Report: Texas is the top state for economic performance

(The Center Square) — Texas ranks as the top state in the country for economic performance, according to a new report.

The 2021 Rich States, Poor States report compiled by the conservative American Legislative Exchange Council (ALEC) ranked the Lone Star State No. 1 for economic performance and No. 9 for economic outlook, which is up from No. 15 in 2020.

Texas’ top tanking for economic performance is attributed to the state’s strong cumulative gross domestic product (GDP) growth, increased population, and non-farm employment growth, according to the report.

ALEC graded each state based on 15 equal-weighted criteria, which include tax rates, tax burdens, and the state employment regulations.

“The trends highlighted in Rich States, Poor States tell a story of the free-market ideals that win for taxpayers, and the consequences that follow when they’re ignored,” ALEC CEO Lisa Nelson said in a statement. “Rich States, Poor States economic outlook scores are a leading indicator of what’s to come.”

One area Texas has made major improvements in is its tax expenditure limits, according to the report. Texas ranked between 13th and 15th for 11 consecutive years in the category before leaping to 3rd overall in 2021.

The state’s constitution places four limits on state expenditures: a debt limit, a welfare spending limit, a pay-as-you-go limit, and a tax expenditure limit.

Article 3 of the state’s constitution requires that welfare spending for needy children and their families not exceed 1% of the state’s budget. Similarly, Article 8 places a limit on how much the state can spend on certain agencies. Some appropriations that are not mentioned in the constitution are also subject to the limit. These include sales tax, motor vehicles taxes, franchise taxes, and cigarette and tobacco taxes.

Using the latest census data, the Lone Star State experienced 32.4% population growth between 2019 and 2020, according the Texas Demographic Center, marking the largest population growth in the U.S.

Texas is set to add two congressional seats to its delegation.

“The new census numbers and the congressional reapportionment to follow confirms Rich States, Poor States findings: People are voting with their feet. They’re headed to opportunity states,” Nelson said.

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