Texas Has A Robust Savings Account. Here's How Some Would Like To Spend It.
The Texas Economic Stabilization Fund, often called the rainy day fund, is doing well. Really well, actually. By the end of 2021, Texas Comptroller Glenn Hegar projects, it will have about $15 billion in it. Lawmakers say the account needs to have a minimum of $7.5 billion to help the state maintain a top credit rating.
What should happen to the rest of that money?
There are several suggestions. And in the end, some of it will be spent. Let's run down a list of the different players asking for money, and what they'd like to spend it on.
The comptroller is the keeper of the piggy bank. Since Hegar was first elected in 2014, he's been pushing for more investment. He says much of the money in the billion-dollar account doesn't make enough on interest to keep up with inflation. He wants to take about $4.5 billion from the account and invest it, hopefully bringing in a higher return.
Hegar wants to then take that return and use it to help stabilize the state's retirement systems.
A draft version of the House budget would take $633 million from the rainy day fund and spread it out over several areas, including: $230 million to help lower premiums for the Teachers Retirement health care plan; $164 million for the Cancer Prevention and Research Institute of Texas; and about $43 million to improve school safety.
The upper chamber would spend more from the fund. Its initial proposal would take $2.5 billion and put $2 billion toward Hurricane Harvey rebuilding, $300 million for the Teachers Retirement and State Employees Retirement systems, and $100 million toward improving security in public schools.
Last week, House Democrats released a plan to increase public school funding, taking $1.75 billion from the rainy day fund. Almost all that money would be used to stabilize the Teachers Retirement System, with about $180 million going toward $500 checks for teachers to buy school supplies. Many teachers use their own money to buy items needed in their classrooms.
The conservative think tank has long been opposed to spending money from the fund. In a report released in December, the group laid out provisions that would make it harder to authorize any spending. That includes requiring a four-fifths vote of both the House and Senate to use rainy day fund money.
The group is OK with the comptroller's plan to invest part of the fund to get a better return. But it'd rather see changes made to the pension system before allowing investment income to prop up those systems.
It also suggests taking some of the tax dollars directed to the fund and using the money to try to lower local property taxes.
This progressive state policy think tank has advocated for using the rainy day fund for times when money is NOT raining on the state. In previous sessions when tax revenues have dropped, the CPPP pushed the idea of spending some of the fund to limit budget cuts.
Cuts are not on the table this session, and the group supports the current spending proposals laid out in the draft House and Senate budget.
The House and Senate usually try to pass their versions of the budget as soon as possible. That gives lawmakers plenty of time to reconcile the differences between the two bills before the legislative session ends May 27.
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