A Review of the Texas Economy from the Office of Susan Combs, Texas Comptroller of Public Accounts • July 2 011 JUNE REVENUE (IN MILLIONS): SALES TAX: $1,731.0 OIL PRODUCTION: $155.3 NATURAL GAS: $71.2 MOTOR FUELS: $264.6 MOTOR VEHICLE SALES: $272.0 TOBACCO: $137.4 An Interview with Pundit Glenn Reynolds SEE PAGE 10 A Bubble in Higher Education? INSIDE STORIES Obesity spells trouble for business 3 Livestock shows fund kids’ education 6 New presidential museum for Texas 12 BY MARK WANGRIN LeTTER FROM The COMPTROLLER ACROSS TEXAS But Texas, unfortunately, suffers disproportionately. Exxon Mobil has announced In 2009, more than two-thirds FAT ENVELOPE. It’s what high school seniors › plans for a new campus near (66.7 percent) of Texans were A across Texas hope to find in the mailbox from their college The Woodlands. The 385- overweight or clinically obese, of choice. If it’s the dreaded thin envelope, a rejection, parents can acre site, which should be compared with 63.2 percent expect to spend the dinner hour trying to convince their son or completed by 2015, will feature nationally. About 29.5 percent of office space, a laboratory, Texans were clinically obese. And daughter that life’s blessings sometimes come well-disguised. conference rooms, training the prevalence of obesity among Texas But if it’s an acceptance, it may be the happy young person who’s facilities, restaurants, a child- adults more than doubled in the trying to cheer up the parents, with assurances that he or she will care facility and an employee last two decades, from wellness center. 12.3 percent in 1990. apply for every available grant and take a part-time job to help pitch The resulting costs in on the tab for their education. › Houston-based Redstone to Texas employers Because no matter how much money mom and dad set aside to Companies will build a reached $9.5 billion in 318,000-square-foot office 2009, due to direct pay for college, these days it seems like it’s never enough. facility as well as a “lifestyle” health insurance Whether they’re staring at four years of tuition or just searching for hotel, complete with spa and expenditures as “An obese and ways to pay monthly bills on one less paycheck, a lot of families have fitness facilities, in Houston’s well as absenteeism, unhealthy work force may reduced productivity at been having serious supper-table discussions about finances lately. Galleria area. work and disability. be viewed as a huge negative In the wake of the recent recession, citizens all over the state and › Texas’ H-E-B grocery chain is The next generation of when businesses consider the country are weighing their options, cutting back and making do. building new stores in Pharr, Texas workers will be pros and cons of moving their And they expect their governments at all levels to be doing Granbury and Bryan. All are affected as well. Today, expected to open in the latter 20.4 percent of Texas operations to Texas.” the same. They’re demanding a business-like, bottom-line focus half of 2011; total construction children aged 10 to 17 are —Comptroller Susan Combs that ensures maximum efficiency and effectiveness. In short, they costs for the three projects are obese, 4 percent more than the want to know that their dollars are being spent with discipline estimated at $34.4 million. national average. If current trends continue unchecked, by 2030 an and forethought. › In the next few years, San estimated 36.4 percent of Texans will That’s the challenge facing Texas colleges and universities as well. Antonio IT hosting and storage be overweight and 36.7 percent will They must find new and better ways to operate efficiently and pro- firm Rackspace Hosting Inc. Gaining Costs, be clinically obese. The effects on plans to triple its work force in worker health could cost the state’s duce graduates fully prepared for the workplace of tomorrow. Austin, from about 300 to 900. businesses $32.5 billion annually. In this issue of Fiscal Notes, we speak with Glenn Reynolds, Excessive weight also carries L o si n g Tıme distinguished educator and commentator, on the spiraling costs significant costs for the individual. Children who stay obese through of getting a college degree — and some of the causes of this Visit FiscalNotes.com adulthood can expect the condition daunting increase. We also look at some of the tools and resources to get email alerts on Costs Growing Along with Waistlines to cost them thousands over their life- available to Texans of all ages who are our publications and times for obesity-related reasons such considering starting businesses of their own. up-to-the-minute news on Obesity continues to cost Texas Like the previous report, Gaining Continued on page 4 billions of dollars annually, and the Costs, Losing Time focuses on the cost There will never be a shortage of dreamers the Texas economy. tab is skyrocketing, according to a of obesity to Texas employers. And the who want to test themselves in the market- recent follow-up to a landmark 2007 updated data show that the crisis is place of ideas or commerce. The decisions report from the Comptroller’s office. gaining momentum. Gaining Costs, Losing Time: The we’re making today will help give the next ObeSITY COSTS Obesity Crisis in Texas, issued in generation of Texas innovators and entrepre- February 2011, builds on the research Obesity is a national crisis, of course. neurs the chance to live their dreams. reported in Counting Costs and U.S. health care costs related to Calories, which first drew national obesity have doubled in less than a attention to the potentially crippling decade and account for 9.1 percent of economic effects of unchecked obesity. annual health costs, or $147 billion. 2 JULY 2011 • FISCAL NOTES FISCAL NOTES • JULY 2011 3 the COST TO A CHILD Continued from page 3 ObESITY COsts TO TEXAS as disease, lower wages, diet plans Combs says. “An obese and unhealthy SLIMMING DOWN IN 2009, EMPLOYERS REACHED and the wage loss inherent in work force may be viewed as a huge shorter lifespans. negative when businesses consider And an unfit work force ultimately the pros and cons of moving their hile Gaining Costs, Losing Time details problems $9.5 may harm Texas’ reputation as a great operations to Texas.” FN and costs, it also offers a series of policy recom- BIllION IN 2009 place to do business, according to W mendations as solutions, including: Comptroller Susan Combs. To read Gaining Costs, Losing Time: 2 “Today, businesses want to come The Obesity Crisis in Texas, please visit returning physical education as a high school gradua- 3 to Texas because we’re seen as a great www.window.state.tx.us/specialrpt/ POrtION SIZES tion requirement and making it mandatory in all semesters of place for them to operate and grow,” obesitycost/. of middle school; (66.7 PERCENt) Obesity is rising faster OF TEXANS WERE 1982 2002 in children than adults. OverWEIght NATION adding nutrition courses to the public school curriculum; OVERWEIGHT 8 OUNCES 16 OUNCES According to the U.S. Cen- ata from the Centers for Disease Control and Prevention (CDC) show that, while OR CLINICALLY 45 CALORIES 350 CALORIES ters for Disease Control D limiting or eliminating the eligibility of soft drinks, (WITH SUGar) (WITH MOCHA SYRUP) OBESE. and Prevention, the rate of obesity is a nationwide problem, its incidence varies considerably from state to candy, cookies and ice cream from the Supplemental Nutrition Portion sizes for many common obesity among U.S. children state. In 2009, Texas fell into CDC’s second-worst category, for states with obesity food and drink purchases have Assistance Program (formerly known as “food stamps”); aged six to 11 tripled from rates of 25 to 29 percent. Nine states (those in dark red) fared even worse, with increased greatly in recent years. 1980 to 2008, from 6.5 per- 30 percent or more of their residents clinically obese. offering a $1,000 federal tax credit to Americans who cent to 19.6 percent. Among pass an annual wellness exam and physical; and adolescents aged 12 to 2009 No Data Obesity imposes costs on business ranging from direct health care 19, obesity rates rose even encouraging restaurants to list nutrition information faster, from 5.0 percent to expenditures to the more subtle effect of reduced efficiency while at <10% on menus. 18.1 percent. work, or “presenteeism.” The Comptroller estimates that these direct 10%-14% • The report also includes sections on the demographics of TEXAS and indirect costs totaled nearly $9.5 billion in 2009. Excessive weight puts 15%-19% BUSINEss COsts children at risk of type 2 dia- obesity in Texas, factors contributing to obesity and the value AREA OF COSTS ESTIMated COSTS PERCENT (BY AREA) 20%-24% of worksite wellness programs, which can reduce business heath betes, high blood pressure, AttRIBUTABLE Health care $4,022,324,929 42.5% gallbladder disease, depres- care expenditures and absenteeism costs by 25 to 30 percent. 25%-29% TO ObESITY, Absenteeism 1,643,955,363 17.4 sion, anxiety and lower 2009 ≥30% • Presenteeism 3,469,229,333 36.7 self-esteem, while increasing their risk Disability 321,813,719 3.4 of chronic disease in Obesity Prevalence Trends In Texas Adults, 1990 to 2009 Total Costs $9,457,323,345 100.0% adulthood. ObeSITY PrevaLence TRENDS IN TexaS AduLTS, 1990-2009 TOTAL PROJECTED ObeSITY COSTS TO TexaS BUSIneSSES, 2009-2030 (IN BILLIONS) • 60% The 2007 National Survey In Texas, our share of adults who 57.1% of Children’s Health (NSCH) Normal Weight f obesity rates and the Texas work force continue to increase as expected, are obese more than doubled I found that 20.4 percent of Overweight 50% EXHIBIT 9 these direct costs could reach nearly $32.5 billion in 2030.