Lone Star Lessons

Ohio can learn a lot from the Lone Star state. While Buckeyes may not quite have the full blown “Don’t Mess With Texas” vibe going on, the fact is that Texas is a leading light for any state looking to become a destination for jobs.

This Wall Street Journal article does a great job outlining just how good Texas has been at becoming a relative job Mecca even during the worst economic the nation has seen since the Great Depression.

“Using Bureau of Labor Statistics (BLS) data, Dallas Fed economists looked at state-by-state employment changes since June 2009, when the recession ended. Texas added 265,300 net jobs, out of the 722,200 nationwide, and by far outpaced every other state. New York was second with 98,200, Pennsylvania added 93,000, and it falls off from there. Nine states created fewer than 10,000 jobs, while Maine, Hawaii, Delaware and Wyoming created fewer than 1,000. Eighteen states have lost jobs since the recovery began.”

So what is the secret recipe that those Texas cooks have that makes their state so much more attractive than anyone else? Look no further to its low tax, low regulation, low tort cost ingredients. Again, from the Wall Street Journal,

“Texas has no state income tax. Its regulatory conditions are contained and flexible. It is fiscally responsible and government is small. Its right-to-work law doesn’t impose unions on businesses or employees. It is open to global trade and competition: Houston, San Antonio and El Paso are entrepôts for commerce, especially in the wake of the North American Free Trade Agreement.

Based on his conversations with CEOs and other business leaders, Mr. Fisher says one of Texas’s huge competitive advantages is its ongoing reform of the tort system, which has driven litigation costs to record lows.”

Now, if that is not good enough for you, Texas is looking at further reigning in its Medicaid costs. After a recent special legislative session, the Texas legislature voted to allow state officials to petition the Obama Administration for a special waiver so that the Texas could better design its own benefit package.

In particular, Texas would like to be able to do things like introducing co-payments for those on Medicaid in order to establish “a culture of personal responsibility and accountability” while moving more people from consuming state resources and into the private insurance market.

While there is a great deal of skepticism that the Obama Administration will approve this expansive waiver, the Texas legislature’s effort is a sign of the times. Governors across the country are looking for more flexibility with their Medicaid plans so that costs can be contained.

As has been mentioned in previous blogs by the Buckeye Institute, Medicaid is a big issue right here in Ohio. So every victory for another state in gaining better ability to deal with their issues is also a potential victory for Ohio as it looks to the future and towards additional reforms besides what the Kasich Administration has put forward in its budget.

The takeaway from all this? Well, beyond “Texas Rocks!”, the idea that a state can make itself attractive to the private sector during tough times is a testament to what good, long-term policy planning can accomplish.

Low taxes, limited regulation, low torts costs and a controlled Medicaid program are all great ingredients that have put some real spice in Texas’ special jobs sauce.

While not everything Texas has done can be replicated in Ohio, that which can should be. We don’t need to be a clone of the Lone Star state, but we probably do need to grab a few of their ingredients for success and add them to our own pot of chili.

Greg R. Lawson

About Greg R. Lawson

Greg R. Lawson is the Statehouse Liaison and Policy Analyst with the Buckeye Institute
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