Big spender
Texas has been stomping every other state, including Virginia, when it comes to job creation. Some of that’s due to the oil-and-gas boom, some to a favorable tax and regulatory structure. And some, no doubt, can be attributed to the splurge in state and local borrowing and spending. Writes Steven Malanga for City Journal:
While Texas’s state government debt is relatively modest—just $40 billion, or $1,577 per resident—local government debt is more than four times higher: $192 billion. That’s $7,505 per capita, according to Combs’s report—the second-highest sum in the nation, behind only New York’s municipalities and far ahead of third-place California’s. Over the last decade, moreover, local debt has increased 144 percent, much faster than the rate of population increase plus inflation.
One of the larger categories of spending is for… high-school sports stadiums. More than 100 high school stadiums have opened in the past five to six years; a single project in Allen, Tex., is costing $60 million.
That spending creates a lot of construction-related jobs, but it saddles local governments with liabilities that eventually must be repaid. Meanwhile public employee pension liabilities are soaring.
In Austin, the cost of fringe benefits—consisting mostly of pension contributions and health-care spending—has exploded over the last decade, from 15 percent of the city’s budget to 30 percent. Those cost increases, according to a report in the Austin American-Statesman, are partly to blame for a sharp increase in property taxes—38 percent over the decade.
Virginia has a lot of misplaced investment priorities, but at least we’re not borrowing millions to fund a wave of high-school stadium construction, and we have made real, if incomplete, progress in tackling our own pension liabilities. While our track record in job creation may be more modest than Texas’, hopefully it is more sustainable.
— JAB
