AUSTIN – The Texas Public Policy Foundation’s Economist Dr. Vance Ginn testified today before the Texas Senate Transportation Committee on the interim charge recommending ways to compress or otherwise reduce the number of required inspections. Dr. Ginn also today released a new paper,Costs of Texas’ Passenger Vehicle Safety Inspection, examining the cost and effectiveness of the inspections.


“While the benefits are minimal, the costs are significant; the inspections have taken close to $2.4 billion out of the pockets of consumers over ten years,” said Dr. Ginn. “By eliminating the safety inspection burden, Texans will be given the opportunity to choose how best to spend their money to meet their needs and stimulate economic activity.

 
To read the paper, please visit: http://txpo.li/cost-of-texas-passenger-vehicle-safety-inspection


Vance Ginn, Ph.D. is an Economist in the Center for Fiscal Policy at the Texas Public Policy Foundation. 
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The Texas Public Policy Foundation is a non-profit, free-market research institute based in Austin, Texas.

By: Vance Ginn and Kiara Pillay 


Texas’ relatively low tax burden has helped create an economic environment that brings people worldwide and from other states here for the opportunity to prosper. This is evident by the state’s 4.7 percent unemployment rate that has now been at or below the U.S. average for 108 consecutive months. There is ample evidence that the Texas model works and must be advanced by passing conservative budgets and eliminating the costly business margin tax.


As an indication of Texas’ competitive standing with other states, the Tax Foundation’s recently released State-Local Tax Burden Rankings FY 2012 report compares this burden for all 50 states. To calculate state-local tax burdens, the authors gather Census Bureau data for state and local governments in 26 categories and then subdivide these into groups and account for tax exporting. Tax exporting is “the shifting of tax burdens from state residents to nonresidents” such as taxing restaurant meals and hotels. After accounting for tax exporting, the authors compute the total state and local tax burden as a share of total state income.


While these measures of a state’s tax burden have limitations, they provide valuable information about the aggregate level of state-local tax burden in a state. The U.S. average burden as a share of state income is 9.9 percent. Texas’ burden is 7.6 percent, which ranks 46th with 1st being the highest burden and 50th being the lowest, indicating the Lone Star State has the fifth lowest state-local tax burden. However, this was a decline from 47th lowest for FY 2011. Figure 1 provides a comprehensive map comparing the tax burdens for all states in FY 2012.

Figure 1: Texas Ranks as the 46th Lowest State-Local Tax Burden








​Source: Tax Foundation


Many of the least burdensome states, including Alaska (50th), Wyoming (48th), Nevada (43rd), and Texas (46th), unsurprisingly do not have an income tax and instead rely on other less burdensome forms of taxation to generate government revenue. Comparatively, California has similar resources and population sizes and demographics as Texas but vastly different governing philosophies that shows up in this report as California’s state-local tax burden ranks 6th worst.


Bottom line: The Texas model of low taxes and no personal income tax works well to keep a low overall burden on Texans, but as another Tax Foundation report recently noted the state ranks 41st worst for the corporate income tax from the burdensome business margin tax that must be eliminated. To do that, the principles of limited government and free market principles must be enhanced for a more prosperous future.

http://www.texaspolicy.com/blog/detail/texas-has-46th-lowest-state-local-tax-burden

AUSTIN – Today, the Texas Workforce Commission released Texas labor market data for 2015. The Texas Public Policy Foundation’s Economist Dr. Vance Ginn issued the following statement:


“Today’s jobs report exemplifies the diversity of the Texas economy that benefits from a limited government philosophy. Texas created 24,900 net nonfarm jobs last month for a streak of more jobs added in all but two of the last 63 months. Despite the last year’s economic headwinds such as the steep drop in oil prices that contributed to 33,600 job losses in the mining industry that is dominated by oil and gas jobs, the private services providing sector added 209,900 jobs for a total gain statewide of 166,900 jobs. This diversity of job creation contributed to the state’s 4.7 percent unemployment rate that has now been at or below the national average for 108 straight months.    

 
Texas faces headwinds from the worst declines in oil prices and the stock market to start a year along with fewer exports from a slowing global economy. But the combination of passing a conservative budget, historic tax relief, and leaving billions of dollars on the table last session was the right recipe that must be continued for more opportunities to prosper for Texans in 2016 and beyond.”  


Vance Ginn, Ph.D. is an Economist in the Center for Fiscal Policy at the Texas Public Policy Foundation. 


The Texas Public Policy Foundation is a non-profit, free-market research institute based in Austin, Texas.
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Here's my interview on KEYE TV regarding the most recent steep drop in oil prices and its potential effect on the stock market and Texas economy. 

By the end of trading on Friday, the New York Stock Exchange was down 391 points for the day, 1,437 points from two weeks ago. The reason: the plummeting price of crude oil and a faltering Chinese economy.

"There are some major headwinds moving forward," said Dr. Vance Ginn, economist for the Texas Public Policy Foundation. "We're almost in correction territory and when you look at the oil prices are down more than 20 percent since the beginning of the year which is what we call a bear market."

The price of crude oil has been a concern in Texas for months, as oil and gas companies lay off people. But for now, Dr. Ginn says don't panic about your 401k. "We're seeing substantial volatility, so this may not be the time to pull everything out," he said, adding it might be a good idea to wait and watch. Dr. Ginn says you should check with your financial advisor if you're nervous.

The bright spot right now is those low, low gas prices. At the Buccee's in Bastrop, KEYE TV caught up with drivers filling up. "At the high prices, it was 50 bucks. And now it's about 20, 30," said one man who was filling up his SUV.

Latrice Newton stopped on her way from San Antonio. "This is a wonderful thing for my budget. I live in San Antonio and I'm seeing $1.60 so to stop and see it at $1.44, it's great," she said.

But while gas prices might be freeing up some of your budget, Dr. Ginn says you might want to be putting that savings away. "It's important for Texans to be able to save for a rainy day just in case something does happen in the future," he said.

​http://keyetv.com/news/local/crude-oil-price-drop-hits-stock-market-hard

Don't miss this video of a panel I moderated recently on advancing the Texas model with a simple tax system. 

The Texas model of low taxes, no individual income tax, moderate regulation, and a good lawsuit climate has generated prosperity for many Texans. Despite these gains, is the state’s tax system with an onerous business franchise tax and burdensome local property taxes the most efficient? Join us as the panel discusses potential improvements to the state’s tax structure so that the budget meets the needs of Texans while providing an environment conducive to the greatest economic opportunity for them to succeed.

Featuring
Sen. Paul Bettencourt, Chairman, Select Committee on Property Tax Reform and Relief, Texas State Senate | Presentation
Scott Drenkard, Economist and Director of State Projects, Tax Foundation |Presentation 
Sen. Craig Estes, Texas State Senate
Rep. Chris Turner, Texas House of Representatives

Moderated by Dr. Vance Ginn, Economist, Center for Fiscal Policy, Texas Public Policy Foundation
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http://www.texaspolicy.com/multimedia/video/advancing-the-texas-model-will-a-simple-tax-system-drive-prosperity-po2016

Don't miss this video where I present the Foundation's Medicaid reforms that saves taxpayer dollars and provides better access to quality care and outcomes for recipients.

A supplemental spending bill passed by the 84th Legislature caused total state spending on health and human services (Article II) to exceed education spending (Article III) for the first time in Texas history. As the state’s Medicaid rolls continue to grow (even without the ACA Medicaid expansion), hospitals face looming federal funding cuts, and the state grapples with unprecedented healthcare costs, how can we stabilize the growth of state healthcare spending while improving access to and quality of care?

Featuring

Rep. Garnet Coleman, Texas House of Representatives
Dr. Vance Ginn, Economist, Center for Fiscal Policy, Texas Public Policy Foundation | Presentation
Camille Miller, President & CEO, Texas Health Institute | Presentation 

Moderated by John Davidson, Director, Center for Health Care Policy, Texas Public Policy Foundation
​http://www.texaspolicy.com/multimedia/video/uncompensated-care-medicaid-and-solutions-to-texas-health-care-crisis-po2016

Here's my interview on KEYE TV with video here: http://keyetv.com/news/local/falling-oil-prices-could-spell-trouble-for-austin.

For the last year and a half, drivers across the nation have enjoyed paying less and less for a gallon of gasoline. "Lower gasoline prices help us to have more money to go buy food or put food on the table," said Dr. Vance Ginn, economist at the Texas Public Policy Foundation.

But Dr. Ginn notes, here in Texas, that good news is countered by bad news. "If it continues to stay low, there is going to be some larger effects moving forward," he said. "Oil and gas is the lifeblood of the Texas economy, and really, the nation."

Eighteen months after oil prices began to slump due to a global oversupply and a strong dollar, Dr. Ginn is using the R-word on Texas cities that depend more on the oil and gas industry. "In Houston or Midland-Odessa, they're really going to struggle. And we could see more regional types of recessions," he said.

Texas has diversified its industries since the oil bust of the 1980s -- more tech in Austin, financial services in Dallas-Fort Worth. And if you just look at job growth numbers, all seems well. "Over the last year, Austin job growth has increased by 4.1 percent. That's pretty fast," Dr. Ginn said. But Austin, even though it's heavy on tech, can't hold out on oil and gas trouble forever. "There is less consumption," said Dr. Ginn. "There's a slowdown in hiring, things of that nature that also has an effect on Austin itself." Already, the state is seeing a dip in revenues coming from the oil and gas industry.

So while Austinites enjoy the low gas prices, remember, if it seems too good to be true, it probably is.

"Fourteen percent of the private economy being dependent on oil and gas activity across the state of Texas, you are going to see that spread across the state including in Austin," Dr. Ginn said.

This commentary originally appeared in Real Clear Policy on January 4, 2016.

President Obama recently signed a $1.15 trillion omnibus bill that included good, bad, and ugly items.
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The good was ending the oil-export ban, a move that's likely to keep gasoline prices low and stimulate economic activity and job creation. The bad was more spending on many frivolous items that will increase an already bloated $18 trillion-plus national debt. The ugly included extending production tax credits for wind and solar energy projects.

Ending tax credits and other subsidies for all energy production would allow entrepreneurs to operate within competitive markets, which in turn would best allocate scarce resources to meet our desires rather than government's. The shale boom provides a lesson in what market forces can accomplish in the energy sector.

As the economist Julian Simon noted, energy is the master resource. The abundance of energy has transformed the world, particularly since the Industrial Revolution, helping to eradicate poverty.

The shale boom epitomizes this success. Not too long ago, the geophysicist Marion Hubbert argued that oil production would eventually peak, given the finite amount of oil underground, which became known as "Hubbert's peak theory." While there is, indeed, a finite amount of oil underground, this theory overlooks the human ingenuity by which energy entrepreneurs created new oil and natural-gas production techniques.

One entrepreneur is George Mitchell, the technological father of refined fracking techniques. In the 1990s, he unlocked the oil and natural gas in shale rock. Another is Jim Henry, who applied Mitchell's techniques to tap the vast oil reserves in the Permian Basin. Bud Brigham is another; he used a new drilling technique that expanded by leaps and bounds the output from horizontally fracked wells.
These entrepreneurs and others helped provide an environment conducive to the shale boom of more affordable, portable fossil fuels. However, many of the cutting-edge, expensive production techniques weren't profitable during much of the 1990s and early 2000s with low West Texas Intermediate (WTI) crude oil prices.

Things began to change during the mid-2000s, when the prices of oil and natural gas steadily rose to profitable levels; prices plummeted during the Great Recession but rebounded following the Arab Spring in 2011. From March 2011 until September 2015, oil production per day went up 68 percent, to 9.4 million barrels, which remains near the record high in late 1970 of 10 million barrels and the latest high of 9.6 million barrels in April 2015.

This is all in spite of the roughly 60 percent drop in the WTI price since the summer of 2014. To the surprise of the Organization of Petroleum Exporting Countries (OPEC) and Russia, U.S. oil producers have quickly refined their drilling technology, which has helped to drastically cut production costs, and continued to produce in the most productive areas.

This drilling activity has been a bright spot in an otherwise dismal national economic recovery. The U.S. unemployment rate of 5 percent remains near what some consider full employment, but this rate is misleading. The labor-force participation rate remains near 40-year lows, and the broader underutilization rate is closer to a more realistic 10 percent.

Texas, where oil production per day is up 156 percent to 3.4 million barrels since March 2011, has been a major contributor to this shale boom. The state accounts for 55 percent of the increase in U.S. oil production during this period. And Texas has contributed to 48 percent of all new civilian jobs in the last eight years. Of course, these have not all been oil-and-gas jobs, as Texas is a highly diversified economy with less than 3 percent of the labor force employed directly by that sector.

​The solution for a more prosperous nation is to facilitate the ingenuity of entrepreneurs. That, after all, is what led to the shale boom.