Guest Column: Use the Rainy Day Fund Before We Go Dry
Using the Rainy Day Fund now will help address the state's water needs and keep general state spending on water down for decades to come.
Transferring money from the economic stabilization fund, also known as the Rainy Day Fund, to capitalize a water infrastructure bank is the most fiscally prudent approach the Legislature can take to uphold one of its core constitutional duties and ensure that our private-sector economy continues to thrive.
Article 16, Section 59 of the Texas Constitution is known as the "Conservation Amendment." It states that the conservation and development of all the natural resources of the state are public rights and duties, and it declares that the Legislature shall pass laws necessary to preserve them. The most fundamental of these natural resources is water.
Our 2012 State Water Plan is the result of a regional planning process comprised of local stakeholders who evaluated needs over 50 years and recommended strategies to meet that demand. It recognizes that over the next 50 years, our water supply will decrease 18 percent while our water demands increase by 27 percent. If we don’t act, we could be 8.3 million acre-feet short per year by 2060. That’s almost 3 trillion gallons of water.
The State Water Plan, however, has never been fully funded. And as we continue to delay addressing our water needs, businesses are left to question whether Texas will have the reliable supplies of water that are essential for long-term economic growth. We need a dedicated source of funding so water providers can make the long-term planning decisions necessary to begin work on projects that are needed now to meet our demands. Without it, citizens could experience higher water rates, or providers may decide to delay projects, thereby increasing costs and threatening economic growth.
House Bill 4 creates a dedicated source of funding to provide meaningful financing to water providers across the state. A one-time transfer of $2 billion from the RDF would capitalize a water infrastructure bank that revolves its funds so that over time — if properly capitalized — it could finance $27 billion worth of strategies contained in the 2012 plan.
The value of using the RDF is that it allows for a one-time infusion of money that guarantees the state's support of water projects for years to come. It also replaces a continuing demand for general revenue funding. In the past, the Legislature has intermittently addressed funding the State Water Plan by using general revenue money to pay debt service on the bonds issued. If we tried to fund the State Water Plan from general revenue, by 2060, it would take between $8 billion and $12 billion. But using the financing mechanisms created in HB 4, a one-time capitalization of $2 billion could fully implement the plan and not require on-going general revenue support.
Using $2 billion to address water needs would still leave a significant balance — about $10 billion — in the RDF. In other words, more than enough money will remain in the fund to protect our credit rating and prepare for unforeseen future disasters. We can minimize the almost immeasurable cost of an unreliable supply of water and show employers that the Texas economy is equipped to prosper.
A one-time withdrawal from the Rainy Day Fund will allow the state to manage the effects of severe droughts, ensure an affordable water supply, foster economic growth and protect the and natural resources of the entire state. As legislators, this is our duty.
Republican Allan B. Ritter of Nederland represents House District 21.
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