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Preserve Texas’ Rainy Day Fund in These Uncertain Economic Times

Key Points:

  • The ESF is projected to receive $1.91 billion of oil and gas-derived revenue during the 2012-13 biennium, increasing the total balance to $7.3 billion by the end of the biennium.
  • Oil and gas severance tax revenues are highly sensitive to the global economy, which is showing signs of weakening.
  • With added pressure for greater spending on Medicaid, education and other programs, lawmakers need to resist the temptation to bolster baseline spending using an ESF balance that could be soon depleted in a poor economy.
  • It is important that lawmakers maintain a balance of at least 5% of general revenue and general revenue-dedicated funds, or approximately $4.5 billion for the current cycle.
  • The ESF should only be spent on one-time emergency items or tax relief. The fund should not be spent to support ongoing expenses.