Lt. Gov. David Dewhurst yesterday told some Dallas-area business types he would entertain spending more than $1 billion for water and transportation projects from the state’s rainy day fund.
If you weren’t thinking, even in this day of trillion-dollar government deficits, that $1 billion is still a lot of money, you might have thought, ‘What in the heck is this rainy day fund?’
And a fine question it is.
About this holiday time for the last 20 years or so, before every biennial session of the Legislature, it seems that one big-name elected official or another waxes philosophical about how or whether to draw money from the Economic Stabilization Fund, its formal name.
The Legislature in 1987, having the bejesus scared out of it by a bad economy, asked Texas voters to approve a constitutional amendment allowing the state to set aside a portion of oil and natural gases taxes collected each year for budget emergencies. A rainy day, if you will.
Voters in November of 1988 saw the wisdom and passed the Economic Stabilization Fund into law.
Everything you might want to know about the rainy day fund is provided in an excellent primer from the Texas Comptroller here.
Everything except the development of the fund as a political tool. As recently as a decade ago, there was less than $200 million in the fund. Today, the estimated value of the fund is more than $8 billion, according to the Comptroller’s figures.
Of the $3.5 billion the Legislature has spent from the fund overall, about $1 billion was spent in 2003-04, another $1 billion in 2005 and $1.2 billion in 2006-07, particularly tough budget times.
The money in those years was allocated to help prop up the Teacher Retirement System, the Texas Education Agency, Department of Health and Human Services programs and Gov. Rick Perry’s Texas Enterprise Fund and Emerging Technology Fund.
With the Emerging Technology Fund accused of crony capitalism and saddled with several business failures, the Legislature has debated when, exactly, does the state draw from the rainy day fund.
Before the 2011 session, when all involved parties took turns inflating the estimated shortfall in the upcoming budget, the Austin American-Statesman suggested there had never been a better time to use the fund.
In March, sounding all fiscally conservative, Perry warned the Legislature that the rainy day fund should be tapped only as an “absolute last resort.” A week later, Perry said he thought it would be all right to use $3.2 billion to help balance the budget.
Weeks away from the start of another session, Dewhurst told the Dallas Regional Chamber it might be nice to create a development bank from which local governments could draw to build reservoirs and other water infrastructure, the Dallas Morning News reports.
Rainy day money might also serve as the feathering for a highway construction project bank, Dewhurst told the group.
But, in fine political fettle, Dewhurst was careful to point out that his infrastructure expansiveness would be done within a framework of ideological austerity.
“In any circumstance – and this is bottom line — we have to maintain a healthy balance in the rainy day fund,” he said. “But as a fiscal conservative, we can draw down a little bit and still keep a very healthy balance.”
As Dewhurst is well aware, such long-range forecasts are useless heading into a legislative session. It remains to be seen come March whether he can convince lawmakers to get out their umbrellas and put on their yellow slickers and boots.
Contact Mark Lisheron at 512-299-2318 or firstname.lastname@example.org or on Twitter at @marktxwatchdog.
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Photo of umbrella by flickr user lakewentworth, used via a Creative Commons license.