Friday, September 14, 2012

Economic Illiteracy on Display at the Austin Statesman

The Austin (un)American-Statesman had this gem today about the Texas Budget; the good news is that we could have a surplus:
Texas could be heading toward a record state budget surplus just two years after facing a historic deficit.
First things first, revenues from oil and gas development are higher than expected:
Soaring oil and gas production in West Texas and the Eagle Ford Shale in South Texas are major drivers of the better-than-expected revenue collections.
Also, as the article reminds us, the Texas Legislature cut spending in 2011:
They filled most of that hole with money from the state's rainy day fund, then set about reducing spending by $14 billion in the 2012-13 budget. 
Which has created the following outcome:
But [Texas Comptroller Susan] Combs reported in December that the state actually started the 2012-13 budget with an unanticipated $1.6 billion in the bank due largely to the oil and gas boom, and she added to that balance with the $3.7 billion announced Wednesday. 
So, lemme get this straight: The State of Texas created more wealth by developing it's resources while simultaneously cutting spending and might have a budget surplus.  Wealth Generation and Spending Restraint begets prosperity?!?  Somehow, this cause and effect is lost on the Austin Statesman and the prosperity is 'unanticipated.'


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