DALLAS — Sustained growth in Texas oil and gas production will continue to pump up the state's $8.7 billion rainy day fund, according to a report issued Oct. 8 by a non-partisan research group.
The growth will continue even if Texas voters approve two measures that would tap the fund for water and transportation infrastructure needs, the Texas Taxpayers and Research Association said in its new report, "Rainy Day Flood."
The rainy day fund was created by constitutional amendment in 1987. It receives 75% of the oil and gas severance tax revenue in excess of 1987 collections.
Texas collected a record $4.5 billion from the production taxes in fiscal 2013, with a corresponding $2.5 billion deposit into the rainy day fund.
Deposits into the fund averaged $1.4 billion over the past eight years, but the TTRA report predicts deposits will average $3 billion a year over the next few years.
Voters will decide in November on a constitutional amendment in November to take $2 billion from the fund for a water infrastructure bond bank. An amendment on the 2015 ballot would divert half of the oil and gas revenues currently going into the rainy day fund to transportation projects.
"While the Legislature is asking Texas voters to weigh in on using some portion of the fund or its revenues to help fund the state's infrastructure needs, those additional uses should not threaten its financial vitality," TTRA said.
The rainy day fund, officially known as the Emergency Stabilization Fund, will top $8.7 billion at the end of fiscal 2014 if there are no diversions, the report said. If both measures fail, the rainy day fund would hit its constitutional cap of 10% of total general fund revenues, or $18 billion, at the end of fiscal 2018.
If both measures are adopted, the rainy day fund would total $6.7 billion at the end of 2014 and $17.3 billion in 2020.
"The fund would be near, but somewhat under its constitutional cap by 2020, but would likely hit it soon thereafter," the report said.