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The Lege’s job killing budget

Do you think this is what all those people who came out to vote last November had in mind?

The Legislative Budget Board, a nonpartisan state agency that helps lawmakers with budget numbers, predicts that House version of the 2012-2013 state budget would result in 272,000 fewer jobs in Texas the first year and 335,000 fewer in 2013.

The projected loss includes eliminating 117,000 private sector jobs in 2012 and 146,000 in 2013. An amendment to the House rules by Rep. Mike Villarreal, D-San Antonio, directed the LBB, which is overseen by the House speaker, lieutenant governor and other state leaders, to produce the Dynamic Economic Impact Statement.

“The voters did not elect us to eliminate hundreds of thousands of jobs. We have to be smarter than this,” Villareal said. “We can’t grow the Texas economy with a budget that destroys jobs, hurts neighborhood schools and makes college more expensive.”

Villarreal has more here. The report doesn’t say directly that this many jobs will be lost, just that Texas will have this many fewer jobs than it would have under a baseline budget scenario. If you have a basic understanding of economics, there’s nothing surprising about this. Cutting government spending is taking money out of the economy. Firing government workers adds to unemployment. Any other conclusion by the LBB would have been shocking. What I expect to happen, if the Republicans are forced to acknowledge this report, is that they will begin attacking the LBB in much the same way that Congressional Republicans have attacked the CBO when it tells them something they don’t want to hear. So far, it’s mostly just whining, as seen in this Statesman story, but give it time. And pay heed to what this guy says:

The projections do not come as a surprise to Bernard Weinstein, an economist at the Cox School of Business at Southern Methodist University.

Weinstein said he had not examined the analysis but that it appeared to be “a government agency in the state of Texas saying, ‘Before you start slashing right and left, remember there are going to be consequences.'”

Weinstein said it was obvious that proposed budget cuts would have an effect on the state’s job market.

“Jobs creation results from spending by both the private sector and the public sector. So now you have what economists call the negative multiplier,” Weinstein said. “By cutting the budget here and cutting the budget there, there will be at least for some time a negative economic impact on income, employment and tax revenue. By cutting state spending, you are cutting state revenues, because the recipients of that spending will not be paying taxes on that.”

Weinstein said the effect is illustrated by the possibility of thousands of teachers being laid off statewide as part of the budget crunch.

“Where are they going to find employment quickly?” he said. “The answer is: nowhere.”

All I can say is that I’m glad to see some kind of counterweight to the overly optimistic forecasts of job growth in Texas. I think we have tougher times ahead than a lot of people expect. If I’m right about that, who do you suppose will get blamed for it this time? Burka, Postcards, Texas Politics, and the CPPP have more, and see also this article in The Economist for a broader view of Texas’ economic situation.

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9 Comments

  1. Chris skipper says:

    I applaud the cuts in education and encourage more. Without significant pain there will be no change. We can start by getting rid of state regulations governing teacher pay. Then we can set limits on the percentage of money spent on all administrative costs. Once that is done we can get rid of the student testing farce. At the end of the line we can move extracurricular activities outside the school day, reduce the number of credits needed for graduation. The only area we need to expand is vocational education.

    Jobs will be lost, but over time others will be developed in the private sector.

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  5. Gary Denton says:

    Chris is a great serf who applauds our new corporate overlords.

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