Ogden Proposes Taking Additional $3B From Rainy Day Fund

Members of the Senate Finance Committee kicked out a series of bills Wednesday intended to fund their chamber’s version of the state budget for the next biennium. Toward the end of the meeting, Chair Steve Ogden, R-Bryan, dropped the news many have been waiting to hear: He wants to attach a contingency provision to their spending plans that would withdraw $3 billion from the Rainy Day Fund to balance the budget for the next two years, provided other revenue can’t be found and the comptroller needs a last resort. 

That figure represents the gap between the committee’s proposed expenditures and available money after the committee passed a slew of revenue bills. Ogden told the committee he could not think of another way to balance the budget. Lawmakers are scheduled to consider the measure during Thursday morning’s hearing. 

“I would support spending more than $3 billion (from the Rainy Day Fund),” said state Sen. Judith Zaffirini, D-Laredo. 

Officials from the Legislative Budget Board told lawmakers the amount of revenue collected from natural gas production is exceeding expectations and oil revenues are on track to do the same. Some of that money will be deposited into the Rainy Day Fund, also known as the Economic Stabilization Fund. The House has already voted to withdraw no more than $3.1 from the account to close the budget deficit between now and Aug. 31. If the Senate approves that proposal in addition to the $3 billion Ogden proposed on Wednesday, the chair said he expected the Rainy Day Fund would maintain a balance between $5 billion and $6 billion in 2013.  

So far, Sen. Dan Patrick, R-Houston, appears to be the committee's most vocal objector to Ogden’s idea. He said he could support resorting to rainy day funds to close the current budget year’s deficit, but he couldn’t go beyond that because he is concerned about the stability of the economy and the possibility of a massive Medicaid shortfall in 2013. 

“That’s my reason for wanting to hold on to every penny we can,” Patrick said. “Maybe we should look at other ways we can cut.” 

Ogden said the committee has exhausted the possibilities. 

“If the committee agrees with you, the only option is to cut SB 22 in half. That’s the only way to do it. I don’t know how else to do it,” he told Patrick. 

SB 22 is a major public education finance package that passed the committee earlier in the day by a vote of 11-4. Sen. Bob Deuell, R-Greenville, joined three Democrats in saying the proposed cuts would seriously hurt schools in his district. 

The legislation, authored by Senate Education Chair Florence Shapiro, R-Plano, would put $5.3 billion back into the Foundation School Program, which is the main source of funding for public schools. An additional $400 million would be available for textbooks and pre-kindergarten programs. Overall, Shapiro said they found the money by changing funding formulas for the schools. She said cuts would be made to every district, ranging from 1 percent to 8 percent, and averaging around 5 to 7 percent.  

If the Senate plan passes both chambers, public schools still face a $4 billion reduction. At the beginning of the session, a baseline budget proposed a staggering $10 billion cut. But at this point, it’s far from clear whether the House would even go along with the Senate. The lower chamber's proposed budget bill leaves public schools $8 billion short of the funds they are entitled to. 

“We need to avoid compromise on this issue,” Shapiro warned the committee. “We need to stand strong, because we’re standing strong for the children of Texas.”

 “If we’re going to continue the heroic effort, the Senate will have to stand up and hold the line," added state Sen. Kevin Eltife, R-Tyler. "We cannot let the conference committee end with less than $6 billion (put back into the school budget).” 

In fact, senators from all sides of the political spectrum united on one front: their opposition to the budget passed by the more conservative House. 

“Having been here so many years, I don’t think we have to be boxed into their corner,” said Sen. John Whitmire, D-Houston. 

Unofficial figures indicate the Senate's budget is billions more than the austere $164.5 billion budget passed by the House in late March. Both drafts cut from current spending levels, and neither takes into account anticipated population growth among adults and school children.  

On Wednesday, the Senate Finance Committee also passed a slew of revenue bills — saving the state a few million here and there — that would permit state agencies (from the judiciary to health and human services and the attorney general) to be more efficient by charging fees for certain services, eliminating costly practices like publishing session laws, leasing available parking spots, etc. They also voted 13-2 to send SB 1811 to the full chamber. That legislation includes about $4 billion worth of non-tax revenue ideas from a sub-committee headed by Sen. Robert Duncan, R-Lubbock. 

At one point, Ogden brought up SJR 5, a bill that would transfer $2 billion to public schools from its endowment, the Permanent School Fund. The chairman wants to put the issue before voters in a constitutional amendment, but he is up against some fierce opposition by fellow committee members. 

The committee is scheduled to meet Thursday morning at 9 a.m. to consider the House’s appropriations bill (HB 1), the supplemental bill to close out the final months of the current biennium, SJR 5, and Ogden’s rainy day proposal.