A specially created Texas legislative panel on Thursday approved a mechanism that, this year at least, will fill about one-third of a highway funding shortfall with energy-production tax money that otherwise would have piled up in the state’s savings account.
The panel voted 6-0 to set $7 billion as a temporary minimum for the rainy day fund, which in the current fiscal year frees $1.74 billion of oil and gas severance taxes for building and repairing bridges and roads that aren’t toll roads. The Texas Department of Transportation says that to maintain current levels of road congestion, it needs $5 billion more per year.
The rainy day fund — formally, the Economic Stabilization Fund — still would hit a record high balance when the current two year budget cycle ends next Aug. 31 — $8.44 billion, according to projections by Comptroller Susan Combs’ office and the Legislative Budget Board. On a separate vote of 6-0, the Joint Select Committee to Determine a Sufficient Balance of the Economic Stabilization Fund also set $7 billion as the rainy day fund’s floor in each year of the next budget cycle. That will allow transfers to the highway fund of $1.31 billion in fiscal 2016 and $1.27 billion in 2017.
Sen. Jane Nelson, the Flower Mound Republican who is co-chairwoman of the panel, said the actions would allow the maximum possible transfer of money to ease road congestion that is allowed under Proposition 1, a constitutional amendment approved by voters last month.
“We’re not jeopardizing our high credit rating and it would ensure that Texas has sufficient resources for any unexpected difficulties in the future,” she said, referring to possible natural disasters. Recovery efforts sometimes are paid for with rainy-day dollars.
“This is a very conservative, logical, common-sense thing to do,” said Crownover, R-Denton.
Since voters in 1988 approved a constitutional amendment creating the rainy day fund, it has vacuumed up half of unspent general-purpose revenue at the end of budget cycles, which only happened in 1992 and 2008; and three-quarters of oil and gas severance tax receipts in excess of the amounts collected in 1987.
Through 2005, the Legislature routinely spent all or nearly all of the rainy day fund, which never had much more than $1 billion in it. But lawmakers didn’t tap the fund in 2007 and 2009. That and a fracking boom in the oil and gas fields sent the fund’s balance soaring. With the rise of the tea party, tapping the fund has become politically fraught within the ruling Texas GOP. In each of the past two sessions, despite fiscal shortfall or clamor to undo budget cuts, lawmakers spent only about one-third of available savings.
By itself, Proposition 1 won’t ease a growing mess on Texas highways. The state’s gasoline tax, last increased in 1991, to 20 cents a gallon, was one of the 11 lowest state taxes in the nation in January 2013, according to the Tax Foundation. Inflation has eroded the Texas tax to less than half the road-building value it had in 1991. Over the past decade, the state has borrowed more than $17 billion. Debt service on that is about $1 billion or more annually.
Democrats and liberals complain that Proposition 1 has placed roads above all other state budget needs.
“It’s just a way to make highways more important politically than anything else,” said budget analyst Eva DeLuna Castro of the Center for Public Policy Priorities, which focuses on services important to middle- and lower-income Texans. “To do more for schools, Medicaid or universities, you would have to cut off this transfer. And that would be hard.”