Gov. Rick Perry made clear Wednesday that the decline of the financial markets, the national housing crisis and falling oil prices won't cause him to divert from an economic playbook that he believes has protected Texas from the rest of the country's troubles.

"I think we've made all the hard decisions," Perry said as he gathered some industry and labor leaders to discuss the economy. "Steady as you go, don't make any mistakes, don't go spend all the money."

Perry's supporters describe him as a governor who likes to do big things. But with the country in a recession, Perry is taking a decidedly doesn't-need-fixing approach to the Texas economy, which he considers one of his signature issues.

That could allow him to draw a contrast with U.S. Sen. Kay Bailey Hutchison, R-Texas, who is exploring a run for governor against Perry in 2010. Perry seems determined to link her to the national economic problems.

"Imagine the financial situation our country would be in had the federal government applied the same principles that have made Texas the envy of the nation," Perry said in an op-ed column that he wrote with Lt. Gov. David Dewhurst and House Speaker Tom Craddick, R-Midland, for Wednesday's Dallas Morning News. [HOT: Rep. Jim Dunnam says this is fantasy and Perry & Dewhurst are in Wonderland.]

Hutchison spokesman Todd Olsen said Wednesday that the senator was heavily involved in pushing tax cuts through Congress in 2001 and 2003.

Perry, who said he'll be looking for ways to cut taxes, has some helpful numbers to make his case that the Texas economy is working just fine. Employers created 230,400 jobs in Texas between October 2007 and October 2008, while the country was losing 1.1 million jobs, according to the Texas Workforce Commission.

But not all the numbers are rosy.

The Texas unemployment rate was 5.6 percent in October 2007, up from 4.3 percent a year earlier.

And although Texas has enjoyed multi-billion-dollar surpluses in recent years, legislative budget-writers are going to find much less wiggle room when they come to town next month.

The expected $2 billion surplus heading into the next budget could easily be consumed by the costs of hurricane recovery and growth in Medicaid rolls, and the state's new business tax is producing less money than expected.

Also, lawmakers have been able to build up the state's rainy day fund in recent years, but that could become considerably more difficult because the fund is largely dependent on oil and gas taxes.

Although Perry attributes the state's economic success in recent years to the low-tax, small-government, limited-lawsuits policies that he and other Republicans have pursued, Democratic state Rep. Garnet Coleman of Houston said the surplus is the product of rising oil prices during that time.

Coleman said the state can mitigate an economic downturn by improving public schools and making college more affordable.

"Businesses relocate not just because of the tax structure," Coleman said. "If they can't find the work force that they need, they don't go there."

[HOT: At least in the homebuilding industry, Perry's policies promote business at the expense of protecting the public. Under Perry, Texas has become the Mecca for unscrupulous builders who cut corners and then hide behind the State when serious construction defects cause homeowner disputes.]

Jason Embry, American-Statesman staff (jembry@statesman.com; 512-445-3572)
12/18/2008

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