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October 19, 2018

Volume 40, Number 29

UTAustin is without doubt one of the Austin areas most important economic engines.  (Years ago we made a speech titled If you want to stop growth in Austinmove the university to Amarillo!”)  So,how is UTAustin doing?  Especially, how does it compare with other peer institutions?  In the world?  How about this UTAustin rose ten points to be ranked #39 worldwide by one of the most respected global rankers of universities.  Impressive.

The editors of Times Higher Education World University Rankings (THEWUR) singled out Yale University and UTAustin for making major advances this year.  It attributed UTAustin’s leap to “significant increases in its institutional income and research volume.”  The ranking relies on a combination of reputation surveys and quantitative metrics in five areas:  teaching, research, research citations, international outlook and industry income.

It’s difficult to get detailed information on the specifics underlying THEWUR’s ranking but, according to UTAustin, it “correlates with recent expansions in research funding, research reputation and academic reputation.”

UTAustin ExecVP/Provost Maurie McInnis said investments in faculty compensation and interdisciplinary research, combined with the addition of the new Dell Medical School, are enhancing UTAustins research impact.  (If memory serves us correctly, UTAustin’s rankings have suffered in the past because most peer institutions boasted medical schools.)

And UTAustin’s future appears even brighter.  McInnis said “by placing greater emphasis on doctoral programs and strategic hiring, the university aims to become even stronger in years to come.”

Other Texas universities placing in the ranking include Rice University (#86), TexasA&M (#159) and UTDallas(lumped into a range of #201-#250).  UTAustin has done well in several other global rankings:  Center for World University Rankings, #31 … USNews&World Report’s latest ranking of Best Global Universities (#32) and Nature Index’s ranking of #23 in the world for scientific research.

As its stature grows nationally and worldwide (and this growth is expected to continue surging), UTAustin enhances much of what makes Austin, Austin. Read more →

September 14, 2018

Volume 40, Number 24

The Texas economy especially as it impacts the Austin area is so strong it has triggered an action not taken in 30 years.  State government, so important in Austin, is benefitting significantly from what is happening throughout the state not to mention the impact of the redhot Austin economy.  All this is due to betterthanexpected economic and revenue growth around Texas.

We’ve long maintained the Austin area is uniquely positioned economically.  Steady government paychecks provide a solid underpinning for the area.  In general, these jobs are not subject to ups-and-downs or twists-and-turns of the private sector.  So, add to this, the Silicon Hills of Austin is right now riding the crest of tech-driven private sector job growth, that is the envy of the rest of the nation.

Consider this:  the skyrocketing Austin private sector tech economy is set to get a rocketboost from normallystaid state government.  What?  How’s this?  The Texas Legislature that sets budget parameters for the many state agencies in Austin doesn’t even meet for almost four months.

Texas Comptroller Glenn Hegar, by law, is the state official who decides money guidelines the legislature must follow.  He says to legislators “this is how much money you will have to spend during the next two years of the biennium and you cant spend any more than that.”  Last October, he issued his forecast for fiscal year 2019.

For the first time other than a legislative session in 30 years, the State Comptroller has increased his certified revenue estimate he made last October.  And it was a big increase.  Remember, the Texas Legislature meets only once every two years for 140 days.  So its a big deal for setting a twoyear budget.

His reason for saying state agencies will have more money to spend starting in 2019 than earlier predicted are several fold:  sales tax revenue is up 10.5% over FY 2017 … oil/gas natural gas production tax revenue is up 56.1% … general revenue-related revenue, up 9.3%, etc.

The legislature will have more money to dole out.  If state agencies get bigger bucks, it will mean bigger paychecks circulating through the Austin economy.  A nice future boost. Read more →

August 3, 2018

Volume 40, Number 18

Are there Chinese and Russian spies in Austin?  Preying on Austin tech interests.  According to one report, the FBIs Austin office may think so.  It is believed Austin may be the target for cybersecurity espionage due to its concentration of tech companies that could harbor important data worth stealing.  Further, there is concern that some Austin tech operations are unprepared to deal with this espionage.

Buried in the next-to-last paragraph of a very lengthy and starkly detailed July 27, 2018 report in Politico magazine is the reference that grabbed our attention.  After recounting what was called “a fullon epidemic of espionage on the West Coast by China and Russia, aimed at science and technology companies, the report said mid-sized cities with thriving tech industries will likely see an uptick in counterintelligence cases.  Then, came this quote:

One former intelligence official noted that the FBIs office in Austin, Texas, has built up its counterintelligence capacities.”  There you have it.  Of course, the FBI is not talking for obvious security reasons.  But it makes sense.  And it’s not because of the logical big targets in Austin like Dell, Apple, Google, etc., but also tech startups that are especially vulnerable.

“Russian and Chinese operatives have an easier time infiltrating organizations without any security systems or hierarchies in place,” noted the report.  “These services like penetrating young companies and start-ups because its always better to get in on the ground floor when seeking to pilfer valuable information or technology.”

The espionage efforts by the Chinese and Russians are diverse and complicated.  For example, here in Austin there is a treasure trove of data at UTAustin where research is conducted on vital topics, such as energy and computer technologynot to mention defense contracts.  UTAustin probably has massive precautions in place.

Now with the allimportant Army Futures Command establishing its headquarters in Austin, its entirely possible Russian and Chinese espionage efforts will ramp up in Austin exponentially.  The Army, too, will have extensive safeguards.  But remember:  spies don’t just concentrate on hacking, etc., spies also compromise individuals who may have access to what they want.  Get ready:  espionage will expand in Austin. Read more →

July 27, 2018

Volume 40, Number 17

Dear [MM_Member_Data name=’firstName’],

As the state of Texas goes, so goes Austin.  Some think the vice versa is more true.  But since Austin is the home of the massive state government that must keep up with the impressive growth of Texas, its important to examine the economic health of the Lone Star State.  Especially as the Texas Legislature will meet in Austin in less than six months for its everytwoyears decisionmaking sessionAnd, legislators will have a lot of money to spread around.

When you think about it, it’s really impressive how the amazing Texas economy is churning out enormous amounts of money to run the government.  And, unlike the vast majority of other states, Texas is doing this without a state income tax.  The single largest source of revenue for Texas is the General Sales Tax instituted in 1961.  And, get this, the state sales tax rate of 6% has not increased since 1990.

The booming state economy has caused the sales tax source of revenue to zoom almost 10% since last year at this time.  As a result, State Comptroller Glenn Hegar now predicts legislators will have more than $110 billion (with a b”) to spend during the next biennium — $2.8 billion more to spend than originally anticipated.

Now then, enough about mind-numbing big bucks.  Let’s talk about another economic factor.  Separate from the sales tax, Texas has “benefitted from rising oil prices and production,” Hegar pointed out.  This translates simply into a 2019 balance in the states savings account – the Rainy Day Fund” – growing to almost $12 billion, the largest ending balance in the states history.  Talk about economic stability.

Not only that.  After voters approved a constitutional amendment in 2015 to increase funding for highways, the adopted formula means $2.5 billion will be allocated to highways from collections this 2018 fiscal year.  This is huge.  And it is occurring because of the increased sales tax receipts.

At least one group is urging legislators to “buy down some existing taxes” with additional funds. (Explanation:  Back in 1992, the legislature allowed municipalities and special districts, such as transit authorities, to levy local sales taxes.  The maximum municipal rate is 2%.  This is why some sales taxes are as high as 8.25%, depending upon the locale.) Read more →

July 20, 2018

Volume 40, Number 16

The UTSystem should be nearing the end of its search to replace retired Chancellor Bill McRaven.  There is no stated deadline and former UTAustin President Larry Faulkner is a very capable interim replacement.  But, the Texas Legislature convenes in Austin in less than six months and a new Chancellor needs time to get uptospeed on critical issues.  One question:  what should the Board of Regents pay to attract a worldclass caliber candidate?  Do the Texas Aggies hold the key to that answer?

No doubt about it, the job of UTSystem Chancellor is a tough one, overseeing as CEO 8 academic institutions (including UTAustin) and 6 health institutions that include 6 medical schools, 2 dental schools and 8 nursing schools, among other professional programs.  Consider this:  The UTSystem confers more than onethird of the states undergraduate degrees and educates over half of the states healthcare professionals.  This is a major responsibility.  And, ancillary to this, the newly-named Chancellor will become an influential citizen of Austin.

So, what should the Regent’s search committee pay to get someone of that caliber?  Start off thinking of an amount north of a million dollars a year.  The Chronicle of Higher Education released a 2016-2917 national salary survey this week.  TexasA&MSystem Chancellor John Sharps salary was among the nations highest at $1.29 million for acting as CEO of 11 institutions.

Even the president of the single campus TexasA&MUniversity in College Station, Michael Young, pulls down a $1 million annual salary.  By the way, UTAustin president Greg Fenves turned down a million dollar salary offer when he was hired in 2015 and now makes $762,220.

The precedent has already been set.  When he retired as UTSystem Chancellor earlier this year, McRaven earned just more than $1.5 million in combined base pay, bonuses and other financial perks during the 2017 fiscal year.

The Board of Regents will hire the new Chancellor at whatever salary it takes to attract its chosen candidate.  The search committee is headed by current Regents Chair and Vice Chair Sara Martinez Tucker and Jeffrey Hildebrand.  They are joined by two former chairs, Don Evans and James Huffines and a former vice chair, Paul Foster. Read more →

July 6, 2018

Volume 40, Number 14

In this holidayshortened week, it seems appropriate that a number of short items should dominate this edition of the newsletter.  Not that they are any less significantIts just they can be covered with a few sentences or paragraphsTake the now-defunct ban on single-use plastic bags as our first example.

It didn’t take long after the Texas Supreme Court ruled local bag bans ran afoul of state law for the state attorney general to take action.  (Austin has had a bag ban since 2013.)  This week, Attorney General Ken Paxton officially notified Austin and other Texas cities their local ordinances were illegal and therefore unenforceable.

To make sure the word got out, Paxton directly notified the City of Austin, Mayor Steve Adler and the 10member Austin City Council, then he issued a press release to the media.  Now what?  The ruling that banning plastic bags is illegal as of this moment should stand until some counter action – if at all – is taken.

 

 

It may not be long now before you see electricpowered, autonomous transit vehicles circulating in Downtown Austin.  It will be a pilot program instituted in two phases technology testing and actual service runs.

The testing by Capital Metro and the City of Austin Transportation Department could begin later this month and take up to 60 days.  During the second phase, proposals will be evaluated to lease six vehicles, carrying up to 15 passengers, to run in the pilot program for 12 months.

CapMetro thinks the fleet of vehicles will be in operation on downtown streets in late fall.  Not to worryCapMetro says operators will be on board while the autonomous electric vans are being evaluated and running in service.

 

 

For Austin airport travelers, and those picking up arriving passengers, the renovated cell phone lot is offering this month a Texaco fuel station, 120 parking spaces, a convenience store (serving tacos, BBQ, etc.) and electric vehicle charging stations.

Read more →

June 29, 2018

Volume 40, Number 13

As Texas grows, so grows state government.  Right?  Uhhhh, not necessarily.  Government payrolls are a significant part of the Austin economy.  Always have been, always will be.  But, as the rest of the Austin area economy expands at one of the fastest rates in the nation to what extent is government keeping pace?  Bottom line:  private sector jobs are quickly growing in the Austin area.  And the jobs in the government sector are not in step.

This is not to downplay the role in Austin of steady government paychecks.  Far from it.  In fact government sector jobs are more than 17% of all jobs in the Austin area.  (These stats are lifted from a June report by the Austin Chamber’s VP/Research, Beverly Kerr.)  Other cities would die for such a solid job base.  Instead, the current economic situation is a testimony to the private sector that it is outshining the government jobs in the metro.

Without relying on the 17% government jobs (because government job growth was essentially unchanged) the Austin area added 33,900 net new jobs in the 12 months ending in May.  Let this sink in.  This growth of 3.3% made Austin the third fastest growing major metro in the US.  And it was basically in the private sector.  For the nation, private sector growth was 1.9% for the same period.

A half-century ago, we were quoted in TIME magazine as saying “Austin is a state government, state university town.”  True, then.  Not so much, now.  And it has occurred in less than one lifetime.

By most measures, the Austin area boasts of one of the most vibrant economies around.  And private sector jobs have been the defining difference compared to the area’s historical past.  This is a major economic sea change that has taken place in front of your very eyes.

Oh, by the way, all this is underscored when you understand that almost as soon as new jobs are created in the private sector, they are filled.  In May, Austins outstanding unemployment was at an eyepopping 2.8%.  Economists will tell you this is full employment – anyone who wants a job can get a job.  Other major metros in Texas are also doing well.  Their unemployment percentages are solid – ranging from 3.2% in San Antonio to 4.2% in HoustonDallas and Fort Worth were at 3.4% in May.  These are all better than the unemployment rates seen a year ago. Read more →

June 15, 2018

Volume 40, Number 11

All you have to do is check the skyline to know that downtown Austin is undergoing amazing change.  But, theres more to this change than skyscrapers.  The Downtown Austin Alliance (DAA) points out that within the last few years investments have also been made in parks and green spaces, a new Central Library, a flood diversion tunnel, roadways and transit planning, and a stateoftheart teaching hospital.  But, what does DAA envision for the future?

DAA took a long-term view toward downtown’s future.  Long-term?  Yeah, they referenced 2039, when Austin will be 200 years old.  DAA went through an extensive process to arrive at a vision.  “We engaged 3,000 people in 75 ZIP codes, using surveys, focus groups, interviews and events to learn their aspirations for downtown,” said Mike Kennedy, Chair of the Downtown Austin Vision Steering Committee.

“The Downtown Austin Vision is the north star to guide the future of downtown toward the communitys values and aspirations for a thriving, welcoming, vibrant and connected downtown,” reads the vision report.  It also calls it “the downtown you will always love.”

Lofty words.  And its priorities seem to cover all the bases, under four headings:  Thriving CenterWelcoming PlacesGrowing Neighborhoods … and Leading Mobility.  All worthy subjects.  But referenced in general terms, with few specifics.

There is some precise language, without detail.  Such as:  “provide a variety of options for people to get to and from downtown, including a robust transit network in central Austin.”  See what we mean.  No mention of what this would look like.  Or “create extremely viable and walkable streets.”

Other phrases:  improve the experience and availability of parking in downtown while planning smartly for the future position downtown for a successful retail futurebroadly address the needs of people experiencing homelessness, and the associated impactsmake downtown a familyfriendly place to live and visit.

To be fair, this “vision” is not intended to be a blueprint for construction.  All bases seem to be touched.  But, the devil is in the details.  And the details will be debated ad nauseum.  Stay tuned. Read more →

June 8, 2018

Volume 40, Number 10

You hear a lot about the Austin area being inundated by newcomers from California, New York, Boston, etc.  And its happening.  But you dont hear much about your fellow Texans leaving their hometowns to settle down in the Austin area. The common denominator is jobseeking. This is an important, often overlooked, part of the growth in the Austin metro.  And, in some cases the peoplemoving event is a twoway street.

According to a new study by a career-analysis website, Glassdoor, the biggest supplier of jobs for newcomers to Austin is tadahh, wait for it the DallasFort Worth (DFW) metroplexHouston and San Antonio are next.  New York City and Los Angeles follow in the pecking order.

Glassdoor measures job applicants.  The availability of wellpaying jobs in Austin is the lure, which we’ve chronicled for you for years.  And, of course, it’s easier to uproot and move down the road to attractive Austin, rather than make a cross-country move.  So, in that sense, it makes sense for ambitious Texans, seeking a better situation, to consider a move to the nearby Austin metro.

Not all Austinites stay here (I know, I know, it’s hard to believe).  And you must (grudgingly) admit, the much larger D-FW metro is also a pretty good area.  While Glassdoor reports DFW attracts the most job applicants from Houston and New York City, Austin comes in at #3, just ahead of Chicago and Los Angeles.  Aside from Austin, there’s a pattern here:  big city attracts residents from other big cities.  (Maybe, for some Austinites, it’s trying to “move-up” to the big city life.)

Another point that needs to be made:  weve always mentioned Austin area.  This population influx is not limited to the Austin city limits.  As we have regularly referenced, the nearby communities within the Austin metro offer more affordable accommodations and civic amenities such as nearby schools, quality neighborhoods and access to all Austin offers in terms of quality of life.  It’s part of the big picture.

Speaking of smaller Texas cities, didja know the most prosperous city in America is a small town in Texas?  And, a nearby city is also in the Top TenOdessa as #1 and Midland as #10 are stories unto themselves.  But, these boomtown oil patch Texas success stories bring with them a number of trade-offs.  Check out the next item. Read more →

April 27, 2018

Volume 40, Number 4

Even as oil and gas production enjoys another resurgence in Texas, the state has issued a positive report on solar powers momentum as a separate energy source.  “The longterm prospects seem as bright as the Texas sun,” said Glenn Hegar, Texas Comptroller of Public Accounts.  And, the cities of Austin and Georgetown were cited as examples of early adopters of the technology.

Ten years ago, Texas’ solar industry was fairly small, but today some believe it’s ready to take on a much larger share of the states energy needs, according to a report by Patrick Graves and Bruce Wright, of the State Comptroller’s office.  How big is the Texas solar industry?

Nearly 8,900 Texans work in the solar industry, in manufacturing, installation, sales, distribution and more,” Hegar noted.  “Our state has 532 solar companies and nearly 100 solar manufacturers.”  Hegar did acknowledge the Texas solar industry is “a relatively small slice of the national industry,” but went on to say “its growing rapidly, driven by improved technology and falling prices.”

Research fellow with the Energy Institute at UTAustin Roger Duncan sayssolar is where wind was 10 years ago and he believes the economics of solar power are as good as wind energy, and maybe better.”

Austin was cited as being at the forefront of using these new energy sources:  “Between solar and its windpower resources, Austin expects to be able to meet more than half of its total needs with renewable energies by 2020,” the Comptroller’s report noted.

It also pointed out nearby Georgetown signed agreements recently that will allow “Georgetowns municipallyowned utility to rely entirely on wind and solar sources.  The city will sell excess power to ERCOT, the states power grid, which will also provide backup power for Georgetown in the event of any shortfall in its power resources.”

To be sure, “there are still unknowns that may rock the industry, including the fate of an important federal tax credit and a recent tariff on foreignmade solar panels,” said Hegar. Read more →