The Texas Capitol can often be the scene of strange phenomena. Enter funds consolidation—this government accounting gimmick actually allows liberal-leaning legislators to spend more of your money by first hoarding it.
First some background. The state collects billions of dollars in funds through specific taxes and fees that flow into special accounts that are subsets of General Revenue. Statutorily designated for a specific purpose or function, these accounts are known as General Revenue-Dedicated Accounts or “GR-D” for short. Many of these funds have a one-way revenue stream with no outflows appropriated—meaning the money is simply collected and never spent. Often called “dead money,” it never changes hands once spilling into state coffers.
A recent and egregious example of this became relevant last session, when the legislature finally disbursed the System Benefit Fund—a utility tax fund that was collected from Texans for years but never actually spent.
If unspent, the money sits in the state treasury with seemingly no use.
Where these funds become useful to the grow-government crowd is in compliance with a major state spending limit. The Texas Constitution mandates that the legislature may only spend money that it has available to spend, known as the “Pay-As-You-Go” limit, or “Pay-Go” for short. Before final passage into law, the comptroller must certify the state budget as containing sufficient revenue to support state spending.
Every session, look for a “funds consolidation” bill that designates these accounts as “available for certification of the budget.”
By deeming the funds as certifiable for the limit, the legislature has a license to “spend” money it isn’t actually using for its intended purpose other than to prop-up budget bloat.
While recent funds consolidation bills have put a cap on the amount of money the legislature may use to certify the budget, the practice itself is repugnant to the principle of budget integrity.
Collecting money simply to have it sit as a “buffer” for state spending undermines the purpose of dedicated taxes and fees and is not truthful budgeting.
Texans deserve transparent, honest budgeting free of gimmicks and games that don’t depend on “dead money” for more state spending.