State Budget Harvesting Big Gains from Energy Production
One of the big changes in state government from the budget-slashing session in 2011 to the slightly more generous – but by no means big-spending – session in 2013 was the willingness of state leaders to dip into the Economic Stabilization Fund to fill some budget holes and begin work on big-ticket, long-neglected items.
And no wonder. Projections for future growth in the fund – almost universally known as the rainy day fund – show an escalation that would actually max out in a few years, all of it because of the boom in energy production and the income Texas gets from that production.
While it is still debatable whether the public needed to vote on November 6 to spend $2 billion on water development – it is the Legislature’s job to make those calls – the fact is that with energy taxes pouring in, that $2 billion expenditure doesn’t really put much of the dent in the fund’s total
In 2014, voters will be asked to weigh in on another constitutional amendment – same argument as before about this not really something that should require amending the constitution – this time to put perhaps $1.5 billion into the state’s cash-starved transportation system.
In both cases, experts in state finance suggest that the fund’s balances will be more than healthy to rescue the state from financial disaster even with these expenditures. In part, that’s because the state is, in a word, cheap about using the fund. In larger measure, though, it’s because there’s just a lot of money coming in.
The highway measure has a few wrinkles the water allocation didn’t. Water was a one-time thing; a $2 billion fund to kick-start development projects and provide money for loans to local jurisdictions that need help in the face of the drought.
The transportation measure divides the energy tax money permanently, splitting it three ways between the state’s general revenue, the rainy day fund and transportation. It provides a way for the Legislature to override the funding mechanism if fears arise that the rainy day fund isn’t sufficiently well endowed. As the projects show, that isn’t likely to be any time soon.
A detailed history of how and why we have the rainy day fund, and projections for its future growth, was released before the Proposition 6 election by the Texas Taxpayers and Research Association. It’s posted on the Chamber’s web site at http://arlingtontx.com/images/uploads/TTARA_1013_Rainy_Day_Fund.pdf
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