After stashing away enough so lawmakers feel comfortable, “then it might make sense to say OK, once we’re above that limit, we may want to sort of set up a mechanism where that fund can be utilized for a different purpose – for other things,” he said.
Zahradnik, director of a Pew project on states’ fiscal health, was asked about recent Texas proposals as he spoke to reporters about a new study of states’ policies on withdrawing money from rainy day funds.
All but three states have some form of savings account, as a hedge against recessions and other emergencies. But policies on them vary widely.
Texas has overtaken Alaska to claim a bragging right some say is dubious, especially when state budget writers are cutting health care and, in the case of the Senate, higher education. Texas’ kitty, the Economic Stabilization Fund, has the biggest balance of any in the nation — $10.2 billion.
Some tea party activists and fiscal hawks, though, insist that lawmakers in recent sessions have diverted enough of the fund into water projects and roads. While the House wants to spend $2.5 billion of the money, Lt. Gov. Dan Patrick and some key GOP senators oppose spending any. Oil and gas production tax collections above levels collected in the late 1980s are the main source of money for the fund.
If lawmakers don’t dip into the fund to ease cuts, it will swell to $11.9 billion by August 2019, Comptroller Glenn Hegar has estimated.
Endowment fund proposals
Earlier this week, Hegar, a Republican first elected in 2014, floated the idea of investing surplus rainy-day dollars in a “Texas Legacy Fund.”
He defined as surplus those in excess of an amount equal to 8 percent of spending of state general-purpose revenue – in the current budget cycle, equal to about $8.5 billion.