government revenue by implementing a new business tax. The revenue from the business tax has never fully made up for the property tax cut, and that's one of the main reasons why Texas lawmakers are trying to make cuts now to avoid a projected $27 billion funding shortfall in the 2012-2013 budget.
Republicans have argued that there is no structural deficit and the state's funding difficulties right now were caused by a sluggish economy.
While a "relatively low" unemployment rate in Travis County is hardly comforting to anyone who has lost his or her job, we are still outperforming the state and the nation in terms of job creation in Central Texas.
Travis County also has a slightly lower unemployment rate than all five counties in Central Texas.