Texas’ economic prowess unlikely to wane under state leadership change
By Paul Cobler, The Texas Tribune
November 6, 2026
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.
“There will not be radical Democratic Socialist bills coming through the Texas Senate,” state Sen. Bryan Hughes, R-Mineola, told Texas Bullpen. “There’s a lot to digest after tonight, but the Texas Senate will hold the line.”
One of the most impactful results of the election may turn out to be Democrats taking control of the attorney general’s office, Bradt said. Attorney General-elect Nathan Johnson said he will use the powers of the office to go after companies that engage in price gouging, consumer scams and unfair competitive practices.
Attorney General Ken Paxton influenced both state and federal policy through lawsuits targeting social media corporations over privacy concerns and nicotine vape manufacturers over marketing to children, securing several large settlements from companies like Meta and Juul. He’s also used his office to carry out Republican priorities, according to his critics, including filing a lawsuit against Tylenol over concerns that it causes autism, although major medical associations have rejected those claims.
Johnson told Bloomberg Law on Thursday that he intends to end Paxton’s lawsuit against the drug maker.
Business community’s reaction to guard change
While he did use his authority to go after some of the country’s biggest companies, Paxton’s critics have also accused him of accepting corporate kickbacks while in office. This year, Elon Musk, who relocated large swaths of his empire to Texas for its business-friendly policies, effectively dumped nearly $190 million into his Senate race.
Since Tuesday’s results, Musk has posted on X about moving data centers to space, suggesting Texas would no longer be as receptive to one of the state’s fastest growing industries.
Data centers may pull back on spending in Texas in response to the election results. Hinojosa has committed to a moratorium on new data center approvals, which is driving construction around the state, until the Legislature can meet to pass regulations on the industry.
The Data Center Coalition, a trade group that represents some of the nation’s largest tech companies building the facilities, in a statement said the industry can still play a role in boosting the economy and is committed to working with local and state officials.
The Texas Association of Business, the state’s chamber of commerce, similarly offered cooperation with the state’s new leadership.
“For more than a century, TAB has worked with Texas leaders from both parties to strengthen our economy and expand opportunity,” wrote Kelly Keel, the association’s president and CEO. “The coming legislative session offers a chance to build on that legacy, making Texas an even better place to live, work and build a business for the benefit of every Texan.”
A senior official with the Texas Stock Exchange, the upstart trading platform that launched earlier this year, said they had little reason to worry under the new government, noting that there was bipartisan support for many of the bills that helped establish the exchange and fostered a wave of recent reincorporations to Texas.
Ed Longanecker, president of the Texas Independent Producers and Royalty Owners Association, also expressed optimism that Democrat Jon Rosenthal’s election to the Texas Railroad Commission would be unlikely to significantly hamper the oil and gas industry.
And the Texas Oil and Gas Association, the industry’s largest trade group in the state, encouraged incoming leaders to continue the state’s history of supporting its oil and gas industry.
“Those taking office in January inherit this responsibility, and we intend to be a constructive partner in the legislative process,” said Texas Oil & Gas Association Good Government Committee Treasurer Todd Staples, a former Republican state senator and agricultural commissioner.
Rosenthal’s election to the commission places a Democrat on the three-member body for the first time since 1990. Rulemaking and enforcement actions require majority support.
On Wednesday, Talarico also committed to “an all of the above energy strategy” that protects oil and gas jobs while continuing to strengthen the state’s nation-leading renewable energy sector.
“I want us to be an energy leader in the 21st Century like we were in the 20th,” Talarico told CBS.
Ray Perryman, president of the Waco-based economic research company The Perryman Group, said Tuesday’s Democratic wave may even lead to a boost for the Texas economy if President Donald Trump is forced to pull back on his tariff and immigration policies, which have slowed growth in recent years.
Leonard Aguilar, president of the Texas AFL-CIO, said Democrats must prioritize the concerns of the working people that elected them, and the change in state leadership offers an opportunity to rethink who the Texas Miracle is for.
“Things are more expensive, education is harder to come by, the issues facing working Texans have been growing,” Aguilar said. “I don’t know what kind of miracle that is for the working people.”
Disclosure: Texas Tech University and The University of Texas at Austin have been major financial supporters of The Texas Tribune. Cody and Tara Campbell, Meta and University of Houston have been financial supporters within the past five years. The Texas Tribune is a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in our journalism. Find a complete list of them and more information about our financial and disclosure policies here.
This article first appeared on The Texas Tribune. 