Texas at the Crossroads: Sustaining Leadership Amid New Challenges

Texas has long been at the forefront of job creation in the U.S., consistently outpacing other states, particularly since the COVID lockdowns. However, recent data from the Bureau of Labor Statistics (BLS) signal that even Texas, a state known for its economic resilience, is not immune to broader economic challenges. In June and July 2024, Texas experienced back-to-back job losses, with a decrease of 9,100 jobs in June before Hurricane Beryl and another 14,500 in July in the month it hit, raising the unemployment rate to 4.1%. 

These figures reflect a critical moment for Texas, where reaffirming its commitment to pro-growth policies is essential.

Texas vs. Other Major States: A Comparative Analysis

Despite these setbacks, red-state Texas remains a powerhouse but faces stiff competition from other states, particularly the other large red-state Florida, where 21,800 jobs were added in July, demonstrating the strength of its pro-growth policies. While the blue states of California and New York often struggle with robust job creation under high taxes and burdensome regulations, they gained 21,100 and 41,400 jobs, respectively, in July. Florida boasts a year-over-year job growth rate of 2.4% compared with Texas’ 1.9% and blue states of California’s 1.6% and New York’s 2.0%. 

Texas and Florida have led the nation in job creation since the COVID lockdowns, a testament to the power of low taxes, limited government, and a business-friendly environment. However, Texas’ recent job losses, particularly in the private sector, indicate that it cannot afford to be complacent. The state must double down on the principles that made it successful and push forward with bold reforms to maintain its edge.

The Path Forward: Policy Recommendations

1. Cut Government Spending: The Texas Legislature’s recent 32% increase in appropriations of state funds, the largest in the state’s history, is unsustainable. Texas must prioritize cutting government spending in the next session, targeting wasteful programs and agencies. Implementing universal school choice through education savings accounts could replace the existing school finance formulas, reducing the burden on taxpayers while empowering parents and improving educational outcomes.
2. Revamp the Tax System: The growing dissatisfaction with property taxes in Texas signals the need for a significant overhaul. Transitioning to a more efficient tax system by capping government spending and using surpluses to phase out property taxes by state and local governments over the next decade is a bold but necessary step. This shift would relieve taxpayers and bolster economic growth by removing one of the most significant barriers to investment and homeownership.
3. Reinforce Limited Government: Texas must recommit to the principles of limited government. Reducing regulatory burdens and tightening state and local government spending are crucial. Strengthening constitutional and statutory spending limits, aligned with the taxpayers’ ability to pay, will ensure fiscal responsibility and long-term economic stability.

Maintaining Leadership in a Competitive Landscape

Texas has been a beacon of economic freedom, fostering an environment where businesses and individuals can thrive. However, the state must innovate and adapt to remain at the forefront of job creation and economic growth. By strengthening its pro-growth policies, cutting unnecessary government spending, and revamping its tax system, Texas can maintain and enhance its position as an economic powerhouse.

As other states accelerate their economic reforms, Texas must lead by example. The comparison with states like Florida underscores the importance of aggressive, pro-growth strategies. While states like California and New York continue to falter under progressive policies, Texas has the opportunity—and the responsibility—to champion policies that ensure prosperity and freedom for its citizens. 

The path is clear: Texas must reject progressive fiscal policies and instead embrace reforms that promote growth, safeguard economic freedom, and provide a bulwark against the economic challenges of our times.

Texans for Fiscal Responsibility relies on the support of private donors across the Lone Star State in order to promote fiscal responsibility and pro-taxpayer government in Texas. Please consider supporting our efforts! Thank you!

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