The Texas Report 7/12

The Texas Report 7/12

What’s Happening:

• Texas drops out of top five in CNBC’s Top States for Business (More here)

• City of Austin suspends partnership with Texas Department of Public Safety (More here)

• Lt. Governor Dan Patrick & Property Tax Update

Texas drops out of top five in CNBC’s Top States for Business

For the first time since the study began, Texas has fallen out of the top five in CNBC’s America’s Top States for Business.

This was first started in 2007, and Texas has often been near the top finishing first in 2008, 2010, 2012, and 2018. This year Texas finished in sixth place - nearly missing the top five by just five points.

CNBC still considers Texas an economic powerhouse giving it the second-best economy ranking after Florida. Jobs grew by 4% year-over-year through May, more than any other state.

This year, Texas ties for No. 1 in Access to Capital — the first state ever to rival perennial category leader California — with abundant financing for small businesses. And it finishes second in the all-important Workforce category, trailing only overall Top State North Carolina, as educated workers pour in, according to Census data.

“People and businesses vote with their feet, and continually they are choosing to move to Texas more than any other state in the country,” a spokesman for Gov. Abbott stated in an email to CNBC.

Abbott added on Twitter:

Texas fell short in CNBC’s eyes in a couple of important categories, namely infrastructure which saw the Lone Star State go from 15th in 2022 to 24.

Some issues CNBC sites include Texans enduring nearly 20 hours without electricity per year. Which is the third-worst in the nation, according to Energy Department data, and the state’s water utilities need nearly $61 billion in repairs over the next 20 years per the Environmental Protection Agency (EPA).

Texas also dropped in Education from 21 to 35, with low per-pupil spending and lagging K-12 test scores being major reasons.

The state ranked the weakest in likely the most controversial category, Life, Health & Inclusion, dropping into last after being 49th in 2022.

Health care in the state is poor, according to the United Health Foundation, which ranks the state No. 50 for clinical care and No. 47 for access to primary care physicians. No state has a greater percentage of residents without health insurance.

Other reasons include the state’s abortion ban and laws banning transgender women from competing in women’s.

Texas Senator Ted Cruz weighed in on the ranking and classified it as CNBC “weaponizing their woke criteria to try to attack Texas.” (More here)

Regardless of the ranking Texas’s economic engine is unquestionable, but from our conversations with major employers and business associations across the state, there is a fear that some of Texas’s social policies will lead to companies choosing to take their business elsewhere. That hasn’t happened yet, as Texas routinely ranks at the top of states with the most Fortune 500 HQs, but it is a trend to watch.

City of Austin suspends partnership with Texas Department of Public Safety

Austin Interim City Manager Jesus Garza today announced that he had suspended the City’s partnership with the Texas Department of Public Safety with the approval of Mayor Kirk Watson.

“From the start of this partnership with DPS, I said I wanted Austinites to feel safe and be safe. Recent events demonstrate we need to suspend the partnership with DPS. The safety of our community is a primary function of City government, and we must keep trying to get it right,” Watson said.

The “recent events” most likely mean a traffic stop this past weekend in which a DPS trooper allegedly pulled over a man with his ten-year-old son in the car, and when the child got out, aimed a gun at him.

DPS, however, told Fox 7 that they would be releasing bodycam footage to show no gun was ever pointed at the ten-year-old.

This entire partnership was drummed up to provide operational and patrol support to an Austin Police Department (APD) facing severe staffing issues. Due to a variety of factors, APD is several hundred officers down from its authorized force strength and doesn’t have the staff necessary to support a city the size of Austin.

In a recent Austin Public Safety Commission meeting, Assistant City Manager Bruce Mills spoke on the importance of the program due to the APD staffing issue and said, “We’re at a point in this City where we don’t have enough officers to police the City by ourselves. So the — you know, obviously, you can see I’m in support of the partnership because it’s out of necessity.”

Many criminal justice activist groups have come out against the partnership and have regularly recommended council end the program.

Watson, council, and city leadership are faced with the tough decision of balancing an ever-growing public safety need with a partnership that has received a significant amount of flack despite being statically proven to lower crime.

Lt. Governor Dan Patrick & Property Tax Update

Yesterday, Lt. Governor Dan Patrick did an interview with KXAN where he outlined some of his political goals for the future and spoke on the upcoming teacher pay raise special session to be held in October.

In speaking on his property tax plan, Patrick said that many of the renters across Texas will feel relief because he anticipates their landlords will lower rent as their property tax bill declines by 23%.

Regarding education, Patrick said that school choice (vouchers) and school funding will be handled in a special this October. The Lt. Governor added that $5 billion had been set aside primarily for pay raises which is $1 billion more than what was in the state budget (contingent upon other legislation passing.)

The Texas House has also been holding interim hearings with the Educational Opportunity & Enrichment select committee, which is tasked with devising long-term strategies for increasing school funding and ensuring all students have equal access to quality education.

Both the House & Senate are expected to pass the compromised property tax legislation tomorrow; if so, then it will head to the Governor for his signature and be placed on the November ballot for approval from the voters of Texas.

The $18 billion in tax cuts will be spent as follows:

• $12 billion on reduction in the school property tax rate

• Every homeowner will get a $100,000 homestead exemption.

• Non-homestead properties valued at $5 million and under will receive a 20% circuit breaker on appraised values as part of a 3-year pilot project.

• Additionally, there will be savings on franchise taxes and newly elected positions for appraisal boards.