Texas’ Rainy Day Fund projected to hit cap for first time

The Palestine Herald-Press
Ali Linan CNHI Texas statehouse reporter
March 29, 2023

AUSTIN — The Texas Comptroller's Office projects the state’s Rainy Day Fund will reach its limit for the first time, according to a Wednesday news release.

Texas Comptroller Glenn Hegar said the extraordinary economic factors that have given the 88th Legislature an unprecedented amount of money for general-purpose spending also are generating record high revenues for Texas’ Economic Stabilization Fund, the state savings account that’s commonly called the Rainy Day Fund.

“The revenue increases that we have seen truly have been historical and unprecedented,” Hegar said. “We have never experienced anything like this in the past, and I don’t think we’ll witness anything like this in the future.”

The Comptroller’s Office, in the 2024-25 Biennial Revenue Estimate, projects that the ESF in 2025 will hit the upper limit on its balance, which in each biennium can be no more than 10% of the amount of certain revenue deposited into the General Revenue Fund during the previous biennium.

The fund is projected to surpass $27 billion by fiscal year 2025, compared to less than $11 billion at the close of fiscal 2022, the release said.

Because of this cap, about $690 million that would have gone to the fund will remain in general revenue, while the ESF is projected to receive $9.8 billion.

The Texas Constitution authorizes the Legislature to withdraw from the ESF with three-fifths vote, per the Comptroller’s Office.

“Although the ESF has a historically high balance, this money belongs to the people of Texas, and we must always be prepared to use those funds to address their needs. I am glad to see that lawmakers are giving careful thought to how this tremendous asset can be best put to work for Texans,” Hegar said.