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Mon January 7, 2013
Some Lawmakers Ready To Tap The Rainy Day Fund
As the state legislature prepares to open its session Tuesday, lawmakers are hearing a word not spoken in the capitol for a long time. It’s ‘surplus.’ Unlike two years ago, when they faced a massive deficit and cut $15 billion from the budget, there’s talk of an increase in money for state programs and a growing Rainy Day fund. The state comptroller will release the official budget estimate this morning, but the debate over whether and how to spend the Rainy Day money has already begun.
For Texas lawmakers the clanking of an oil derrick pumping crude is the sound of money pouring into the state’s savings account, what’s called the Rainy Day Fund.
It’s an emergency fund the state can tap if financial clouds gather putting important state services at risk.
The Rainy Day Fund was established in 1988 and receives most of its money from a tax on oil and gas produced in the state. Until six years ago the fund had less than $1 billion. But this session it's at more than $8 billion and is expected to grow.
Last session Governor Rick Perry, who wields a veto pen, resisted dipping into the fund when it was even bigger.
“I believe the Rainy Day Fund must be used as an absolute last resort not just as a quick fix,” Perry admonished, in 2011 when the deficit was so big many argued the rainy day had become a full-fledged monsoon.
Perry eventually signed off on spending just over $3 billion -about a third of the fund. So what will the Governor agree to this session?
Lawmakers are already shopping their wish lists. That includes some Republicans who’ve been cautious about raiding the piggy bank.
“One of the things I want to look at is that we take $1 billion out of the Rainy Day Fund to create a water infrastructure development bank,” said Republican Lieutenant Governor David Dewhurst during a recent stop in Dallas.
Dewhurst carries a big stick because he runs the Senate. His development bank would loan $1 billion in startup money to utilities building new reservoirs at a time when drought and growth are threatening water supplies.
Republican Senator David Deuell of Greenville wants to commit twice as much Rainy Day money- $2 billion –to the water development fund. Deuell and Dewhurst agree another $1 billion should go into a similar fund to build roads.
But Deuell, unlike many Republicans, is openly calling for the use of Rainy Day dollars to pay for some public school programs cut last session.
“I am embarrassed as a state legislator that there are school districts that are making some very Draconian cuts while we were sitting with almost $9 billion in the Rainy Day Fund. I advocated spending more of it,” said Deuell.
“We’re going to spend the money anyway. The kids don’t go away. We’re going to build schools and hire teachers or build prisons and hire prison guards,” Deuell reasoned.
Representative Dan Branch of Dallas is another influential Republican who says it’s time to open the purse strings a little. He says the state has ignored its infrastructure for years and it’s crumbling.
“It’s raining because we have under invested to a point we are now going to cause our economy to stumble,” said Branch
“People are going to say your taxes are low and your regulations are light but it’s really hot without air conditioning or it’s really bad without water and it’s really bad without educated workers in a knowledge-based economy so we’re going to go elsewhere.
“I am into making sure we have solid basic infrastructure and I think we are at risk on the education water power road front,” Branch said.
It’s a good bet Democrats will want to spend more of the Rainy Day money than Republicans are willing to touch. Senator Wendy Davis, for one, wants to restore all of the $5.4 billion cut from schools.
The Fort Worth Democrat proposes leaving a healthy balance in the account, but during the next two years, as oil and gas production pumps new revenue into the fund, she wants to earmark those dollars for education.
“If we don’t capture that surplus now and direct it into public education we will never get back to where we were,” said Davis.
Davis believes it’s a plan some of her Republican colleagues might just buy when the expected budget surplus is spent and the legislative forecast calls for rain.
Shelley Kofler will be reporting from Austin this week as begin the legislative session.