Texas Cities Face Fiscal Squeeze on Prolonged Oil Rout, S&P Says

[Purveyor]

By Darrell Preston Jan 22, 2015 2:26 PM ET

The credit ratings of Texas municipalities could suffer if tumbling oil prices slow the economy of the second-most-populous U.S. state, Standard & Poor’s said.

Oil has fallen from more than $100 a barrel in June to about $46. That may cost jobs and tax revenue in regions of Texas where the energy industry dominates the economy, the New York-based credit-rating company said in a report Thursday.

“Oil price declines will temper the state’s growth prospects in 2015,” Oscar Padilla, an analyst with Standard & Poor’s, said in the report, which assumes oil prices of $50 this year. “The dampening effect that low oil prices will have on Texas’ growth could be magnified if oil prices decline significantly below our current assumptions and if those low levels persist well into 2015.”

more...

http://www.bloomberg.com/news/2015-01-22/texas-cities-face-fiscal-squeeze-on-prolonged-oil-rout-s-p-says.html

[Skittles]

1. guess they'll find out it wasn't the magic of repuke politics keeping them up

just oil

[Fred Sanders]

2. Apparently the oil industry is cyclical and cynical. Who knew?

[dumbcat]

4. I think most Texans knew

This is not the first rodeo.

[villager]

5. Most Texans certainly don't *vote* like they know...

n/t

[Fred Sanders]

6. Good thing the GOP dominated government planned for this cycle turn then and saved up some money from tax

revenue on the Oil that belongs to all it's citizens equally.

[dumbcat]

11. It is a good thing

http://www.texastribune.org/2014/12/11/lawmakers-set-7-billion-floor-state-piggy-bank/

The state’s savings account should hold at least $7 billion for the next three years to maintain the state’s high credit ratings and ensure the state is ready for an unforeseen emergency, a group of lawmakers decided Thursday morning.

The Joint Select Committee to Study the Balance of the Economic Stabilization Fund made the 6-0 decision in a six-minute meeting with no debate and little discussion. But the decision will have far-reaching consequences, paving the way for the start of an extra $1.7 billion in roadwork around the state while also potentially impacting how much lawmakers choose to spend during next year’s legislative session.

Normally, most of the state’s oil and gas production taxes go to the Rainy Day Fund. Before 2007, the fund’s balance had never topped $1 billion. Because of a recent surge in drilling activity in South and West Texas, the fund’s balance has quickly taken in billions of dollars. The comptroller’s office has projected the fund’s balance will be $8 billion in 2015.

During a special session in 2013, lawmakers passed a measure asking voters to approve sending half of the oil and gas production taxes that would normally go to the Rainy Day Fund to the State Highway Fund instead. The Texas Department of Transportation has said it has a $5 billion annual budget shortfall. Last month, 80 percent of Texas voters approved the measure, called Proposition 1.

Smart folks, those Texans.

[Fred Sanders]

12. GOP Texas about 1/12 as smart as Albertans, Texas has six times the population and half the money.

[dumbcat]

16. We were discussing Alberta?

Who knew? And who cares? I thought we were discussing Texas.

[Fred Sanders]

18. Done the math yet?

[dumbcat]

21. Why?

I don't care about Alberta.

[Fred Sanders]

15. What is the calculation, now that it is all going south?

[dumbcat]

17. You tell me

the future, you're so smart.

[Fred Sanders]

19. I need to consult with my dumb cat, get back to you.

[dumbcat]

20. When you are out of arguments

resort to personal insults and taunts.

I chose my screen name for a reason. And you just validated it again. Thank you, and goodbye.

[Purveyor]

7. Same with our auto industry. Everyone around Michigan knows the day will

come when auto sales plunge and layoffs begin. Just a matter of time but I think we are good for at least a couple more years barring some unforeseen event.

No one, absolutely no one, predicted this oil price collapse so one can never tell when the next shoe will drop.

[Fred Sanders]

9. Alberta, Canada has tens of billions of dollars in a Rainy Day Fund for just this kind of down turn,

created by a royalty on every barell of oil extracted.

Did Texas have similar long range planning?

Without doing any research I think I know the answer.

http://www.finance.alberta.ca/business/ahstf/

Improving Albertans' Quality of Life
Another positive quarter for the Heritage Fund
November 26, 2014

Over the first six months of the 2014-15 fiscal year, the Heritage Fund earned $1 billion in gross income and posted a 4.7 per cent rate of return. The Fund’s value at September 30, 2014 was $17.4 billion on a fair value basis. Read the Alberta Heritage Savings Trust Fund 2014-15 Second Quarter Update.

See the left-side menu above for more information about the Heritage Fund, or use the quick links below to access highlighted topics.

...................

That would be the equivalent on a per capita basis of almost $ 90 billion for Texas....

[dumbcat]

13. "Without doing any research I think I know the answer."

See post 11.

[Fred Sanders]

14. See math.

[Aristus]

3. Time to stop being a one-industry state...

n/t

[dumbcat]

8. It did ...

The Texas economy today relies largely on information technology, oil and natural gas, aerospace, defense, biomedical research, fuel processing, electric power, agriculture, and manufacturing.

http://en.wikipedia.org/wiki/Economy_of_Texas

Of the eleven major industries1 of the Texas economy, all except Information and Government experienced net job growth during fiscal 2011. Gaining industries included Mining and Logging, Construction, Manufacturing, Trade/Transportation/Utilities, Financial Activities, Professional and Business Services, Education and Health Services, Leisure and Hospitality, and Other Services.

http://thetexaseconomy.org/business-industry/industries/

[Fred Sanders]

10. That industry is political corruption, energy production is about 17% of GDP. That is a lot but it is 100 % of politics.

The Texas Governor is under criminal indictment!

[tammywammy]

23. If you're going to bash Texas at least get your facts straight

Rick Perry is no longer governor; Greg Abbott was sworn in Tuesday.

[Fred Sanders]

24. Currently indicted ex-Governor "Rainman" Perry, I stand corrected.

I insult corruption in Texas, who would have a problem with the good folks of Texas, who are the victims of the rampage of corruption?

[Populist_Prole]

22. I guess their low-wage, job-poaching "business friendly" model aint all that then

[ChosenUnWisely]

25. and we should care why?

Its Texas they made the mess they can live with it, TS.