Texas Comptroller Glenn Hegar announced today he recently completed the transfer of $2.77 billion into the State Highway Fund (SHF) and the Economic Stabilization Fund (ESF; commonly known as the "Rainy Day Fund"). Each fund received more than $1.38 billion, or 50 percent of the total transfer.
“Texas’ Rainy Day Fund is an important tool established to help our state weather difficult economic circumstances,” Hegar said. “This transfer pushes the balance in the fund to more than $12 billion. It is crucial that Texas use this amazing asset to maintain our strong fiscal position and our state’s AAA credit rating. That's why I have asked the Legislature to authorize me to invest a portion of the fund in a more prudent and responsible manner and use the returns to address the types of long-term liabilities that have crippled the finances of states such as Illinois and New Jersey. Significant portions of this money have not been keeping up with inflation, and we must not allow the power of this asset to erode over time.”
The transfer amounts are based on crude oil and natural gas production tax revenues in excess of 1987 collections. If either tax generates more revenue than the 1987 threshold, an amount equal to 75 percent of the excess is transferred.
In November 2014, voters approved a constitutional amendment allocating at least half of these severance taxes to the ESF, with the remainder going to the SHF for use on non-toll highway construction, maintenance and right-of-way acquisition.
“Legislators and voters have taken crucial steps to address the infrastructure challenges of our fast-growing state,” Hegar said. “The 50 percent split that flows into the State Highway Fund is critical to address the transportation needs of a dynamic and growing economy that serves a rapidly expanding population.”
According to the Texas Constitution, the ESF transfer must occur within 90 days after the end of the fiscal year. When fiscal 2018 ended on Aug. 31, the ESF balance was $11.04 billion.
With this most recent transfer, the new balance is $12.48 billion, not accounting for currently outstanding spending authority. The balance in the ESF will decline as agencies spend down this remaining appropriation authority.