Texas accounts for 17 percent of U.S. exports and has been the No. 1 export state since 2002. Those are fun facts — or should be since, at their core, they’re about money.
They’re among the facts in the Texas Comptroller’s Biennial Revenue Estimate, which is a lot more interesting than its title suggests.
We should be excited about our state’s export ranking. Exporting is an important measure of an economy’s strength.
Also, it should not go unnoticed that Texas became the No. 1 export state long before discovery of (cue angelic music) the Eagle Ford Shale. The Texas economy isn’t dependent entirely on its oil boom and, therefore, shouldn’t implode just because oil prices fell.
Texas’ diversified economy explains partly why the first biennial revenue estimate of new Comptroller Glenn Hegar’s comptrolling career wasn’t Henny Pennylike just because oil prices are down. Hegar forecast a $7.5 billion revenue surplus from a “moderated yet expanding Texas economy.” The oil downturn is just the moderating influence on expansion — not the end of days.
What a refreshing change from Hegar’s predecessor, Susan Combs, who infamously lowballed the 2011 estimate by $11.3 billion. For those who have forgotten recent history, the giant wave of Eagle Ford revenue hadn’t quite reached the state treasury by January 2011. But it could be seen headed there by anyone not working for Combs.
Clearly, biennial revenue estimating can be as woefully inexact a science as a comptroller makes it. But it’s also the mechanism that limits how much the Legislature can spend. So, an inexact few billion here, an inexact few billion there and pretty soon you’re talking real power, especially if there’s a method to a comptroller’s mad inexactitude.
Hegar appears much better suited to the job than I or the Caller-Times Editorial Board expected. Our expectations were low because during the election campaign he emphasized noteworthy comptroller nonessentials such as his enthusiasm for gun rights and his opposition to abortion.
But apparently he got an amazing amount of comptrolling done between taking the oath of office on Jan. 2 and Monday. Sure, the bulk of the actual work is done by a professional staff. But Hegar made it his business to seek advice from lots of officials from lots of industries, including but not limited to petroleum. For example, he heard plenty from retail, tourism and non-petroleum manufacturing.
As for oil, the revenue estimate reflects a careful review of Texas’ extensive history of oil price fluctuations during which fortunes were made, lost and remade — and during which the sky never fell.
He also took a savvy step that, according to one staffer, the old-timers had never seen taken before by a comptroller: He mustered every former comptroller staff revenue estimator he could find — retirees, people who had moved into the private sector or academia, longtimers still on staff — and picked their brains. If it sounds like a no-brainer, why didn’t previous comptrollers think of it?
What he came up with was a forecast affected but not held hostage by falling oil prices, which is reflective of the diversified Texas economy. In our part of the state, a lot of new infrastructure and diversification has happened since the start of the Eagle Ford that won’t be derailed by an oil price bust. Drilling can’t help but be affected. But just about everyone else is positioned to benefit from lower prices. Refineries have been retooled to process ultralight ultrasweet Eagle Ford arriving from a huge network of already drilled wells, pipelines have been installed from field to refinery, and other industries lured here by cheap Eagle Ford energy are building plants that may operate on cheaper-than-expected Eagle Ford. Lower fuel prices mean lower freight prices, which mean lower prices for transported goods.
The refineries will refine whether oil is cheap or expensive. They will pass the feedstock price to their customers like they always do. And if their feedstock price is cheaper, customers at the pump will have more to spend on other things.
Reporters asked Hegar more than once whether his estimate was conservative. His response was that he wasn’t trying to be conservative, just accurate. He also promised to revise the estimate as often as necessary to remain accurate.
Candidate Hegar displayed a video of himself firing an AR-15 rifle that appeared suspiciously to be fully automatic. It’s early in Comptroller Hegar’s administration, but so far he’s hitting the bull’s-eye.
Contact Tom Whitehurst Jr. at firstname.lastname@example.org or 361-886-3619. Join him on Twitter @WhitehurstJr.
This article was written by Tom Whitehurst from Corpus Christi Caller-Times, Texas and was legally licensed through the NewsCred publisher network.