The New York Times

Updated January 19, 2011 10:02 PM

What's the Matter With Texas?

Introduction

Rick PerryLm Otero/Associated Press Gov. Rick Perry, nationally known for his opposition to taxes and public spending, faces a huge budget deficit.

In a recent column on Texas's huge budget deficit, Paul Krugman wrote that "it’s hard to imagine what will happen if the state tries to eliminate its huge deficit purely through further cuts."

On Tuesday, this was what Texas legislators proposed doing, with a plan to slash $31 billion in state spending that includes cuts in education, Medicaid and the prison system. New taxes weren't an option for the Republican-controlled state government. Texas has among the lowest tax burdens in the country, with no income tax.

But how did a state which touts its fiscal tightfistedness find itself in a deficit bind in the first place? Its oil and gas industries hummed along during the recession, and it had no housing meltdown. Unions are not an issue, and it has the lowest state spending in the nation per person.

But there is not even unity on the amount of its budget shortfall: is it $12 billion to $15 billion, as the Republicans say, or up to $27 billion, a figure used by liberal groups like the Center on Budget and Policy Priorities? Many fiscal conservatives say that the gap is not a problem. Why do they say that? Are there lessons for other states?

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