DALLAS — Texas will draw up to $3.2 billion from its rainy-day fund to close a revenue shortfall in fiscal 2011 under an accord approved Tuesday by Gov. Rick Perry.
The drawdown — along with $300 million of unexpected sales-tax revenue and $856 million of budget cuts that have been implemented over the past two years — will cover a revenue gap that had been estimated at $4.3 billion.
Perry had strongly rejected tapping into the rainy-day fund in favor of cuts to balance the current budget, but said Tuesday he would agree to a one-time, $3.2 billion drawdown of what is officially called the Emergency Stabilization Fund.
“I remain steadfastly committed to protecting the remaining balance of the rainy-day fund, and will not sign a 2012-2013 state budget that uses the rainy-day fund,” the Republican governor said.
Soon after Perry withdrew his opposition to tapping into the fund to cover the current shortfall, the House Appropriations Committee unanimously approved HB 275, which would transfer $3.1 billion into the general fund from the rainy-day fund.
The stabilization fund, which was established in the late 1980s, currently contains $8.2 billion. If left intact, it was expected to grow to $9.4 billion by the end of the next biennial budget on Aug. 31, 2013.
The resolution of the fiscal 2011 revenue shortfall reduces the projected revenue gap for the next biennial budget to between $15 billion and $23 billion.
Appropriations Committee chairman Rep. Jim Pitts, R-Waxahachie, who had proposed a measure to tap the fund despite Perry’s opposition, said he was relieved by the compromise reached between Perry, House Speaker Joe Strauss, R-San Antonio, and Comptroller Susan Combs.
“We’ve come a long way, baby, from this morning,” he said after the vote.
An upset Pitts canceled a committee hearing on Monday when Perry staffers, invited to outline a potential budget deal at the session, did not show up.
Combs on Monday certified the additional $300 million of fiscal 2011 revenue coming from strong sales tax collections over the last 10 months. She said the higher revenues will increase the funds available for the fiscal 2012-13 biennial budget to $72.5 billion.
“Sales tax revenue has done well in recent months because of increased business and consumer activity, which will help close the 2011 deficit,” Combs said. “And as I mentioned in recent testimony, it is also important to keep the state’s future budget needs in mind in our decision-making of today.”
Combs told the committee on March 3 that she would be forced to take from the rainy-day fund whatever was needed to redeem $7.8 billion of temporary tax notes due in August unless lawmakers resolved the current-year revenue gap.
Rep. Mike Villarreal, D-San Antonio, voted for the measure, but said Strauss and Perry were seeking to avoid political embarrassment by changing their stance on the stabilization fund.
“We’re willing to tap the rainy-day fund to save face, but we’re not willing to tap the rainy-day fund to mitigate the harm that is going to be inflicted upon our children,” Villarreal said. “That, in a word, is irresponsible.”
The agreement on the fund was criticized by both liberal and conservative groups. Talmadge Heflin, the director of the conservative Texas Public Policy Foundation’s center for fiscal policy, said it was too early in the session to get into the rainy-day fund when even larger problems are on the horizon.
“Those who seek to empty the fund because it is raining today have not checked the long-range weather forecast,” he said.
F. Scott McCowen, of the liberal Center for Public Policy Priorities, said Perry was mistaken in his opposition to using the fund to reduce projected spending cuts over the next two years.
“Gov. Perry has things backwards,” he said. “Texans aren’t supposed to protect the rainy-day fund. The rainy-day fund is supposed to protect Texans.”