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, , . 4r V V V v 7 ,C, tlY g Ilr ‘ V. LUNCH ON THE RIVER OR THE BALCONY BRUNCH ON SUNDAY! … and Sandwiches, Chili, Tacos, Chalupas, and restaurant baked desserts. Haagen Dazs Ice Cream and fresh yoghurt. Soup and salad bar. 11:30 am until 5:00 pm Monday thru Sunday. 224-4515 the greenhouse Above the Kangaroo Court Downtown Riverwalk 314 North Presa San Antonio, Texas CLAYTON PLAN During the first few years, according to Clayton’s presentation, 50% of the surplus will be deposited in a water fund that will guarantee repayment of local government water bonds. This guarantee, he says, will lead to lower interest rates and enable communities to finance projects they previously could not afford. The remaining surplus will go into a bond retirement fund which Clayton estimates will require $620 million. He bases this estimate on financial projections which demonstrate that if the state invests this $620 million today, the accumulated principal and interest will be sufficient to retire the state’s $950 million debt. Under the Clayton plan, after the comptroller certifies that the bond fund has enough money to repay the bondholders, any additional surplus will be divided evenly between the water fund and a “special reserve fund.” This last fund is a state savings account that can be spent only with a four-fifths vote of the legislature. Clayton advocates this stringent restriction on grounds that “this reserve fund is going to be of utmost importance to the state” when tax revenues from oil and gas begin to decline. Therefore, he declares, “this fund will build, but will require a four-fifths vote to direct that revenue to any particular use.” In his testimony before the House constitutional amendments committee last week, Clayton emphasized how rapidly his new funds will grow. For example, he told his colleagues that if the state surplus is $600 million in each of the next ten bienniums, and if that money is invested at 8% interest, then by 2001 the water fund will accumulate more than $7 billion and the special reserve fund will have just under $5 billion. He also emphasized that with prudent financial management, the $7 billion water fund could be “leveraged” to guarantee $70 billion of water bonds. Clayton also insisted that the water fund will need every last penny deposited in it. “If we’re going to in this state develop the 26 reservoirs,” he said, “we’re going to have to have huge sums of money available to take care of the needs of our people or we’re going to wind up with a water crisis that is much worse than what our energy crisis has been. “Before the turn of the century, we’re going to have to be utilizing water from these reservoirs that are as yet underdeveloped, which means mammoth sums of money. This is going to be a tax savings to people who have to ante up for water supplies.” For more than’ two hours, Clayton paraded through the committee room a group of financial executives, city officials, bond lawyers, water development experts, and chamber of commerce executives. Each witness repeated the same story. Without new water projects, Texas will face a serious emergency. Clayton’s bill, on the other hand, will solve this problem and allow the state to continue growing well into the 21st century. This is the time to start planning for the future. “Just remember,” said Herb Grubb, the director of planning and development for the Texas department of water re ANDERSON & COMPANY COFFEE TEA SPICES AUSTIN; TEXAS Min 512 453-1533 Send me your list. Name Street City Zip sources, “it wasn’t raining when Noah built the ark.” By focusing on the need for water projects and regaling the committee with financial statistics, facts about reservoir capacities, and the intricacies of bond guarantees, Clayton sidetracked the committee from asking about the size and sources of the state surplus. Perhaps that was deliberate; perhaps it was inadvertent. In either case, it would be remarkable if the legislature approved this measure without getting precise answers. For example, consider the problems involved in defining such a simple phrase as “the state surplus.” To the uninitiated, the Texas financial system is a bewildering maze of dedicated revenues, non-dedicated revenues, and all types of expendable nonexpendable funds. Even officials who are intimately familiar with this Rube Goldberg contraption regard it as hopelessly complex. They point out that under the current system, seemingly minor legislation can produce all sorts of unexpected reverberations in other parts of the financial system. Since Billy Clayton’s amendment can hardly be classified as minor, its shock waves conceivably will affect every agency and fund in the state treasury. In a less convoluted system, the state would collect its taxes, fees, royalties, and federal aid, put them all in one or two accounts, and then spend the money. The remainder at the end of each two years would then be defined as “the surplus.” Unfortunately it’s not that simple in Texas. The state treasury currently has 325 different funds. Some receive revenues that are specifically dedicated to them by the state constitution. Others receive non-dedicated revenues. Some funds can be used only for constitutionally specified purposes. Others have no restrictions. There is even one fund, the omnibus tax clearance fund, which receives a potpourri of revenues that are then disbursed to other funds on the basis of a complex formula and priority system. Because of this financial complexity, as well as the enigmatic wording in Clayton’s amendment, the legislature, attorney general, comptroller, and state courts well need the wisdom of Solomon Good books in every field JENKINS PUBLISHING CO. The Pemberton Press John H. Jenkins, Publisher Box 2085 \(11 Austin 78768 20 MARCH 20, 1981