Luke Bellsnyder Special Contributor
With just weeks to go in the Texas Legislature lawmakers are busy focusing on issues that matter to their local communities. With more than 7000 bills filed this year some might have lost sight of the big picture and the collective effects of individual proposals on the states job force. Stepping back to survey this Legislatures potential impact on jobs shows the Texas job machine might be in danger of death by a thousand cuts.
The very economic pillars that are helping Texas weather the global economic storm low taxes a rational legal environment and economic development incentives are all under assault at the Capitol. Financial Times CNBC and Site Selection Magazine rank Texas as the strongest economy and the best state to do business but that standing cant last unless lawmakers save our competitive edge from dying a slow death.
Energy prices and policy are central to Texas economic health. Electricity is the single greatest cost for most manufacturers. Some energy bills circulating the Legislature might only cost a homeowner a few dollars a month but without care the same proposals can cost a manufacturing facility millions. And that costs jobs.
Access to affordable energy is further compromised by an air proposal that would limit manufacturers ability to generate their own power which eases the burden on the public electric grid. The well-intentioned legislation essentially closes the door on economic expansion by prohibiting construction of power generation where Texans need it most. Texas doesnt need air proposals that would choke economic progress when existing state and federal regulations are dramatically improving Texas air quality.
Low taxes are an oft-cited reason employers bring jobs to Texas. Its no accident that Texas is home to more Fortune 500 companies than any other state. Yet only two years after Texas adopted a sustainable low-rate broad-based business tax some want to abandon the new tax and resurrect a system where mostly capital intensive businesses which drive the economy shoulder the tax. The new broad-based tax should be allowed to work to keep Texas competitive.
Weve also seen many proposals to raise local sales taxes fuel taxes and water fees (by as much as 150 percent). Increasing the cost of doing business and the price of everyday goods and services undermines the ability of Texas companies to compete in any marketplace. Tax proposals might seem narrow or local in scope but individually they erode the fiscal environment that makes Texas attractive.
Undoing years of lawsuit reforms will leave another ding on the states economic engines. As seen on TV personal injury lawyers are dedicated to finding new ways to sue. Some are pushing to lower the causation standard for mesothelioma cases so low that employers might be forced to settle even if theyre not at fault for an illness. Other lawsuit-related proposals might discourage businesses from bringing jobs here by expanding lawsuits against property owners and increasing health care costs. Texas reputation for common sense legal reforms is in serious jeopardy.
To attract more jobs to Texas lawmakers should extend the Texas Economic Development Act also known as Chapter 313 which allows school districts to offer tax incentives to attract economic development projects. Chapter 313 abatements were part of the economic development packages that attracted the likes of Toyota in San Antonio and Caterpillar in Seguin. Renewing Chapter 313 keeps an important economic development tool in the Texas toolbox.
As the global economy contracts Texas is indeed performing better than other states and not by accident. But Texas employers especially manufacturers and the 900000 high quality jobs they provide are not immune from the collective consequences at the Capitol.
Even before any ominous legislation from this session becomes law Texas is hemorrhaging jobs. In March alone Texas lost 47100 jobs; more than 25 percent of those were manufacturing jobs. Increasing energy costs and taxes undermining legal reforms and eliminating economic incentives signal a slow death of the competitive edge in Texas. We may boast the strongest economy in the nation today but it remains to be seen if this Legislature leaves a legacy that helps to keep it that way.
Bellsnyder is executive director of the Texas Association of Manufacturers.
