Texas' State Budget Crisis Looms Larger: Rainy Day Fund $1 Billion Less Than Expected

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From the Statesman:

Texas’ piggy bank will be almost $1 billion lighter than expected, according to a report released last week by Texas Comptroller Susan Combs. Combs revised her estimate for the so-called rainy day fund to $8.2 billion, down from her January projection of $9.1 billion.

The primary culprit is falling natural gas prices, which will lead to less production and thus less tax revenue.

Texas' state budget crisis is looming large for the 2011 Texas Legislature. The only reason lawmakers were able to stave off raising taxes or raiding the Rainy Day Fund in 2009 was due to the federal stimulus dollars sent from Democrats in Congress and the Obama administration — something Perry has tried to deny, to no avail.

Months ago, Dewhurst tried to get away with saying Texas didn't need the federal stimulus dollars. From my BOR post at the time:

While Dewhurst is out spinning lies to cover his and every other Texas Republican's political hide when Rick Perry is rallying against Washington at the same time he's accepting $14 billion to fill a budget hole that he created — his Senate Finance Chair, Steve Ogden, is actually telling the truth.

From the Fort Worth Business Press:

“In order to balance the budget this biennium, which is $182 billion, we used $14 billion in federal stimulus money to balance it,” said Sen. Steve Ogdenm R-Bryan. “We're not expecting a similar amount of similar money to be available in the next two years because the federal government just doesn't have it. So, assuming that's true, you go into the next session with a $14 billion hole.”

According to the State Comptroller's office, Texas requested and was allocated almost $20 billion in federal stimulus funds from the American Recovery and Reinvestment ACt, and has so far been awarded about $13 billion. About $3.6 billion has been received, and nearly all of the received funds have been spent.

Dewhurst was further fact-checked by the Statesman's Jason Embry, to be proven quite wrong:

Without the stimulus dollars, the Legislature would have had to completely empty the Rainy Day Fund and find other areas of state government to cut. (Spending cuts would have been unavoidable because the state’s growth — 75,000 new students per year, for instance — makes it more expensive each year to maintain the same level of services).

So could the budget have been balanced without stimulus money? Sure. But without those dollars, you could have a near-empty Rainy Day Fund today, and it would have been much more difficult to make the spending increases in higher education, for instance, that state leaders have been bragging about ever since the session ended.

Without the stimulus dollars, the budget may have been balanced, but it would bear little resemblance to what the Legislature actually passed.

Rick Perry's failures with the state budget will end up eating away at his general election campaign, especially since he will have no new answers to offer for how to solve the crisis that the Republican-controlled Legislature has created over the past six years.

About Author

Phillip Martin

Currently the Research and Policy Director for Progress Texas and the Texas Research Institute, Phillip Martin writes occasional long-form pieces for BOR that promote focused analysis and insight into Texas politics. Born and raised in Austin, Phillip started working in politics in 2003 and started writing on BOR in the summer of 2005. Phillip has worked for the Texas Democratic Trust, the Texas Legislative Study Group, and now the Progress Texas family. He is a lifelong Houston Astros fan, a loyal Longhorn, and loves swimming at Barton Springs Pool.

1 Comment

  1. Rick Perry Campaigning on Spending
    Rick Perry is proud of the fact that he has refrained from spending money on things he should be spending money on.  He is campaigning on his fiscal discipline.  If the state budget blows up, his campaign will have to go back to the drawing board.

    Having said that, Perry looks to be the one to beat in the GOP primary, since KBH is not really running.

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