Proposal Would Tap Rainy Day Fund for $6 Billion

CPA Sen. Tommy Williams (R-The Woodlands), Senate Finance Committee Chairman, has offered SJR 1 to his committee today to establish constitutionally-dedicated funds for water and roads with initial funding of $6 billion from the Economic Stabilization Fund, commonly referred to as the Rainy Day Fund (RDF). The water fund would get $2.5 billion and roads $3.5 billion. Additional legislation would be needed to deal with the use of the funds.

HB 4 by Rep. Allan Ritter (R-Nederland) establishes a state water plan, and that bill is predicated on the $2.5 billion RDF funding. SJR 1 was voted unanimously from the committee, but some members indicated they might try to amend the resolution on the Senate floor to include public education funding. Sen. Royce West (D-Dallas) suggested that $2.5 billion be added, expressing the belief that public education was as important to the voters as water and roads.

Ever since Governor Perry suggested using the RDF for water and roads in his State of the State speech, legislators have embraced the idea. Then entered the budget cap dilemma. The Texas Constitution limits the growth of the state budget from one biennium to the next to the growth rate of the economy. The budget bill as passed by the House is about $600 million shy of the constitutional budget cap; the Senate version is a little over $1 billion below the cap. Expenditures from the RDF count towards the budget cap. By using a constitutional amendment, the budget cap issue is avoided. The proposal must be passed by a two-thirds majority in the legislature and must be approved by the voters.

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