On the heels of announcing a property tax increase on storm-battered Houstonians, Mayor Sylvester Turner sent a letter to Gov. Greg Abbott asking for him to tap the state’s economic stabilization fund to aid recovery efforts.

The ESF, often called the “rainy day fund,” was created in the late 80s when Texans passed a constitutional amendment in response to an economic downturn. Hoping to never have to raise taxes again just to keep the state afloat, lawmakers created the fund as a way to store money during robust economic times.

“The crude oil and natural gas production taxes are by far the most important funding sources for the fund, contributing more than 85 percent of its revenue over times. Ironically, the state has amassed its substantial cushion by tapping the same volatile revenue stream that has caused it financial difficulties in the past,” reads a Comptroller report on the fund.

The fund now tops $10 billion and Turner is saying that he wouldn’t have to pursue a property tax increase if Abbott taps the fund.

The only way to release ESF dollars is for the governor to call a special session, or wait until the 2019 legislation session. So far Abbott hasn’t indicated he will call a special session.

State Sen. Paul Bettencourt (R-Houston) says that it’s not necessary; he believes that through tax increment reinvestment zone (“TIRZ”) dollars (in addition to $100 million the city has already received in FEMA relief) the city would be able to find the necessary revenue until ESF funds are allocated by the legislature and without increasing property taxes. Council Member Mike Knox has also said that he would like to see the administration tap into its own reserves, which could be done at any time.

“Use of ESF funds is appropriate for response to a natural disaster such as Harvey that wreaked significant damage and caused local governments to incur unanticipated costs far above and beyond their budgets,” read Turner’s letter.

According to sources, the fund has only been tapped once for natural disasters and that was through a supplemental spending bill in 2013 to address wildfire recovery.

Turner continued, saying that total costs have yet to be determined, but a few of the examples they are confronting are $25 million for debris removal, $10 million for additional flood insurance, a $15 million deductible on recovery damages, and closing the letter by saying, “there hardly seems a more appropriate use of the nearly $10 billion of taxpayer dollars in the fund than on recovery from this storm.”

Charles Blain

Charles Blain is the president of Urban Reform and Urban Reform Institute. A native of New Jersey, he is based in Houston and writes on municipal finance and other urban issues.


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