Texas’ rainy day fund hits $878 million

AUSTIN – Texas Comptroller Carole Keeton Strayhorn today transferred $594.5 million into the state’s Rainy Day Fund, bringing the fund’s balance to $878.1 million.

“I am pleased to report today that I transferred $594.5 million into the state’s Rainy Day Fund,” Strayhorn said. “As I have said so many times before, the money in the Rainy Day Fund should only be used for an emergency. I still believe we should grow the Rainy Day Fund to at least $3 billion. This would only be 5 percent of our state’s General Revenue budget, which is what rating agencies recommend for fiscal soundness and a minimum necessary if, God help us, we have a true emergency.

“I have always said that conservative fiscal policies have served our state well in the past and are the best bet for the future,” Strayhorn said.

Despite the raid of the Rainy Day Fund during the last regular Legislative session, Strayhorn said the unexpected surge in the natural gas severance tax has begun to restore the fund. All three of New York’s top bond rating firms gave their highest possible ratings to Texas’ 2004 Series Tax and Revenue Anticipation Notes (TRANs).

The Rainy Day Fund, also known as the Economic Stabilization Fund, was created by the 70th Legislature in 1987 as a savings account to help offset fiscal instability in cases of a downturn in the economy. Dollars are transferred into the fund in two ways – either by appropriations from the Legislature, which has never occurred, or when oil and gas severance taxes are above the benchmark year of 1987, 75 percent of those dollars trigger into the fund.

It takes either a two-thirds vote of the Legislature to make withdrawals from the Rainy Day Fund, or a three-fifths vote if the Comptroller’s forecasts reduced revenue before a session or if a deficit hits after a budget is approved.

Strayhorn also said economic news from her agency at the end of the fiscal year shows that the Texas economy is fighting back and poised to make strides in the near future.