Why Texas' debthole could be well over $27B

Why? Why might the nominal two-year deficit of the state of Texas, set at $27 billion if the GOPocrats actually wanted to maintain the current level of services, potentially be much worse than that?

Because the crunch in the housing market may not have bottomed out yet in Texas, that's why.

Proof? Foreclosure rates for 2010 in all of Texas biggest metro areas climbed well above those of 2009.

Houston was up 26 percent, the highest percentage increase in top 50 metro areas. Austin up 22 percent. Dallas-Fort Worth up 16 percent from 2009. San Antonio up about 13 percent.

That said, this is still all relative right now, as none of the cities' foreclosure rates cracks the top 100 metro areas for 2010. But, it could foreshadow more problems in 2011, which the Texas Legislature had better consider on things like school funding.

I've already said I wouldn't be surprised if the state faced yet another lawsuit over school funding issues. With it likely, in my estimation, that foreclosure rates in Texas metro areas will get worse this year than 2010, the likelihood of that lawsuit increases.

And, here's more on why those numbers might increase.

“Deep fault lines of risk remain and could potentially trigger more waves of foreclosure activity in 2011 and beyond,” RealtyTrac Chief Executive Officer James J. Saccacio said.

The number of U.S. homes receiving a foreclosure filing will jump 20 percent this year as unemployment remains high, RealtyTrac said earlier this month.

The 10 cities with the highest foreclosure rates last year all had fewer filings than in 2009, the company said today. Six of them -- five in California -- also had declines from 2008. Still, filings “remained five to 10 times higher than historic norms in most of those hard-hit markets,” Saccacio said.

Further thought that, even as the subprime bubble in the Southwest starts to deflate, it could keep up in Texas.

One reason for this? A number of SoCal residents retired, sold out, and moved to Texas rather than California. In many cases, their investments may have gone south, payments on the houses they sold (or rented out) may be in disarray, and so forth.

I expect foreclosure issues to get significantly worse in 2011, followed by modest to moderate improvement in 2012.

If, with that, school districts win a funding lawsuit, the debthole is probably more like $40 billion.