DALLAS — Texas would tap the rainy day fund to pay down its $44 billion of debt under a resolution passed easily in the state House of Representatives.
House Joint Resolution 8 by Rep. John Otto, R-Dayton, would require voter approval to become a constitutional amendment if the Senate concurs. The measure passed the House April 7 on a vote of 142-2.
Otto, chairman of the House Appropriations Committee said the resolution represents "responsible budgeting and fiscal transparency."
Texas is flush with revenue from the oil and gas boom of the past two years, but falling prices have prompted layoffs and bankruptcies in the industry. So far, Texas has not seen any drop-off in sales tax revenue, which is the state government's primary source of revenue.
The rainy day fund, known officially as the Economic Stabilization Fund, is derived from oil and gas revenues. The fund is expected to reach $11.1 billion by the end of fiscal year 2017. Under HJR 8, when the fund accumulates more money than its constitutional cap, the excess money would be placed in a dedicated account that could be used only for retiring state debt early. The constitutional cap is 10% of the general revenue budget. Currently, any excess goes into the general revenue fund.
"The falling oil prices pointed out that great economic times don't last forever," Otto said. "When that spillover occurs, the best use of that money is to early retire debt."
Rep. Four Price, R-Amarillo and a member of the House Appropriations Committee, said that now is a good time to pay down debt while also providing property tax relief for homeowners.
The House has already approved a $210 billion budget for the next two years and is waiting for Senate action on the spending plan.
The House and the Senate are still trying to reconcile the amount of tax breaks to provide to homeowners. The House has approved $4.6 billion, while the Senate is considering as much as $4.8 billion.
"I think there is room to accomplish all those goals," Price said. "I think we are taking very deliberate and sensible steps at this time based on the financial condition of the state and where we expect to be over the course of the next biennium and beyond."
Rated triple-A, the Lone Star State has $17 billion of general obligation debt, but that comes to only $614 per capita, about 58% of the median level for all states, according to Moody's Investors Service.
