Perry guarded about GOP's $6B Rainy Day Fund plan

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Associated Press

Posted on April 12, 2013 at 7:06 AM

Updated Saturday, Apr 13 at 4:03 PM

AUSTIN, Texas (AP) — Gov. Rick Perry kept guarded Friday about a new Senate GOP proposal to spend half of the state's $12 billion Rainy Day Fund on water and highway projects, but remained unequivocal that the money should not be used to restore spending cuts to public schools.

"We've got a substantial surplus in our state budget before you get into the Rainy Day Fund," Perry said. "The dollars for education are there in our regular general revenue."

That stance is not surprising from Perry, who has long refused to tap the stockpile of emergency cash reserves for recurring expenses. But it drew a fresh line in the sand a day after Democrats seized on a sudden willingness by Senate Republicans to crack open a fund long-protected by state GOP leaders as fiscally — and politically — sacred.

The Senate plan would take $2.5 billion from the Rainy Day Fund to shore up the state's water supply. It also throws $3.5 billion at a crumbling and congested Texas highway system, which is increasingly buckling under the strain of roughly 1,000 new residents a day.

Yet that $6 billion price tag far exceeds what Perry had in mind in January, when he called for taking $3.7 billion from the fund and divvying that for both water and roads.

Following an appearance at a transportation summit in Austin, Perry said Friday he was "open to their ideas" when asked if he was now comfortable with cutting the Rainy Day Fund balance in half.

"We don't need $12 billion in the Rainy Day Fund," Perry said. "So let's get it back into a productive arena, which is either to build that transportation infrastructure or get it back in the hands of the citizens in the state of Texas."

Perry announced Friday he's in favor of dedicating future vehicle sales taxes to help fund transportation projects, a plan introduced by some Republican lawmakers earlier this session. The state projects collecting $3.5 billion in taxes on new and used car sales this fiscal year — a significant source of revenue that pays for services across the board. The plan would set a threshold for vehicle sales tax collections, and any money above that would go toward road and highway projects.

Democrats' renewed hopes about raiding the Rainy Day Fund for schools weren't unfounded, as Republican state Sen. Tommy Williams, the chief budget-writer in the Senate, said Thursday he was willing to talk about tapping the fund for education or health care.

But water and transportation have taken on new urgency in the Legislature this year. A historic Texas drought left some small towns almost completely dry, while more than 80,000 miles of highways are increasingly traffic-choked and harder to ignore.

Vehicle congestion is growing at an annual rate of more than 8 percent, and keeping the average Texas commuter in their car for 40 hours every year, according to the Texas A&M Transportation Institute. The state's gas tax, which helps pays for new roads and maintenance, has remained at 20 cents per gallon for two decades, and raising taxes of any kind is anathema to many in the Republican-controlled Legislature.

The Texas Department of Transportation has said it needs an extra $4 billion annually to keep up with road maintenance. Williams, who proposed the new Rainy Day Fund spending, estimated this week that Texas would need to spend even more — about $6-8 billion each year — "if you really want to make an impact on congestion."

Yet transportation experts say more funding alone won't solve the problem.

"We're never going to have enough money to build our way out of this problem. Even if we did, we don't have the space," Dennis Christiansen, director of the Texas A&M Transportation Institute, said.

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Follow Paul J. Weber on Twitter: www.twitter.com/pauljweber

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