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Texas' economy growing better than Alberta's since 2014: study

Last Updated Aug 13, 2019 at 1:46 pm MST

PHOTO: The Fraser Institute

CALGARY (660 NEWS) – You’ve likely heard that Alberta is considered the Texas of Canada with its rich oil heritage.

However, a new study is showing our neighbours to the south are handling the oil crisis better than us.

The study, commissioned by The Fraser Institute, compared the economies of Texas and Alberta following the end of the recent oil boom in 2014.

Steve Lafleur with the Institute explains why they chose Texas for this study.

“It was probably the best pure state that we could come up with. This also does build off a previous study where we looked at how economic and fiscal performance in the two jurisdictions diverged during the boom.”

Once the numbers were crunched and put into graphs, the outcome wasn’t great for our province.

“While we are still a high-income jurisdiction, we’ve now become a fairly high unemployment jurisdiction with unemployment having peaked at over nine per cent,” said Lafleur.

According to the report, unemployment numbers in Texas have decreased in the last three years to below four per cent in 2018.

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The study also showed employment has grown in Texas from 2015 to 2018 by almost two per cent, compared to 0.6 per cent in Alberta.

If both economies relied on oil in the past, why are the numbers so different for Texas?

Lafleur said one of the big reasons is taxes.

“They (Texas) don’t have a state-level income tax. There were some federal income tax reductions in the United States plus the corporate income tax reduction. In Alberta, we have not only had a federal increase in the top personal income tax rate but we have also seen a provincial level increase from 10 to 15 per cent as well as a corporate income tax increase that was recently rolled back.”

On top of those tax rates, Lafleur pointed out that government spending in Alberta increased drastically since 2014 to around $805 per person, fueling years of massive deficits.

Texas on the other hand only saw increases of about $58 a person.

Lafleur adds that changes to taxes and government spending can help Alberta’s economy but so can a change in perspective.

“There’s this idea that if oil and gas prices aren’t at $90 or $100 a barrel we can’t balance the budget, we can’t have a strong economy. Those things just aren’t true. We look at the price of gas and it’s easy to think that that’s what’s driving all of our changes when I don’t think that’s really correct. I think that there are a lot of policy choices we can make that would have an impact on outcomes going forward.”

The study showed that other factors have benefited the Texas economy including growth in its technology sector.