The Economic Stabilization Fund, also known as the Rainy Day Fund, is now hovering around $12.48 billion, which is the highest balance in the fund’s 30 year history, and is also the highest among other states that have a similar fund. The Rainy Day Fund was established to help the state weather difficult economic circumstances.
Several years ago, the Joint Select Committee on the Economic Stabilization Fund (ESF Committee) was established to determine and adopt how much money would be sufficient in the ESF – as a minimum balance. Well, at the end of last month the committee set the Rainy Day Fund’s minimum balance.
In a unanimous decision, the Select Committee on the Economic Stabilization Fund Balance, chaired by both Sen. Jane Nelson (R-Flower Mound) and Rep. Sarah Davis (R- West University Place), voted in favor of keeping the $7.5 billion, as a sufficient balance in the ESF.
During the panel discussion, it became quite apparent to the members that there were no compelling reasons to increase the sufficient balance to $8 billion, based on various credit bureau recommendations, since the state already has the highest credit rating possible.
It was also noted that the Rainy Day Fund will slightly decrease to $11.8 billion in fiscal year 2020, due to several transfer obligations – including the $989 million for capital projects.
It remains unclear whether the legislature will choose to tap into the Rainy Day Fund to address certain issues, such as Hurricane Harvey and public education, during the upcoming legislative session.
Sen. Jane Nelson filed SB 69 in November, which would eliminate this joint select committee all together – the sufficient balance would be set during the legislative session.
For more information on this topic, please contact Paul K. Emerson at (800) 456-5974.