Every day, Texans are reminded why letting liberal democrats take over this state would be a terrible idea.

In a new report released by S&P Global Ratings, Texas has been ranked among the most recession-proof states in the country, according to a variety of factors.

Texas’ fiscal strength stems from conservative state legislators’ insistence against implementing a personal income tax or increasing other taxes. Also important has been the push by Gov. Abbott and Lt. Gov. Dan Patrick to slow the rate of spending growth and refusal to dip into the state’s “rainy day fund” for non-emergency spending.

The report explains that when recessions occur, states can experience upwards of a ten percent shortfall in general revenue due to decreased collection of income taxes, which for most states constitutes a large portion of their tax base. Adding all of the states together, personal income taxes constituted 55 percent of all state taxes collected in fiscal year 2018.

The rankings are based off of the analysts’ confidence in each state’s ability to weather the first year of an economic downturn, where a sudden decrease in available revenue can lead to large deficits. The report explains why first-year effects are so important to the ranking:

Our assessment thus focused on the first-year effects of a recession for two reasons. First, predicting when recessions will occur has eluded economists and state budget forecasters; therefore, a state’s capacity to withstand the first-year and thus unanticipated stress of a recession indicates its fiscal resilience. Second, typically it is not practically or politically feasible for states to accumulate and maintain reserves large enough to offset entirely the effects of a recession. Given this reality, our criteria include an assessment of a state’s political and institutional capacity to make fiscal adjustments in response to an unfolding recession.”

In categorizing states, S&P Global Ratings placed states in low, moderate, and high-risk categories when it comes to susceptibility to fiscal stress in the event of a recession. Texas resides squarely in the low-risk category.

Part of Texas’ resilience can be attributed to our lack of a personal income tax. Since decreased income tax revenue is a large cause of fiscal instability in the first year of a recession, not having a personal income tax is a strong hedge against fiscal stress.

Additionally, the article describes how—contrary to previous trends—in the economic expansion that followed the Great Recession, states have not saved their extra tax revenue in case of budget shortfalls. Instead, many have spent it on massive, unsustainable pension liabilities and state employee healthcare costs. Texas has bucked that trend by building up comfortable reserves in its Economic Stabilization Fund, also known as the “rainy day fund,” even as spend-happy Democrats and liberal Republicans have called for draining the account.

The failure to build reserves during economic expansion has led to credit downgrades for many states, while Texas still enjoys a AAA rating from Standard & Poor’s, one of only 11 states out of the 39 S&P rates to do so. California and Illinois, on the other hand, have an AA- and a BBB- rating respectively, two of the lowest scores available.

Taxpayers can rest easier knowing that fiscal conservatives like Gov. Abbott and Lt. Gov. Dan Patrick continue to hold the line on preserving the Rainy Day Fund. Without taxpayer champions consistently fighting for fiscal restraint, tax-and-spend liberal Republicans like Joe Straus would have long ago drained the public coffer at the behest of powerful public-sector unions looking to increase the scope of already out-of-control state pension and healthcare systems.

Saurabh Sharma

Saurabh Sharma served as a Capitol Correspondent for Texas Scorecard. He was a Biochemistry and Government student at the University of Texas at Austin. He was also the State Chairman of Young Conservatives of Texas. In his free time, you can find him writing with fountain pens, learning graphic design, experimenting with unique nutrition regimens, and studying men’s fashion.

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