Rainy Day Divisions

F. Scott McCown

Considering Texas' state coffers are empty, now may not be the time for lawmakers to boast about fiscal responsibility. Yet as the Republican leadership fights internally over how and when to tap the Rainy Day Fund, it is lecturing the federal government on good housekeeping.

Texas is in the red. Out of the state's projected $27 billion shortfall for the 2012-13 biennium, $4.3 billion is deficit spending from the current biennium. What lawmakers passed as a balanced budget in 2009 is not balanced now, and Democrats and Repub­lic­ans are divided along party lines and internally over how to fix that.

Two recent votes revealed some of those divisions. On March 15, the House Appropria­tions Committee voted unanimously for House Bill 275, releasing $3.2 billion from the state's Economic Stabilization Fund – better known as the Rainy Day Fund. Yet in the same meeting, the committee broke 18-9 on strict party lines over HB 4. While it may be called a supplemental appropriations act, HB 4 is actually a cash grab by lawmakers, pulling an additional $736 million out of current agency funding. This comes after several rounds of cuts last year, followed by agencies submitting dramatically decreased funding requests last fall. Veteran Appropriations Com­mit­tee member Rep. Dawnna Dukes, D-Austin, warned that these newest cuts will lead to Health and Human Services staff making "life-and-death decisions. Texas children, senior citizens and disabled Texans deserve better."

Republicans hope that the combination of cuts, a limited Rainy Day drawdown, and increased sales tax revenue will fill the debt hole. But GOP leadership only agreed on that balance hours before the vote, when Gov. Rick Perry ended his blanket opposition to spending anything from the Rainy Day Fund. In the original version, House Approp­ri­a­tions Committee Chair Jim Pitts, R-Waxahachie, wanted to cover the whole $4.3 billion deficit out of the Rainy Day Fund. While he has been bargained down, the new deal may be a bigger embarrassment for Perry, who as recently as his Feb. 8 State of the State address railed that "we must protect the Rainy Day Fund." Even after Perry's March 15 climbdown, F. Scott McCown, executive director for the Center for Public Pol­icy Priorities, accused Perry of missing the point. "Texans aren't supposed to protect the Rainy Day Fund," he said. "The Rainy Day Fund is supposed to protect Texans."

HB 275 only deals with the current biennium and still requires a three-fifths vote in both chambers to release any funds. Law­mak­ers could still go back and tap the other $6 billion left in the fund for the next budget, but because that would target future spending, it would require a two-thirds majority – an extra 10 votes in the House and two in the Senate. With fiscal hawks targeting state agencies, and tea partiers still feeling cocky after the November election, that small shift would require a big sales job. More worryingly for state and local agencies hoping for fiscal stability, Perry still opposes using Rainy Day cash in the 2012-13 biennium.

The driving force behind all these discussions is the Texas constitutional requirement for a balanced budget. Fiscal conservatives argue that this keeps the state out of debt, and they're pushing for the federal government to follow the same model of living paycheck to paycheck. On Feb. 23, the Senate voted 24-7 to send Senate Joint Resolution 1 to the House; it calls for the federal government to propose a balanced budget amendment for the U.S. Constitution.

However, the split was not along party lines, and in a move that may draw flak from the small but vocal 10th Amend­ment activist groups, three Republicans voted no, stating concerns that SJR 1 calls for a constitutional convention in the event that Congress does not move forward by the end of 2011. Summing up their fears, Sen. Leticia Van de Putte, D-San Antonio, said a convention could ignore its remit and start an "uncontrolled rewrite" of the Constitution. Sen. Craig Estes, R-Wich­ita Falls, was less polite: If it were "men like George Washington, James Madison, and Alexander Hamilton" running the show, then he would be fine with it, but he feared it may be hijacked by "men and women of our time" whose political beliefs may include "theories of class warfare [and] the culture of victimization."

While Sen. Eddie Lucio Jr., D-Brownsville, shared some concerns about a runaway convention, he was equally worried about the immediate impact on Texas programs dependent on federal aid. Moreover, he warned that the term "balanced budget" may be meaningless for an institution like the federal government that can literally print its own money.