In a commentary in this newspaper recently, Texas House Speaker Joe Straus suggested that the Legislature consider dipping into the state’s so-called rainy day fund to balance the budget and pay for critical needs.
It is an excellent idea. This is precisely what the Economic Stabilization Fund — its technical name — is for. It is a reserve against hard times, when the state’s needs outstrip its revenues. By most accounts, we’re there, hence our “it’s pouring” remark.
The fund now stands at about $12 billion.
The San Antonio Republican notes a bevy of needs, including properly funding the state’s child welfare system, big parts of which are effectively broken. And despite a Texas Supreme Court ruling that says school funding is not unconstitutional, the court noted that no one can make the case that it is adequate. It isn’t, not by a long shot.
As Straus wrote, Texas’ needs dictate something other than a “cuts-only approach” to balancing the budget. He said that the state has dipped into the fund seven times previously and that it can go down to $5 billion without jeopardizing the state’s credit rating.
There are, of course, risks.
The fund cannot be a permanent source of revenue for critical spending. The needs do not go away after a budget cycle. In fact, they increase because of population growth and other factors. Both child welfare and adequate public school funding are in that category, but so, in our view, are a host of other needs, including higher education and the state’s contributions to the safety net for low-income Texans.
But using the fund this biennium buys breathing space so the Legislature can undertake a thorough examination of its tax code — including tax breaks — and whether other sources of revenue can be found. Moreover, no one expects that the plunge in oil and gas prices that spelled less revenue for the state will be a permanent state of affairs. Texas is as familiar with booms as busts.
It’s clear that Straus’ premise — that this can’t be just a cuts-only budget — is spot on. The needs are as obvious as is the need to quit this constant mantra of tax cuts. Texas is already a relatively low-tax, low-service state that nonetheless has enormous needs that go unmet.
Use the rainy day fund to balance the budget this session. Then get smarter about revenue sources.
