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« Texas Forest Service Budget As High As It Has Ever Been. | WILLisms.com | Texas Under Rick Perry Versus Massachusetts Under Mitt Romney. »

Texas Debt Versus U.S. Debt.

Trivia Tidbit of the Day: Part 941 -- Texas Debt Versus U.S. Debt-

Disingenuous attacks on the Texas success story abound these days from every which direction. One of these attacks is that the Texas debt situation is somehow terrible. I've written on how Texas' debt per capita is among the lowest in the nation here, here, and here, but there is a misleading line of attack that keeps popping up about how Texas' debt has doubled under Perry and is therefore worse than the national debt situation.

Here are some facts:

Per capita state government debt in Texas ranks 2nd best in the nation (an improvement from 6th best when Governor Perry took over).

Interest on Texas' debt as a percentage of its direct spending ranks as the third lowest in the nation.

Taking the $37.71 billion in Texas debt and dividing it by the Texas Gross State Product of $1.332 trillion, Texas' debt as a percentage of the annual Texas economy is only 2.83%, while the nation's debt is just below 100% of the nation's annual economy. Some sources actually peg the Texas figure at 1.05%, and the debt to personal income ratio at 1.4%.

Meanwhile, the national debt has grown and is growing at a frightening clip.

From the authoritative source on Texas debt, the Texas Bond Review Board:

Texas had a total of $37.71 billion in state debt outstanding. Texas' general obligation debt is split rated at Aaa/AA+/AAA by the three credit rating agencies, Moody's Investors Service, Standard & Poor's and Fitch Ratings.

Interestingly, if you compare some of the debt figures in Texas to the seven AAA rated states, Texas seems to beat those states pretty easily:


Compared to the seven “AAA” rated states, Texas’ net tax-supported debt per capita and net tax-supported debt as a percentage of personal income are the lowest.

While Moody's and Fitch both give Texas an AAA rating, one explanation about S&P's rating I've heard from smart people who follow this stuff closely is that Texas actually didn't have enough of a history of having and thus paying back debt to warrant more than a AA rating from S&P until recently, when S&P upgraded Texas to AA+ status.

Moreover, as I've noted before, the vast majority of debt in Texas is voter-approved.

The attacks just keep coming, though. Indeed, others have incorrectly suggested that Texas is actively going deeper ("AS WE SPEAK!!! OMG!!!") into debt because of some routine cash-flow management tools that have been in practice for nearly a quarter of a century:

The state’s recent sale of Tax and Revenue Anticipation Notes (TRANs) is a cash-flow management tool that dates back to 1987. These notes are sold every fiscal year to manage cash flow and to provide up-front payments to public schools. They are repaid within the fiscal year with tax revenue that comes in after the upfront school payments are made. Texas earned the highest possible ratings in anticipation of this offering, receiving a rating of SP-1+ by Standard & Poor’s, MIG 1 by Moody’s Investors Service and F1+ by Fitch Inc. Texas’ net interest rate of .27 percent is down from last year’s rate of .34 percent, representing the state’s lowest net rate ever for these notes.

Yeah. That looks really troubling. The lowest rates ever. The second lowest debt per capita in America. Upgraded credit ratings for the state government. Oh dear!

Under some rankings, Texas is around 9th or 10th best in the country, while in other rankings, it is in the 4th or 5th range, while in still others, it is in the top 2 or 3 range.

The Texas debt situation is unequivocally a winning contrast for Rick Perry against President "Downgrade" Obama.

Context matters. Texas' state government debt situation is among the best in the country, almost no matter which way you slice it. The national debt crisis, meanwhile, threatens the very fabric of our society and undermines the future of this nation. It's one thing for liberals to disingenuously attack the Texas model, as that is what they do, but it is beyond the pale for so-called conservatives, using misleading or out-of-context stats, to attack the prime example of conservative governance and success in the nation.

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Previous Trivia Tidbit: Texas Forest Service Budget As High As It Has Ever Been..

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Posted by Will Franklin · 21 September 2011 07:07 AM