Krugman et al. are having a gleeful time with the Texas-has-a-$25-billion-deficit story. Problem: It is not really true. Texas is looking at a gap of probably about $10 billion or so, spread out over two years, but the state takes a radical approach to budgeting: Legislators start by asking, How much money do we have? rather than by asking, How much money are we going to spend? That makes all the difference.
In fact, Governor Perry apparently plans to introduce a budget that is balanced without touching the billions of dollars the state has socked away for just such an occasion as this. (What, your state doesn’t have a few billion put away for a rainy day?)
More here.