Abbott: Spending Limit Includes Rainy Day Fund

Updated 5:30 p.m.: Having already expressed his opposition to asking voters whether to use the state's Rainy Day Fund for water, transportation and education programs, House Speaker Joe Straus said Thursday afternoon there are other ways to finance the state's needs.

Attorney General Greg Abbott told lawmakers this week that Rainy Day spending is subject to constitutional spending limits.

That prompted this response from Straus: "Texans expect their elected leaders to make difficult decisions, and the House will not shy away from those decisions. I remain confident that Members of the House and Senate can reach agreement on a balanced budget that addresses key priorities, including water. In addition, House Bill 4 includes numerous provisions that protect taxpayer dollars and make a constitutional amendment unnecessary."

Original story:

Texas budget writers can’t dip into the state’s savings account unless they either get voter approval or vote to ignore a state constitutional limit on spending, Attorney General Greg Abbott wrote in an opinion letter made public Thursday.

State lawmakers have more money than they’re allowed to spend under the Texas Constitution, and with expensive proposals for water, transportation and tax cuts, and a state budget in the balance, they’re looking for ways to stay within the limits while giving voters the programs those voters want.

They have enough money to accomplish all of that in the bulging Rainy Day Fund, which is expected to have a balance of more than $12 billion at the end of the current budget period this summer. But money spent from that account, according to Abbott, will count against the constitutional limit on growth in state spending, unless the Legislature first wins approval from voters in a constitutional amendment. Lawmakers suspected as much, but Abbott’s opinion comes as they were looking for ways around the spending cap. In an answer to House Appropriations Chairman Jim Pitts, R-Waxahachie, the attorney general cited a recent state court decision on whether Rainy Day Fund money counts against the spending limit.

“In the court’s view — and in ours — the Constitution contains the one and only legal standard by which to judge whether appropriated funds must be counted toward the constitutional spending limit," Abbott wrote. "That constitutional standard is whether the appropriated funds are from ‘state tax revenues not dedicated by this constitution.’ Only a constitutional amendment can change that standard.”

Abbott’s letter makes that a little bit clearer, if not easier.

The Texas Senate already approved a constitutional amendment that would raid the Rainy Day Fund for $5.7 billion for water, transportation and public education programs. If the House were to approve that, voters would get a chance to weigh in next November. But House leaders have said they don’t like that approach.

The alternative is to bust the state’s constitutional limit on how much spending can grow from one budget to the next; spending is not allow to expand faster than the state economy unless lawmakers vote to do so. A large number of lawmakers have said they are unwilling to do that — one reason the Senate resorted to the constitutional amendment.

The timing is critical. House and Senate negotiators are reconciling differences between their two budgets, and there are less than three weeks left in the legislative session. Figuring out how much money they are able to use — and how to get to it — are crucial to those negotiations. Gov. Rick Perry has threatened to call lawmakers back for a special session if they don’t fund water plans and tax cuts and find some way to keep building roads in the state.

Lt. Gov. David Dewhurst said that under the Senate’s “brief review of the constitution and our legal precedents, the only way that the Legislature can take money out of the Rainy Day Fund and not have it count toward the constitutional spending cap is through a constitutional amendment which dedicates the money to the purposes outlined.”

He acknowledged that the House doesn’t like to “punt things to the public,” but also insisted that there was no controversy or disagreement between the House and Senate. "At the end of the day we're not trying to be right or wrong,” he said. “We're just simply saying the law is the law.”

The attorney general’s letter is attached.

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