Editorials

Senate balances budget with a $2.5 billion IOU

THE EDITORIAL BOARD

State Senator Jane Nelson would rather borrow money from future Texans than withdraw it from current savings to balance the budget.
State Senator Jane Nelson would rather borrow money from future Texans than withdraw it from current savings to balance the budget. rmallison@star-telegram.com

Every two years, Texas lawmakers tie themselves in knots to avoid being seen as big spenders — or any kind of spenders other than under-spenders.

Smaller government is better government, some say.

That an understandable world view, even if it causes severe problems in meeting the state’s needs.

What the Senate did Tuesday is not understandable.

The upper chamber adopted a $217.7 billion 2018-19 budget that includes $106.3 billion from state general revenue. That’s significantly more general revenue than the $104.9 billion that Comptroller Glenn Hegar said is available.

The problem is in how state Sen. Jane Nelson’s Finance Committee made the jump from having $104 billion and change to spending $106 billion and change.

They borrowed from the next state budget, the one for 2020-21.

They decided it’s OK if budget writers two years from now start out $2.5 billion in the hole.

They may hope it doesn’t turn out that way, that our oil-and-gas economy booms again or something else happens to pump cash into state coffers before the IOU comes due.

But how smart is that, especially when there are at least two other ways to come up with the same dollars?

Nelson’s maneuver was to delay a $2.5 billion payment due to the state highway fund in 2019, moving it to early 2020 instead.

The borrowed money is a bite out of the $4.71 billion in sales tax revenue devoted to highways under a constitutional amendment approved by voters in 2015.

But that amendment allowed the Legislature to “claw back” for general spending purposes up to half of a year’s allocation. All it takes is a two-thirds vote of the House and Senate.

Of course, it would look bad to take back highway money that voters approved only two years ago. But borrowing it is no better, really.

There is a better way, one that the House, under Speaker Joe Straus, says it intends to take.

The state’s Rainy Day Fund contains $10.2 billion and is expected to have $12 billion by the end of 2019.

Withdrawing $2.5 billion from savings would be smarter than borrowing it.

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