FORT WORTH - The Texaseconomy should remain stronger than the rest of country as recession fears set in elsewhere, according to a panel at the The Bond Buyer's12th annual Texas Public Finance Conference.
Bernard Weinstein said the Lone Star State's economy continues to outpace the rest of the country.
"For the past few years, Texas has been our economic superstar with growth two to three times the national average," said Weinstein, who is director of the Center for Economic Development and Research at the University of North Texas.
"The recession of 2008 is with us, and while I hope it's short and shallow, I'm a little less optimistic about everyone coming through unscathed," he said. "Although Texas has so much momentum at the moment that I believe we'll be able to withstand the rough seas of the next 12 to 18 months."
One example is the town of Argyle, about 30 miles north of Fort Worth.
Paul Lyles, chief financial officer of the Argyle Independent School District, said the district's current enrollment of about 1,750 is projected to reach 16,000 in 20 years.
Ahead of the ISD's last bond sale, Lyles said some rating analysts questioned whether the growth within the district remains at the high pace.
"It may be bad elsewhere with talks of a recession, but things are still good where I'm at. I hear the hammers every day," Lyles said. "The trucks are still going by all day long."
However, Dwight Burns, a senior analyst at Moody's Investors Service, said one of the common themes being brought up recently by Texas issuers is the slowdown in the number of residential building permits.
"It seems there's a lot of supply and not as much demand except in some of the high-growth areas," Burns said.
And Weinstein said the Texas economy is doing well creating new jobs, adding almost a million new jobs since 2004.
"Even in a slow economy we've been outperforming the nation," the economist said. "While national unemployment levels are around 5%, unemployment in the Dallas-Fort Wortharea is about 8 basis points lower at 4.2% with the state at about 4.5%, a full half a percentage point lower than the national average."
Weinstein also said spending in the defense manufacturing industry is up as is the energy sector, both of which help the Texas economy.
"We're standing here now in the middle of the Barnett Shale and 10 years ago no one had heard of this thing that's pumping billions of dollars into the north Texas economy," he said. The Barnett Shale is an approximately 5,000-square-mile natural gas field stretching between Dallas and Fort Worth that could be the largest onshore natural gas field in the U.S.
Again bucking the national trend, while new-home sales fell about 50% nationwide the last two years and existing homes sales declined by about one-third, Weinstein said: "The picture here in Texas is very different, 2006 was a record year for home sales and last year was the second-best ever."
Although rapid residential growth continues within the Argyle ISD, it has added has virtually no commercial development, Lyles said.
"We still don't have a Sonic," he said, referring to the fast-food chain. "We'd like to see a Wal-Mart or strip mall type of development come in, but they don't build until the residential development is in place."
Lyles said there are two smaller subdivisions under construction within the district and two larger developments, one with about 5,000 homes, have been designed and are ready to start building.
But until the development is built it's hard for the school district to keep up with growth in its student population.
As a result, Lyles said it is hard to explain to people moving to the area that the district needs additional sales tax revenue to get ahead of the enrollment gains and build more schools.
"With these new homes, the school-age kids keep coming and come before we have the revenue and bonding capacity to build new schools, so we need to find a balance," he said.
Lyles said the district has experienced about 3% to 4% growth in each of the last few years, but a jump of 20% or more in one year may come soon. q
