Texas has suffered, just like other states, from a large decline in tax revenues from the recession, and it has come in the form of many parameters. Property valuations have declined, sales tax reciepts, the price of natural gas has been very low leading to huge royalty income declines, etc etc. Texas has been a leader forever in how to properly run a state, it is unfair to say it is due to spending. When you initiate projects and have the bottom of the economy fall out, you don't create more wastes by cancelling these projects, you plan for the future and complete them, even if it creates shortfalls. Texas is the second most populus state, yet has a shortfall of 10.2%. most populated states by rank and their budget shortfalls- 1. california 21.6% (8th largest economy in the world) 2. Texas 10.2% (10th largest economy in the world) 3. new york 15.9% 4. florida 20.2% 5. illinois 41.5% (Obongas state) 6. pennsylvania 15.6% 7. ohio 11.3% 8. michigan 9.2% 9. georgia 26.2% 10. north carolina 30.3% http://www.cbpp.org/cms/?fa=view&id=711 Here is an article from a week ago- http://money.cnn.com/2010/07/13/news/economy/california_texas_economy.fortune/index.htm