‘Optional’ ESF Protection (Updated)

Word from inside the Capitol this afternoon indicates the House and Senate spending negotiators may have reached a “compromise” on transportation funding to “protect” the state’s rainy day account. Except it’s really not much of a compromise at all. And doesn’t provide any real protection. Just a lot more spending.

Over the last week, conferees from both chambers have been working on a solution that both sides could agree to regarding transportation funding. The main hiccup in the process has been over the protection of the Economic Stabilization Fund.


The Senate took the more fiscally responsible position of insisting on a constitutional “floor” of $6 billion before any oil & gas severance taxes could be diverted to the State Highway Fund. (Those funds would otherwise be deposited in the ESF.)

The House on the other hand, beholden to big spending Democrats and moderate Republicans, wanted nothing to do with a floor for the ESF. That of course would have made it harder to spend from the state’s savings account – much like they did this session.

So what have they proposed?

According to the Texas Tribune, conferees and leaders from both chambers are tossing around the idea of simply giving the Legislative Budget Board the option to set a floor for the ESF.

That’s right. An “optional” protection determined solely by 10 legislators (including the Speaker of the House and Lt. Governor). Not even the full bodies of both Houses.

You may recall the legislative members of the LBB are also charged with picking the “spending limit” for budgetary purposes. Of course, the LBB has always exceeded the “population-plus-inflation” figure, using a fictional “projected personal income growth” as their unlimited limit  – essentially allowing them to set a moving target depending on their spending appetites for the upcoming session.

So just imagine the “optional floor” they would set for the ESF.

It gets worse…

The only saving grace from the House’s proposal was that it ended the 25% gas tax diversion to public education, giving taxpayers a bit more truth-in-taxation. Now, the “compromise” keeps that diversion intact, hich means legislators are preparing to sign off on nearly a billion dollars of extra diversions.

Oh, and they’re going to delay sending the proposal to voters until November of 2014 instead of this upcoming November, to hedge against taxpayers rejecting both new water and transportation funding at the sight of so much new spending.

Such political maneuvering sounds eerily familiar.

If a 3rd special session is needed to get this right, so be it. Legislators (and especially taxpayers) shouldn’t sign off on such a watered-down agreement simply just to get out of town.

UPDATE: After later reports indicated the initial deal fell apart, a new deal appears to have been struck. The LBB would now be required to periodically set a floor for the ESF, instead of just having the option to do so, if the deal were to pass. In other words, a terrible deal for taxpayers was only nominally improved. If the LBB is in charge of setting the floor, you can expect the same level of gamesmanship as there is with setting spending parameters each session. Legislators and taxpayers should still be opposed to this “compromise.”

This post was last updated at 10:13pm 07/27.

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ABOUT THE AUTHOR

Dustin Matocha is the Executive Director of Empower Texans. Dustin graduated from the University of Texas at Austin with a BBA in Management, a BA in Government, and a minor in Marketing. He’s a self-described Corvette enthusiast, baseball purist, tech geek and growing connoisseur of local craft beer.

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