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Guest Column: Texas Should Leave the Rainy Day Fund Alone

The state's Rainy Day Fund should be kept as insurance against real financial downturns. If the state needs money for water programs, it should get that money by cutting other programs that are less important.

By Matt Krause
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The legislative session is a series of difficult decisions, each requiring lawmakers to weigh their own beliefs and convictions against the reality of governing. The need to develop water infrastructure and supplies for a growing Texas and the means to fund such development is a fantastic example. Many lawmakers see this session as a potential watershed moment for Texas' continued long-term success, and they are even willing to take extraordinary measures, such as a one-time expenditure from the Economic Stabilization Fund — better known as the Rainy Day Fund — to address our state's water needs. However, the merits of such an extraordinary action should be openly debated.

First, "water" is a fundamental function of government; no one disputes that. And no one is disputing that the water crisis is real. The only question is what we plan to do about it. We recently passed House Bill 4, which created a mechanism for funding our state's water plan. While HB 4 passed by a near unanimous vote, the proposal to fund this mechanism — known as House Bill 11 — takes $2 billion from the RDF. That should give quite a bit of pause to not only to proponents of  limited government, but to those of good government, too.

The Rainy Day Fund was created amidst a severe economic crisis during the mid-1980s to ensure the state had a cash reserve to offset unexpected downturns in the economy. The fund, most of which comes from oil and gas revenue, is not allowed to rise above 10 percent of general state revenue. According to the comptroller's office, we are not currently near that cap and don’t expect to be next session, either.

The Legislature has used the fund to bridge revenue shortfalls numerous times since 2003, fulfilling the express purpose for which it was created. Texas is currently experiencing extremely uncertain times that could pose serious challenges to our budget.

First, our federal government is plagued by gridlock and has failed as a rational governing partner for some time. Whether it was the near default, the fiscal-cliff freak-out or the current sequester, our federal government does not inspire confidence. Due to the sequester, Texas could face billions in absorbed costs for delivery of critical services, as well as potential tax revenue losses as a result of military bases closing and other decreases in federal activity in the state.

Furthermore, Texas is in the midst of another school finance lawsuit that could potentially obligate unknown billions more to the public school system. And while we are blessed with access to the Gulf of Mexico, what should happen if we are struck by a storm of the magnitude of Hurricane Sandy or Katrina along our coast with the current status of the Texas Windstorm Insurance Association? The fund was created for these types of emergency events that threaten the state's ability to meet its obligations.

Last session, some insisted that we use the fund to cover the shortfall in public education. Rightfully, the Legislature resisted the urge to spend money for a purpose outside of the scope of the fund. Today is no different. Any one-time expenditure that is outside the fund’s stated purpose — even for essential functions like public education or water — leaves the state weaker, not stronger. Why don't we find the political courage to cut $2 billion from nonessential programs and put that money into an essential function like water? We are nearing a crisis that demands planning and action — much like the planning and action taken by a previous Legislature to create the fund to address future economic swings. To me, our water security and our budget security are parts of the same conversation on preparedness. Sacrificing one for the other is not good government; it is a gamble with potentially severe consequences.

Our goal should be to leave Texas at the end of this legislative session as prepared as it possibly can be for the uncertainties of the future. We can do this by funding the water growth we need by making the necessary, tough decisions in reordering existing appropriations and by preserving the fund for any number of potential rainy days ahead.

Republican Matt Krause of Fort Worth represents House District 93.

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