Appropriations Votes to Spend $3.1 Billion From Rainy Day Fund

On Tuesday afternoon, Gov. Rick Perry offered the chairman of the House Appropriations Committee the blessing he seeks to go forward with a vote that would authorize the withdrawal of $3.2 billion from the state's Rainy Day Fund. Chairman Jim Pitts, R-Waxahachie, said on Monday he wanted the governor's public support in order to "comfort" some members of his committee.

In the press release issued just before 3 p.m., Perry's office said he had reached an agreement with House Speaker Joe Straus, R-San Antonio, and Comptroller Susan Combs to "close out the Fiscal Year 2011 budget gap by implementing $800 million in cuts, using $300 million from increased sales tax collections over the last few months, and using a one-time draw not to exceed $3.2 billion from the state’s Economic Stabilization Fund, also known as the Rainy Day Fund."

Perry made it clear in the release that he continues to oppose using the Rainy Day Fund to help close the 2012-13 biennium budget shortfall, which is estimated to be between $15 billion and $27 billion. “As we craft the next two-year budget, Texas leaders will continue to focus on a more efficient, fiscally responsible government, essential state services, and private sector job creation," he said. "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.”

Within minutes after the press release was sent to reporters, Pitts pounded the gavel and called his meeting — originally scheduled to begin at 1:30 p.m. — to order.

Update: The House Appropriations Committee voted 27-0 Tuesday afternoon to move HB 275 to the floor. The substitute bill authorizes the state to draw down about $3.1 billion from the Budget Stabilization Fund, commonly referred to as the Rainy Day Fund. A companion bill, HB 4, passed out of the committee on a party-line vote. That legislation is controversial because it outlines where the savings will come from. Lawmakers began the day short about $4 billion. After the Rainy Day funds are taken into account, the rest of the savings comes from Combs' revised $300 million sales tax revenue estimate and more than $800 million in cuts. That latter figure is alarming, but officials say most — if not all — of those reductions have already been implemented by state agencies over the past two years. 

Democrats objected to the effects the potential cuts may have on education and health care services. They also spoke out against the governor's refusal to consider using any additional Rainy Day funds to cover the next biennium's shortfall, especially since Perry has clearly stated he will not support any kind of tax increase. 

"[This statement] ties our hands," said Rep. Sylvester Turner, D-Houston. "To say you cannot consider the Rainy Day Fund for fiscal years 2012 and 2013 is irresponsible."

On the other side, Rep. Debbie Riddle, R-Tomball, said her constituents were telling her to not spend any of the Rainy Day Fund — and that last fall's election sent a clear signal to lawmakers that Texans want the government to tighten its belt. 

After the bills passed, opposing public policy groups weighed in. F. Scott McCown of the left-leaning Center for Public Policy Priorities sent out a statement encouraging lawmakers to consider a balanced approach to addressing the next biennium's shortfall. 

"Governor Perry has things backwards. Texans aren't supposed to protect the Rainy Day Fund. The Rainy Day Fund is supposed to protect Texans," McCown said. "Voters created the Rainy Day Fund by constitutional amendment in 1988 to offset unforeseen falls in state revenue just like the state faces in 2012-13. The Legislature and Governor should use the Rainy Day Fund to bridge the revenue hole created by the Great Recession."

The conservative Texas Public Policy Foundation said lawmakers voted too soon. 

"We are disappointed to learn that Texas will likely resort to using its rainy day fund this early in the legislative session," said former lawmaker Talmadge Heflin, who is now the director of foundation's Center for Fiscal Policy. "Those who seek to empty the fund because it is raining today have not checked the long-range weather forecast."

Pitts, who appeared exhausted after days of negotiations with the governor's office, responded to his critics before adjourning the meeting. 

"Some say we’re moving too fast. To those people, I say this committee has been meeting since Feb. 9," he said. "Anyone who says this committee hasn’t fully weighed the impact of cutting has obviously not been following this committee’s work."

Pitts must convince at least 90 lawmakers to pass the bill on the floor. "My plan is to take the bill to the floor ... and see what happens," he said.