Texas remains a poster child for fiscal woes despite a more than $9 billion budget surplus this year and record sales tax revenues in May, according to a group that advocates for fiscal transparency.
Truth in Accounting (TIA), a Chicago-based nonprofit that examines government finances, gave Texas a financial grade of “D” last fall in a national study. The analysis, which measures the amount of state debt per taxpayer, ranked Texas 32nd among the states in terms of the size of its debt burden.
“It’s interesting to hear what people mean by the word ‘surplus’,” Bill Bergman, TIA’s director of research, told The Center Square.
The rules for a state’s general fund accounting may allow for it to say revenues are outpacing spending, but in actuality the situation in Texas is much less rosy, according to Bergman.
The Lone Star State has a debt burden of $82.2 billion, or $10,100 for each state taxpayer, when assets are compared to long-term obligations, the 2018 TIA report says. Texas has not funded $45 billion in retirement benefits and $65.5 billion in health care benefits for retirees, according to the report.
“Texas’ financial problems stem mostly from unfunded retirement obligations that have accumulated over many years,” the TIA report states.
The additional revenues that have been flowing into state coffers in the current fiscal year are not likely the beginning of a sea change, according to Bergman.
“It’s hard to turn these numbers around in a hurry,” he said, adding that Texas has also benefited from strong oil prices in the last decade or two, as well as healthy economic growth.
“Texas should be in better shape than it is,” Bergman said.
The state is also no standout when it comes to transparency in financial reporting, he said.
“Texas is not better or worse than the average,” Bergman said, “but it’s still pretty slow in producing these financial reports.”
Many of the fiscal numbers presented to Texas residents have been either not reliable or inaccurate, according to the 2018 report.
“Texas’ financial condition is not only alarming but also misleading as government officials have failed to disclose significant amounts of retirement debt on the state’s balance sheet,” the report states.