Texas Debt

[SilverEagle]

Sorry about the title, I meant to post DEBT

Ok, so raising taxes slightly is extremely bad, but accumulating debt is not?

http://www.star-telegram.com/2011/07/12/3217429/texas-debt-growing-at-faster-rate.html

[UNT90]

Sorry about the title, I meant to post DEBT

Ok, so raising taxes slightly is extremely bad, but accumulating debt is not?

http://www.star-tele...aster-rate.html

Do the first, and you will ensure the second.

Especially in this economy.

So many really need to retake economics 101.

[KRAM1]

I don't think its THAT hard to understand that both are bad. Raising taxes is not the answer. Again and again....if you want to increase tax revenues...LOWER TAXES!

Agree UNT90, a refresher of Eco 101 would be good for some folks, but not if you are a Keynesian or if the nut case teaching the course is a Keynes disciple. Just sayin.....

[yyz28]

Per the constitution, the State MUST balance the budget yearly - there is no debt.

...the "debt" is a result of losses ON PAPER underwriting state-wide and municipal bonds.

...and here is the most important point made in the article "Texas doesn't appear to be overextended. In a May report, Standard & Poor's gave the state an AA+ rating, citing its outperforming economy, strong cash management and constitutional limits on debt."

...so really, it appears the article was written so they could have a nice sensational headline, but really doesn't deliver the shock he headline would lead you to expect to find within. Perry isn't even running yet, and here come the hit-pieces. LOL!

[KRAM1]

Per the constitution, the State MUST balance the budget yearly - there is no debt.

...the "debt" is a result of losses ON PAPER underwriting state-wide and municipal bonds.

...and here is the most important point made in the article "Texas doesn't appear to be overextended. In a May report, Standard & Poor's gave the state an AA+ rating, citing its outperforming economy, strong cash management and constitutional limits on debt."

...so really, it appears the article was written so they could have a nice sensational headline, but really doesn't deliver the shock he headline would lead you to expect to find within. Perry isn't even running yet, and here come the hit-pieces. LOL!

let's not let reality get in the way of a flammable piece or trying to sensationalize something. What fun is that?

[UNT90]

Is it wrong of me to root for the hit pieces on Perry to work their magic??

[SCREAMING EAGLE-66]

I don't think its THAT hard to understand that both are bad. Raising taxes is not the answer. Again and again....if you want to increase tax revenues...LOWER TAXES!

Agree UNT90, a refresher of Eco 101 would be good for some folks, but not if you are a Keynesian or if the nut case teaching the course is a Keynes disciple. Just sayin.....

---We had a surplus in 1999, in Texas and USA,(largest in history in USA and $6 billion in Texas) We lowered taxes or in the case of Texas, taxes were lowered or eliminated for some.... and now we have a problem...both places. None of your taxes in Texas were lowered unless you were certain businesses (often know as big contrubutors). I don't think lowering either helped the economy any either place. It is not so much about actually raising taxes but just restoring what once existed... In Texas that wouldn't be a dime more to most people since they got no cuts to start with.

---Some just don't get that less money comes in is a problem unless other sourses appear or the economy improves GREATLY which in Texas would mean more sales/gasoline tax collected ... which hits all of us and not just the buinesses that got those cuts. It is likely you got zero tax cuts from Texas and even the claims about a tax rate decline in property tax is off-set by increased evaluation..... pay attention... you likely got nothing....maybe higher local property taxes as a result..and these budget problems now and underfunded schools and social services.

--- To all those so called conservatives [i think I am actually one, not a so called one] explain why 1788 - 2001 had a total national debt of $5.5 trillion, but after the eight "conservative administration years", 2001-2009, it went to $11 trillion and you say more cuts is a good idea. ... could it be things weren't as claimed. Don't say 9-11... or else also explain WWII debt which was many times more expensive.... even with the difference in the value of the dollar. You are being conned.

..

[UNT90]

---We had a surplus in 1999, in Texas and USA,(largest in history in USA and $6 billion in Texas) We lowered taxes or in the case of Texas, taxes were lowered or eliminated for some.... and now we have a problem...both places. None of your taxes in Texas were lowered unless you were certain businesses (often know as big contrubutors). I don't think lowering either helped the economy any either place. It is not so much about actually raising taxes but just restoring what once existed... In Texas that wouldn't be a dime more to most people since they got no cuts to start with.

---Some just don't get that less money comes in is a problem unless other sourses appear or the economy improves GREATLY which in Texas would mean more sales/gasoline tax collected ... which hits all of us and not just the buinesses that got those cuts. It is likely you got zero tax cuts from Texas and even the claims about a tax rate decline in property tax is off-set by increased evaluation..... pay attention... you likely got nothing....maybe higher local property taxes as a result..and these budget problems now and underfunded schools and social services.

--- To all those so called conservatives [i think I am actually one, not a so called one] explain why 1788 - 2001 had a total national debt of $5.5 trillion, but after the eight "conservative administration years", 2001-2009, it went to $11 trillion and you say more cuts is a good idea. ... could it be things weren't as claimed. Don't say 9-11... or else also explain WWII debt which was many times more expensive.... even with the difference in the value of the dollar. You are being conned.

..

First, 2001-2009 was not a conservative administration. Many conservatives go to Washington, begin hobnobbing with the social elite, long to be accepted by that crowd, hear the constant bashing that conservatives get, and lose their moral compass when it comes to a whole host of issues, spending being one of them.

Everyone wants to fit in. It's human nature. And if you aren't approving huge social programs in Washington, you aren't fitting in with the social elite. I respect these people less than democrats.

Bush was anything but a fiscal conservative. He sure was big on the tax cuts, but was lilly livered on spending cuts and outright refused to take on the Dems when it came to entitlements. His administration was a well document fiscal disaster, not because of the tax rates, but because of huge increases in spending.

Funny, but for being a "true conservative", I have yet to ever see one post of yours calling for deep spending cuts to ease the deficits. All you ever talk about is increasing taxes on businesses (which are passed on to the consumer) and the rich. Pretty much the liberal democrat playbook.

And you might want to mention how businesses are leaving California in droves and relocating to places like Texas because of California's tax rates. Maybe we should be more like them?

Here

Here

and Here

There were about a hundred more articles that I found on my visit to the local library, but they would only let me check three out to take home and scan into my computer. Imagine my surprise, when after accomplishing this task and returning these articles to the library, I performed a simple google search and found the same articles online!!!

Well, at least I didn't reference the internet.

Edited July 15, 2011 by UNT90

[UNTflyer]

---We had a surplus in 1999, in Texas and USA,(largest in history in USA and $6 billion in Texas)

No we didn't... we had a PROJECTED surplus... many years down the road.

Debt in 1998: $5,526,193,008,897.62

Debt in 1999: $5,656,270,901,615.43

Debt in 2000: $5,674,178,209,886.86

The surplus never happened... one of the great American political lies of the 20th century

[UNTflyer]

And let's take a look at some of the debt numbers over the last 10 years, the amount of debt, and the amount of the increase.

2010 13,561,623,030,891.70 13.87%

2009 11,909,829,003,511.70 18.80%

2008 10,024,724,896,912.40 11.29%

2007 9,007,653,372,262.48 5.89%

2006 8,506,973,899,215.23 7.24%

2005 7,932,709,661,723.50 7.50%

2004 7,379,052,696,330.32 8.78%

2003 6,783,231,062,743.62 8.91%

2002 6,228,235,965,597.16 7.25%

2001 5,807,463,412,200.06 2.35%

2000 5,674,178,209,886.86

So while the percentage increase spiked after 9/11 and peaked in 2003, the debt increases were on their way back down. Until the financial credit crisis hit in 2008. Take out the 800 billion in TARP money we had to pump into the system to save the investment banks and the debt would have increased by only 2.4%.

[SCREAMING EAGLE-66]

And let's take a look at some of the debt numbers over the last 10 years, the amount of debt, and the amount of the increase.

2010 13,561,623,030,891.70 13.87%

2009 11,909,829,003,511.70 18.80%

2008 10,024,724,896,912.40 11.29%

2007 9,007,653,372,262.48 5.89%

2006 8,506,973,899,215.23 7.24%

2005 7,932,709,661,723.50 7.50%

2004 7,379,052,696,330.32 8.78%

2003 6,783,231,062,743.62 8.91%

2002 6,228,235,965,597.16 7.25%

2001 5,807,463,412,200.06 2.35%

2000 5,674,178,209,886.86

So while the percentage increase spiked after 9/11 and peaked in 2003, the debt increases were on their way back down. Until the financial credit crisis hit in 2008. Take out the 800 billion in TARP money we had to pump into the system to save the investment banks and the debt would have increased by only 2.4%.

--- All of those bank bailouts occurred in 2008.... before the 2008 election.

---I very much agree with spending cuts.... but not just to programs that were put into place by just the other party which seems to be the big problem. There are two issues to a balanced budget.... more income ( taxes.. I don't want new ones just just SOME of the old ones put back ) and less spending which partly occurred because the unnecessary Iraq war and those insane earmarks really that went crazy. Just don't cut things that should not be cut even if a member of the other party got it passed.

--I get tired of hearing those imply the debt problem just occurred after the current guy walked it... it didn't.

Edited July 20, 2011 by SCREAMING EAGLE-66

[Green2012]

Per the constitution, the State MUST balance the budget yearly - there is no debt.

...the "debt" is a result of losses ON PAPER underwriting state-wide and municipal bonds.

...and here is the most important point made in the article "Texas doesn't appear to be overextended. In a May report, Standard & Poor's gave the state an AA+ rating, citing its outperforming economy, strong cash management and constitutional limits on debt."

...so really, it appears the article was written so they could have a nice sensational headline, but really doesn't deliver the shock he headline would lead you to expect to find within. Perry isn't even running yet, and here come the hit-pieces. LOL!

yyz. Can you explain this a little better? I was approached yesterday actually with some lib throwing the Texas debt in my face and honestly I didn't have an argument for our Texas debt. He claimed it was due to Perry spending but I told him that couldn't be the case.

This article seems extremely liberal slanted but here it is.

http://thinkprogress.org/economy/2011/07/06/261752/perry-budget-accounting-gimmicks/

Surprisingly this is alot of the same hooplah that was thrown at me.

Edited July 20, 2011 by Green2012

[SCREAMING EAGLE-66]

yyz. Can you explain this a little better? I was approached yesterday actually with some lib throwing the Texas debt in my face and honestly I didn't have an argument for our Texas debt. He claimed it was due to Perry spending but I told him that couldn't be the case.

This article seems extremely liberal slanted but here it is.

http://thinkprogress.org/economy/2011/07/06/261752/perry-budget-accounting-gimmicks/

Surprisingly this is alot of the same hooplah that was thrown at me.

---Looks like an honest article to me... The budget problem is not about his excessive spending [ which he hasn't been other than his residence after the official one burned ]. The problem is mostly due to so many tax cuts to business etc... a lot of which became big contributors. Did most people get any of those tax cuts ... nope.... sales, alcohol, gasoline etc. hasn't dropped a penny.

---He (and the Legislature) apparently did some interesting accounting by moving some expenses from one budget to the next one....(paying in September instead of August or whenever).... this made the first one look ok but eventually caught up with them and we now had a bigger problem....... and education in the state will take a big hit. ----ever waited until after payday to mail a check.??... about the same... but you still owed the money.

..

Edited July 24, 2011 by SCREAMING EAGLE-66

[yyz28]

A few important things to include in the thought process that isn't listed in that article - mainly because the facts are not politically expedient for a left-leaning blog site.

1. Deficit shifting has been going on in Austin (and in every other state capital) for years now. It essentially allows the states to pay forward on long-term projects and projects that span fiscal years so that the budget can balance on paper.

2. For all of the cries of accounting tricks in that article, I didn't see anything showing from whom the State of Texas borrowed the money, at what interest rate and under what terms in order to have a true debt.

3. There is no line-item in the budget for interest to be paid on this debt. It would seem if we had debt, we'd be paying for it in the form of interest payments.

4. The only debt that really shows up on the books are unfunded liabilities, in the form of bond backing the state has done both at the statewide level and for local governments. The state often backs up local municipalities and counties when they are seeking funds for projects, particularly education and infrastructure projects. They are motivated to throw their credit behind smaller/weaker locals as it keeps the state from having to fund some of these projects themselves.

...the comments to the article are even more mis-leading.

Texas has made moves that make the state VERY desirable. 25 people from California move to Texas every day. Businesses are relocating here by the drove. These migrations push up the tax base and over the long haul will allow the state to do quite well in terms of revenue in the future. The biggest challenge the state faces today in terms of being able to maintain the budget (and is one of the biggest reason why this state's education system is stretched so thin) is the illegal immigration/anchor baby problem. ...and when you compare the outcome of Northern counties in the state vs. Southern counties in the state, you will see that our education system is in league with the top 25% of the country. When education isn't important at home, it won't be important to the Student. Far too many on the dole in this state, and education for far too many people who shouldn't be here and aren't contributing to the tax base is the reason we have a budget problem here. Politicians won't say this because it isn't PC, but it is the truth.

[meangreenacct]

A few important things to include in the thought process that isn't listed in that article - mainly because the facts are not politically expedient for a left-leaning blog site.

1. Deficit shifting has been going on in Austin (and in every other state capital) for years now. It essentially allows the states to pay forward on long-term projects and projects that span fiscal years so that the budget can balance on paper.

2. For all of the cries of accounting tricks in that article, I didn't see anything showing from whom the State of Texas borrowed the money, at what interest rate and under what terms in order to have a true debt.

3. There is no line-item in the budget for interest to be paid on this debt. It would seem if we had debt, we'd be paying for it in the form of interest payments.

4. The only debt that really shows up on the books are unfunded liabilities, in the form of bond backing the state has done both at the statewide level and for local governments. The state often backs up local municipalities and counties when they are seeking funds for projects, particularly education and infrastructure projects. They are motivated to throw their credit behind smaller/weaker locals as it keeps the state from having to fund some of these projects themselves.

...the comments to the article are even more mis-leading.

Texas has made moves that make the state VERY desirable. 25 people from California move to Texas every day. Businesses are relocating here by the drove. These migrations push up the tax base and over the long haul will allow the state to do quite well in terms of revenue in the future. The biggest challenge the state faces today in terms of being able to maintain the budget (and is one of the biggest reason why this state's education system is stretched so thin) is the illegal immigration/anchor baby problem. ...and when you compare the outcome of Northern counties in the state vs. Southern counties in the state, you will see that our education system is in league with the top 25% of the country. When education isn't important at home, it won't be important to the Student. Far too many on the dole in this state, and education for far too many people who shouldn't be here and aren't contributing to the tax base is the reason we have a budget problem here. Politicians won't say this because it isn't PC, but it is the truth.

I have a hard time shifting most of the blame to illegal immigrants/anchor babies. In Texas our two main sources of revenue are sales tax and property tax, don't even illigal immigrants either directly or indirectly pay both? They buy stuff, so the incur the sales tax. They also live somewhere, so they pay property taxes at least indirectly through their rents. Now I won't pretend to understand how any federal dollars are handed out, but I would assume it's partially on the basis of heads in school, so in that case if they are in school then we probably get some kind of credit for them.

[glick1980]

I have a hard time shifting most of the blame to illegal immigrants/anchor babies. In Texas our two main sources of revenue are sales tax and property tax, don't even illigal immigrants either directly or indirectly pay both? They buy stuff, so the incur the sales tax. They also live somewhere, so they pay property taxes at least indirectly through their rents. Now I won't pretend to understand how any federal dollars are handed out, but I would assume it's partially on the basis of heads in school, so in that case if they are in school then we probably get some kind of credit for them.

The State does not get property tax, only cities, counties, school districts, state colleges, hospitals, municipal utility districts, public imrpovement districts, etc. get property tax.

[yyz28]

I have a hard time shifting most of the blame to illegal immigrants/anchor babies. In Texas our two main sources of revenue are sales tax and property tax, don't even illigal immigrants either directly or indirectly pay both? They buy stuff, so the incur the sales tax. They also live somewhere, so they pay property taxes at least indirectly through their rents. Now I won't pretend to understand how any federal dollars are handed out, but I would assume it's partially on the basis of heads in school, so in that case if they are in school then we probably get some kind of credit for them.

Illegal Immigrants (and often others in various communities) get by sales taxes often by doing business in closed circles. Flea markets, roadside grocers etc are pretty common down in the valley. Federal dollars are a big part of what is funneled to education, and is allocated based on heads, but the bulk of the households I'm talking about here don't pay any federal taxes, so those monies are not being offset at all. Yes, their rent may be funding the property taxes, but the value of this property is a biggest factor that determines its tax value. You can play the stereotype out on your own. Ditto sales tax. Lower income individuals and those who operate completely on cash will pay far less in sales tax than those who have a bank account, debit card, etc.

You can find it hard to believe, but the next time you're paying your property taxes if you live in Dallas, take a close look at the parkland hospital line item, and then go check out the waiting room.

You then combine these factors in with simple items like the ability of parents to donate time/materials/money to their kid's school districts and the importance of education in the home, and it is easy to see how some school districts far out perform others in the state even though the state/local/federal money being spent per child is the same.

[SCREAMING EAGLE-66]

The State does not get property tax, only cities, counties, school districts, state colleges, hospitals, municipal utility districts, public imrpovement districts, etc. get property tax.

--You are absolutely correct... I know Perry claims to have reduced property tax in Texas which is amazing since we doesn't even have a state one. I am not certain but I think there was one until the 1960's when we went with a 4% sales tax instead. Actually Perry et. al. by cutting state funding to schools has caused your local property tax to increase.

---We as tax payers in Texas do take a beating from indigent health care at hospitals [often illegals especially near the border]. Most people don't think of that and that we are already paying for that anyway... Knowing that makes the new federal health care program make more sense.... you are already paying for the poor and uninsured.....which includes births etc.

..

Edited July 27, 2011 by SCREAMING EAGLE-66

[Green Mean]

I am really really far from being an economist or even being someone that is really good in the subject but I don't really grasp the idea of why a country such as ours would have a 'debt ceiling'.

Why can't our elected and paid lawmakers both reps and dems in Washington just be more prudent about their spending and allocate their finances correctly?

[glick1980]

I am really really far from being an economist or even being someone that is really good in the subject but I don't really grasp the idea of why a country such as ours would have a 'debt ceiling'.

Why can't our elected and paid lawmakers both reps and dems in Washington just be more prudent about their spending and allocate their finances correctly?

A debt ceiling is to prevent an organization from exceeding the amount of debt they can reasonably service while maintaning competent levels of service. I work in municipal finance, and at my city this expressed as a percent of our tax collections. We have a maximum percentage of property taxes that can go towards debt service while the remainder goes towards maintanence and operations. The federal government seems like they just do whatever they want to, and lets not forget, big business runs this country now as they are the ones contributing the all of these politicians campaigns. There is a reason why the richest 1% of the country gets the most favorable tax breaks, his name was George Bush.

[Green2012]

A few important things to include in the thought process that isn't listed in that article - mainly because the facts are not politically expedient for a left-leaning blog site.

1. Deficit shifting has been going on in Austin (and in every other state capital) for years now. It essentially allows the states to pay forward on long-term projects and projects that span fiscal years so that the budget can balance on paper.

2. For all of the cries of accounting tricks in that article, I didn't see anything showing from whom the State of Texas borrowed the money, at what interest rate and under what terms in order to have a true debt.

3. There is no line-item in the budget for interest to be paid on this debt. It would seem if we had debt, we'd be paying for it in the form of interest payments.

4. The only debt that really shows up on the books are unfunded liabilities, in the form of bond backing the state has done both at the statewide level and for local governments. The state often backs up local municipalities and counties when they are seeking funds for projects, particularly education and infrastructure projects. They are motivated to throw their credit behind smaller/weaker locals as it keeps the state from having to fund some of these projects themselves.

...the comments to the article are even more mis-leading.

Texas has made moves that make the state VERY desirable. 25 people from California move to Texas every day. Businesses are relocating here by the drove. These migrations push up the tax base and over the long haul will allow the state to do quite well in terms of revenue in the future. The biggest challenge the state faces today in terms of being able to maintain the budget (and is one of the biggest reason why this state's education system is stretched so thin) is the illegal immigration/anchor baby problem. ...and when you compare the outcome of Northern counties in the state vs. Southern counties in the state, you will see that our education system is in league with the top 25% of the country. When education isn't important at home, it won't be important to the Student. Far too many on the dole in this state, and education for far too many people who shouldn't be here and aren't contributing to the tax base is the reason we have a budget problem here. Politicians won't say this because it isn't PC, but it is the truth.

Thanks for the explanation. I was under the impression that investors bought up municipal bonds for a secure investment and avoidance of tax. Is texas being repaid back by local governments with a 6% interest rate like typical bonds?

[Green2012]

--You are absolutely correct... I know Perry claims to have reduced property tax in Texas which is amazing since we doesn't even have a state one. I am not certain but I think there was one until the 1960's when we went with a 4% sales tax instead. Actually Perry et. al. by cutting state funding to schools has caused your local property tax to increase.

---We as tax payers in Texas do take a beating from indigent health care at hospitals [often illegals especially near the border]. Most people don't think of that and that we are already paying for that anyway... Knowing that makes the new federal health care program make more sense.... you are already paying for the poor and uninsured.....which includes births etc.

..

I thought there was a texas supreme court ruling back in 2005 that ruled the current method of education funding primarily through property taxes as unconstitutional. So the Gross margins tax was created to lower property taxes and cover the cost of education. From reading it seems the gross margins tax has failed in producing the amount of revenue it was created for which is one of the reasons why we are in the education funding problem we are in. Please correct me if I'm wrong and off base. My ignorance may be showing.

[DoubleEagle]

I thought there was a texas supreme court ruling back in 2005 that ruled the current method of education funding primarily through property taxes as unconstitutional. So the Gross margins tax was created to lower property taxes and cover the cost of education. From reading it seems the gross margins tax has failed in producing the amount of revenue it was created for which is one of the reasons why we are in the education funding problem we are in. Please correct me if I'm wrong and off base. My ignorance may be showing.

Your description is accurate. In 2007 the gross margin tax was instituted, replacing the franchise tax as the primary source of corporate tax revenues in the state. This change was implemented to replace the tax revenue lost when the legislature cut the school M&O tax rate from $1.50 to $1.00 (per $100 of valuation) in 2006. To date, the gross margin tax has failed to generate as much revenue as expected which is part of the reason for the budget deficit we are currently experiencing.

[KRAM1]

A debt ceiling is to prevent an organization from exceeding the amount of debt they can reasonably service while maintaning competent levels of service. I work in municipal finance, and at my city this expressed as a percent of our tax collections. We have a maximum percentage of property taxes that can go towards debt service while the remainder goes towards maintanence and operations. The federal government seems like they just do whatever they want to, and lets not forget, big business runs this country now as they are the ones contributing the all of these politicians campaigns. There is a reason why the richest 1% of the country gets the most favorable tax breaks, his name was George Bush.

Riduculus...can't think of any other comment about this post.

[glick1980]

Riduculus...can't think of any other comment about this post.

Well that certainly clears up any questions about why George Bush would make a law granting Estates a $5,000,000 tax exemption....I mean let's face it those are the people that really need tax breaks.

Edited July 28, 2011 by glick1980