Rainy Day Bill: A $4.3 Billion Drop in the Bucket?

Even if the House elects to spend $4.3 billion from the Rainy Day fund, it would hardly fix the state budget woes.


When House Appropriations Chair Jim Pitts introduced the very first draft of the budget almost two months ago, he was visible displeased with the document. Even with a $27 billion budget shortfall, the bill did not count on any new money from either the state’s $9 billion Rainy Day fund or taxes and fees. Instead, the slashes to Medicaid funding, schools and other big issues were startling. “This bill is only a starting point,” the Waxahachie Republican cautioned his colleagues before he began to outline the tremendous cuts to education and health and human services. Later in his presentation, he adamantly told House members, “We will try to find a way to improve this budget.” When Democrats and Republicans alike began criticizing the cuts, he shook his head. “I promise you that I’ll work day and night to make this budget better,” he said with his trademark twang.

While there’s no doubt that both the House and Senate members—not to mention their staffs—have worked hard, the draft budgets have barely changed. Over the course of this week, the Appropriations Committee has heard back from its subcommittees on education and health and human services, the two biggest areas for budget cuts. In both cases, the budget largely maintains most of the same cuts present in Pitts’ initial draft.

There’s been one spot of light for those hoping to avoid budget cuts: using the Rainy Day fund money to soften the budget shortfall. Pitts himself is carrying HB 275 which would take $4.3 billion from the Rainy Day fund to pay off the state’s current debts from this current fiscal year. (The rest of the budget shortfall is money we don’t have to appropriate for the next budget cycle of 2012 and 2013.) The controversial bill’s committee debate, scheduled for Thursday afternoon, should be exciting. The governor and some hard-right fiscal groups have maintained that the Legislature should balance the budget using cuts alone. Meanwhile, Democrats and a coalition of advocacy groups have pushed for using the entire $9 billion in the Rainy Day fund, and some are advocating tax hikes or sales tax expansion to help minimize cuts.

Because the bill would use Rainy Day money to pay off the state’s current debts, as opposed to using the money for the 2012-2013 budget, it only requires a three-fifths majority—or 90 votes in the House. Using any more of the fund would require two-thirds.

While spending the $4.3 billion would be a victory for Pitts, it would only barely ease the budget crisis. Consider: The budget currently cuts $9.8 billion in state payments to school district. The commissioner of education says the state must find a minimum of $6 billion to put back into schools. Similarly, the commissioner of health and human services says he needs $9 billion more for basic costs of core programs like Medicaid. In case your math is rusty, that’s a minimum of $15 billion the state has two find in just two parts of the budget. Next to that, $4.3 billion ain’t much.

Of course there are still a plenty of options, but some of which are more politically palatable than others. For instance, holding off on some state payments until the next budget cycle, an old accounting trick, can save the state somewhere between $2.3 and $4 billion, and is unlikely to cause controversy. Meanwhile, given the controversy the Pitts bill has faced, it’s hard to tell if anyone could get the 100 votes needed in the House to spend the entirety of the Rainy Day rather than just half. Closing tax loopholes and exemptions could save the state billions according to the state comptroller, but that might incur the wrath of industry lobbyists. And expanding the sales tax, so that more industries had to pay the state, would generate quite a bit of money—but probably wouldn’t go over so well in anti-tax Tea Party circles.

Today’s debate over spending $4.3 billion will undoubtedly be an interesting discussion on the merits of adding more revenue to the budget.  But even if the measure passes, it would hardly be a total solution to the state budget woes.