When a $21 Billion Shortfall Gets a State a Good Fiscal Rating

When Bill Brady reads a headline and uses that to make an argument. Presumably our dunderheaded Republican nominee didn’t bother to look up actual facts and relied on the reporting of Fortune on Texas’ fiscal condition

Whitney, who famously predicted the credit crisis of 2008 before it hit, released a 600-page report this week evaluating the financial health of the 15 largest states, measured by gross domestic product. The study, entitled the “Tragedy of the Commons,” examined each state’s economy, fiscal health, housing and taxes.

The findings: New Jersey ranked second to last, trailing California, and tying with Illinois and Ohio. Michigan and New York were also among the poorest performers, while Texas and Virginia were rated as winners, according to Fortune, which got a hold of the study, accessible through a $25,000 membership.

As Rich points out, Brady argued Texas was in good fiscal condition, but it actually faces a $21 billion shortfall.

Whitney, who famously predicted the credit crisis of 2008 before it hit, released a 600-page report this week evaluating the financial health of the 15 largest states, measured by gross domestic product. The study, entitled the “Tragedy of the Commons,” examined each state’s economy, fiscal health, housing and taxes.

The findings: New Jersey ranked second to last, trailing California, and tying with Illinois and Ohio. Michigan and New York were also among the poorest performers, while Texas and Virginia were rated as winners, according to Fortune, which got a hold of the study, accessible through a $25,000 membership.

Now, how does this analyst come to rate Texas higher?  Pretty simple–the Texas tax base is based more on oil and there is no income tax so that leaves future taxes in Texas more reliable, but hardly in good shape.  Texas has a more stable tax base if the economy doesn’t grow much is how it rates better.

Of course, none of this is relevant to Illinois that has a fairly limited extraction based sectors of the economy with coal being the biggest part of those sectors and fairly limited.

Here’s a suggestion.  Someone in Bill Brady’s office sit down with him with a year of his office’s free subscription to Governing that all State Legislators get and teach him something about state finances.