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Economists attributed Texas’ economic success to factors that have little to do with the political party that controls the state.
The Texas Republican Party for decades has credited its policies for the “Texas Miracle” that is the state economy, which has grown faster than that of every other major state over the past 25 years. Throughout the campaign and in the hours following Election Day, those same Republicans warned a Democratic takeover would spell an end to the state’s economic success.
Texas Tech University regent and GOP megadonor Cody Campbell warned Tuesday’s result would “gut the great Texas economic miracle.”
And outgoing Lt. Gov. Dan Patrick in his concession statement said Texas Democrats’ “socialist policies will fail, as they have in every country in the world.”
Economists and political observers, however, say Texans should not expect the fundamentals underpinning the state economy to change any time soon.
“The Democrats knew that winning statewide would mean convincing voters and employers that Democratic control would not mean a wholesale rewriting of the state’s successful economic model,” said Brandon Rottinghaus, a professor of political science at the University of Houston.
Economists attribute Texas’ economic success to factors that have little to do with the political party that controls the state. That includes its large population, diverse industrial sectors, a natural endowment of resources like oil and gas and the geographic advantages of its size and location along the Gulf of Mexico.
“There is a lot about the trajectory of the Texas economy in recent decades that comes down to fundamentals about Texas itself,” said Jake Bradt, an assistant professor of business, government and society at the University of Texas at Austin. “You, of course, need the right policies in place to incentivize and encourage the growth we’ve seen in a lot of key sectors in the state.”
One of the primary draws for businesses to Texas has been the stability of the state’s economic and corporate policies, which will not be easily changed, Bradt said. That includes the state’s low regulation environment for businesses and property use, a constitutional ban on a state income tax and wealth of economic development incentives for companies seeking to build in the state.
Throughout the decades of Republican control of Texas, Democrats and Republicans also remained largely aligned on supporting the state’s economic development, Bradt added.
Recent economic policy passed under Republicans — such as bans on state income and capital gains taxes, efforts to lure corporate headquarters from other states and property tax reform — will be difficult to undo in a divided state government with the GOP still controlling the Senate.
“What we’re really seeing now is a change in who is enforcing the rules in this economy more than a change in the rules,” Bradt said. “You can’t understate the significance of what happened (this week) … but big statutory changes are likely to be difficult to get through.”
The politics of business
Democrats are inheriting a state government with a balanced budget and a healthy rainy day fund they intend to use on their own spending priorities. That will require economic growth to continue, translating into tax dollars that can be spent on Democratic priorities, said Sriram Villupuram, a University of Texas at Arlington associate professor of finance.
“They’re going to keep some of the golden goose roaming around, laying those golden eggs, and they will try to bring some of their own ideas in,” Villupuram said.
Rottinghaus said Democratic campaign messaging reflected as much, seeking to assure voters the party would be good stewards of the state economy while also addressing affordability concerns.
“I think the Democratic victories look less like a rejection of the Texas Miracle and more of an effort to revise it around contemporary issues like affordability and accountability,” Rottinghaus said. “The campaigns didn’t move in the direction to reject it outright, they seemed to want to reframe it.”
The rule enforcers in the Texas economy are largely the heads of departments and agencies that Hinojosa will appoint. Those appointments must be approved by two-thirds of the Senate.
The governor-elect has promised to build a “postpartisan” administration.
Senate Republicans are already promising to serve as a check on Democrats in state government.
Source: Texas Tribune BY Paul Cobler
Photo: Industry in Pasadena on Sept. 1, 2026. The eighth-largest economy in the world, Texas enjoys strong economic advantages regardless of the party in charge in Austin. Jon Shapley for The Texas Tribune
