Rainy Day Fund and Water
People keep moving to Texas because our policies foster economic growth.
This growth has caused a boom in tax revenue which ironically threatens to grow government, the limited nature of which in Texas is largely responsible for our prosperity.
Speaking of irony, how is it that in 2011, when lawmakers struggled with a huge biennial deficit, they decided to use $3.2 billion from the Rainy Day Fund (formally known as the Economic Stabilization Fund) to cover a shortfall that year’s budget. But now, in 2013, in a time of sunshine, some lawmakers are proposing to again use the Rainy Day Fund, this time to spend $2 billion to create another water fund on top of the existing $6 billion water fund.
In any case, the newly proposed state budget is very close to its spending cap. Spending for a purpose other than what the Rainy Day Fund was created for would require a two-thirds vote in both houses as well as a vote to bust the spending cap—two votes that would set a dangerous precedent in setting Texas on the path of growing government ahead of the people’s ability to pay for it.
Further, as important as water is, it ought to be debated in the context of the existing budget and under the current constitutional spending cap along with other important programs such as education, transportation or Medicaid.
No one denies that Texas is in need of more water. But, what Texas needs more than money is reform at both the federal and state level. In addition to environmental regulations, Texas can improve its own water picture by eliminating state restrictions on the sale and repurposing of water rights and inter-basin water transfers.
Having what will be an $11.8 billion pile of money laying around in 2015 is giving some lawmakers an urge to burn a hole in the public purse.
If lawmakers really want to dip into the Rainy Day Fund, we have a suggestion: return the money to the people with a tax cut. Putting the complex and expensive to comply with Texas franchise tax on the road to elimination over six years would be an excellent use for $1.2 billion of this fund.