Even The Economist Thinks Texas is too Fiscally Conservative

The Economist isn't conservative in the American sense of the word, which has come to be defined as much as by views on abortion and Jesus as by a desire for limited government, but it's consistent in its support of free market capitalism relatively unfettered by government.

The magazine did endorse Obama's bid for reelection, but that was more a function of Mitt Romney's slipperiness on most important issues than of any shared ideology. It has long been a fan of Texas' business-friendly approach.

But the magazine thinks the state has taken that concept a bit too far. An article published today warns of "the pitfalls of Texan austerity."

Those pitfalls were revealed, paradoxically enough, by Comptroller Susan Combs' recent announcement that the state has $8.8 billion left over from the previous session. As the magazine points out, that surplus was largely the result of Combs' overly cautious 2011 revenue estimate.

Under Texas law, the state may not spend more than the comptroller expects it to have. The 2011 estimate, in other words, meant that the state was in effect facing a budget shortfall of more than $20 billion. In order to stay in the black, Texas had cut spending across the board.

Texas had some $9.4 billion in a "rainy day" fund, and that money could have been used to soften the blow. The legislature, which is controlled by Republicans, did take several billion dollars out of the fund in the end, but reluctantly. Most of the shortfall was made up by deep cuts. The rapidly growing public-school system, for example, was allocated about $5 billion less than expected, given previous funding commitments.

Complicating the state's budgeting process is the fact that the Legislature only meets every other year, and thus has to predict what revenue will be available two years down the line.

"Little surprise that they err on the side of caution," The Economist concludes. "But an abundance of caution may have undesirable consequences, too."

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