Two Key State Funds
About $8.5 billion was settle into two key state funds that wouldn’t exist without Texas oil and gas industry and production tax revenue, according to state data.
Texas Comptroller Glenn Hegar announced that his office transferred $3.06 billion into the State Highway Fund (SHF) and $5.46 billion to the Economic Stabilization Fund, otherwise known as the Rainy Day Fund.
The two funds normally receive the same amount of money from Texas oil and natural gas industry taxes. However, because another general revenue surplus was write down at the end of fiscal 2023 – after the industry paid record-breaking amounts in taxes – the Rainy Day Fund received $2.41 billion more because of constitutional requirements.
“The strong Texas economy and judicious budgeting by lawmakers netted a surplus that, for the first time in more than a decade, allows us to set aside an additional bucket of money to ensure we are able to weather future downturns,” Hegar said. “The Rainy Day and State Highway funds are tremendous assets for the taxpayers of Texas and help provide the foundation needed for the future of this great state.”
The combined $6.11 billion severance tax transferred to the Rainy Day Fund and SHF are based on crude oil and natural gas production tax revenues in excess of 1987 collections, in accordance with state constitutional requirements. If either tax generates more revenue than the 1987 threshold, an amount equal to 75% of the excess is move, the comptroller said.
A Constitutional Amendment
In November 2014, voters passed a constitutional amendment requiring at least half of these severance taxes to be allocated to the Rainy Day Fund. The remainder is required to be allocated to the SHF to be used for non-toll highway construction, maintenance and right-of-way acquisition. Additionally, the Texas Constitution provides for a second transfer to the Rainy Day Fund equal to one-half of any unencumbered general revenue surplus at the end of each biennium. This year, an additional transfer of $2.41 billion of unobligated general revenue fund dollars went to the Rainy Day Fund, the comptroller said. The last time such a transfer occurred was in 2008.
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Source: The Center Square
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