Research and taxpayer organizations urge Legislature to preserve Economic Stabilization Fund

AUSTIN – The Texas Public Policy Foundation joined several research and taxpayer organizations today to urge legislators not to tap the Economic Stabilization Fund during the 81st Texas Legislature.

The Foundation, along with leaders from Texans for Fiscal Responsibility, Americans for Prosperity-Texas, the Free Market Foundation, and the Texas Conservative Coalition Research Institute, made the call in a letter sent to legislators today.

The letter cited Article III, Section 49-g of the Texas Constitution, which states that, “The Comptroller may transfer money from the economic stabilization fund to general revenue to prevent or eliminate a temporary cash deficiency in general revenue.” [Emphasis added]

“The Texas Constitution and the ballot language approved by voters illustrate the clear intent for the Economic Stabilization Fund to serve as a mechanism to remedy state budget deficits in existing programs, not to fund one-time spending items when other funds are available,” the letter said.

“We believe the federal stimulus package was bad policy and the wrong direction for America,” said Talmadge Heflin, Director of TPPF’s Center for Fiscal Policy. “As bad as it is that the legislative budget committees have incorporated the stimulus funds into the 2010-11 state budget, doing so while also drawing down the Economic Stabilization Fund could set Texas up for a serious budget crisis two years from now.”

Last week, the House Appropriations Committee approved House Bill 6, which would withdraw $865 million from the Economic Stabilization Fund to reimburse state agencies and institutions of higher education for damages and disruptions caused during last year’s hurricane season.

“We do not wish House Bill 6 and hurricane recovery to fail,” the letter emphasized. “We simply urge you to save the Economic Stabilization Fund for the next budget cycle, and to repair hurricane-damaged state facilities through other means.”

The Honorable Talmadge Heflin is Director of the Center for Fiscal Policy at the Texas Public Policy Foundation, a non-profit, free-market research institute based in Austin. Heflin served 11 terms in the Texas House of Representatives and chaired the House Appropriations Committee in 2003, leading the Texas Legislature’s successful efforts to close a $10 billion budget deficit without a tax increase.

The Texas Public Policy Foundation is a non-profit, free-market research institute based in Austin, Texas.

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