Texas' economy is booming, a reflection of the success of major cities like Houston, but the economic outlook could be better.

The Lone Star State is No. 1 in the country for economic performance, according to a new report by the American Legislative Exchange Council, but falls to No. 13 in terms of economic outlook.

See above for the top 15 states with the best economic outlook for 2014.

Performance was measured by looking at the state's gross domestic product, absolute domestic migration and non-farm payroll employment. Economic outlook, however, is a forecast based on 15 variables, such as taxes, workers' compensation costs and options for individuals to join a union. It ultimately reflects that states that spend and tax less will have higher growth rates.

Texas' outlook rank made a big jump from 2012 to 2013, from No. 16 to No. 12, but it took a step back this year.

It ranks lowest in the variable "debt service as a share of tax revenue," which is interest paid on debt as a percentage of total tax revenue as well as "state liability system survey," which measure the health of the state's judicial system.