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Time Proves State’s Refusal to Spend Rainy Day Fund Misguided; What We Should Do Now and for the Future

  

Author:
Dick Lavine /(512) 320-0222 x 101

February 21, 2012

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During the legislative session, we recommended that the state spend the Rainy Day Fund to prevent damaging cuts to vital state services, particularly public education. The Rainy Day Fund is a constitutional fund designed to save money in good times to pay ongoing expenses during bad times when revenue is short. After the economy improves, and revenue rebounds, general revenue once again pays for ongoing expenses. During the 2011 legislative session, with billions available for appropriation from the Rainy Day Fund, the state had no need to cut spending on public education—the proven path to good-paying jobs. Unfortunately, the state cut public education spending by $5.3 billion.

Time has proven our recommendation to use the Rainy Day Fund a sound one. The Comptroller's December 2011 certification revenue estimate projects a $1.6 billion ending balance by August 2013, because of improved tax collections since the 2011 legislative sessions ended.

If the governor called the legislature into special session today, $1.6 billion (the currently estimated ending balance), along with $400 million from the Rainy Day Fund, could be appropriated to restore public education spending for the upcoming 2012-13 school year.