The answer to that question appears to be both yes and no. Despite pleas from conservatives throughout the state calling for spending cuts to bridge the budget gap, the House Appropriations Committee voted unanimously to withdraw $3.2 billion from the Economic Stabilization Fund, commonly known as the Rainy Day Fund. Three-fifths of the House and Senate must approve the withdrawal, and then it would go to the Governor’s desk for signature. But while Governor Perry has gone on record against using the RDF, stating that he “will not sign a 2012-2013 state budget that uses the Rainy Day Fund,” he does support this $3.2 billion draw to cover the fiscal year 2011 budget gap.
It appears that the House Appropriations committee is throwing in the towel on any further effort to cut spending, going instead for the easy fix of tapping nearly a third of the RDF. It is still relatively early in this legislative session, and the Appropriations Committee has committed to cutting only $800 million from the current budget, while the gap between spending and revenue exceeds $4 billion.
Now legislators must focus on crafting the next two-year budget. Depleting the RDF to solve the current budget shortfall effectively kicks the can down the road and will likely create further deficits for the next biennial budget when it is projected that there will be increased costs due to Medicaid and the probability of a worsening budget gap. The Rainy Day Fund was created to be a safety net. Were Texas to have some type of natural disaster or if the economy remains volatile, as experts predict, it is vital to have those funds available. Now is the time for legislators to come up with creative solutions for reducing current spending, while there are still months left in the session. It may be cloudy now, but the long-range forecast calls for rain. Legislators would be wise to preserve the RDF in full for future emergencies.