Should Texas Tap Rainy Day Fund to Ease Shortfall?

States across the nation are making similarly dramatic budget cuts, but just about everyone admits it's raining in Texas. Falling revenues and a number of other factors could force up to $27 billion in cuts to the state's two-year budget.

But is it a hurricane, a downpour or just a sprinkle? The state's ever-positive Republican governor, Rick Perry, still has his sunglasses on and is pushing to cut the budget instead of opening the piggy bank, or, as it's known, the Rainy Day Fund.

"Emptying the savings account to pay for recurring expenses is a bad idea, whether it happens at home, the workplace or in our state budget," Perry said. "Therefore, we must protect the Rainy Day Fund."

But just like any debate over the weather, opinions vary.

"I think we ought to spend all of it," said state Rep. Garnet Coleman, D-Houston.

Audio: Ben Philpott's story for KUT News

He sees hurricane warnings, pointing to proposed cuts to public education that could force up to 100,000 teacher layoffs and health care cuts that could make it harder for the state's Medicaid recipients to find doctors.

Coleman knows the tax increases being passed in other states like Illinois aren't going to fly in a red state like Texas. "The reason other people are raising taxes is because they don't have $9 billion sitting in an account that can be used readily," he said, referring to the projected amount in the Rainy Day Fund.

But this isn't necessarily a debate defined by which side of the aisle you're on.

Bill Hammond, president and CEO of the Texas Association of Business, considered the most powerful conservative business lobby in the state, says tax increases are job killers. But massive cuts to public and higher education, he said, will hurt efforts to build the skilled workforce Texas businesses need.

"We think if we're going to hold the school districts and the administration accountable for their performance on the new end-of-course exams and on accountability in general, we need to provide them with the materials as well to do their job," Hammond said.

He added that lawmakers should spend about $6 billion of the fund, leaving some for the next rainy day.  

So where does all this leave the debate over what to spend? Lawmakers are actually working to plug two budget shortfalls. The current budget cycle, which ends Aug. 31, is about $4 billion short.

The leading budget writer in the Texas House, Jim Pitts, R-Waxahachie, said he has the votes needed to use the Rainy Day Fund for the current budget hole. But it'll takes a two-thirds vote of the House and Senate to spend any of the fund for the next budget, and Pitts isn't optimistic about that.

"If we tried to use it for anything else, then I think that the reaction is, then you haven't looked for cuts enough," Pitts said.

On the bright side for Texas, at least the state can have this debate. A recent report by the National Association of State Budget Officers shows 15 states are projected to have empty reserve funds in 2011.  

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