A proposal being considered by the Texas Senate today would mark a one-upmanship in legislators’ foolhardy attempt to drain the state’s Economic Stabilization Fund and play money-diversion games. The plan would use the highly volatile oil and gas severance tax revenue stream to fund future highway projects.
[Updated at end of post.]
While there is a lot to be said for the “pay-as-you-go” approach to financing public infrastructure, Senate Joint Resolution 2 by State Sens. Tommy Williams and Robert Nichols won’t get us there.
The severance tax is a highly volatile revenue stream, to put it lightly. Revenue estimates have been off on average by 133 percent in recent years – some to the good, some to the bad. But the basic point is simple: it is unreliable. That’s why it was chosen as the method of funding the Economic Stabilization Fund: the dollars couldn’t be reliably counted upon for budgeting.
So now Sens. Nichols and Williams want to tie road building to the wildly unpredictable boom-and-bust cycles of the oil industry. Projects that require a decade or more of planning shouldn’t be held to a revenue source that fluctuates like the wind.
Two better proposals exist, but will be most likely ignored by a legislature that the Wall Street Journal said wants to “spread the bounty” rather than legislate responsibly.
One proposal would dedicate the existing motor vehicle sales tax to highway construction. That would be a smart, reliable way to put dollars in the highway fund, addressing concerns about declining buying power of the gas tax due to more fuel efficient (and alternative-fuel) vehicles on the road.
A second proposal would essentially turn the Economic Stabilization Fund into an endowment. As long as the fund rested at seven percent of General Revenues, the proceeds of the interest would flow to constitutionally protected highway, education and water funds. That would be hundreds of millions of dollars a biennium – forever.
The problem with both plans is that neither allows the spendoholics to go hog-wild right now. Like a child in a candy store with mommy’s cash, too many legislators – like Mr. Williams — are intent on making bad decisions that put Texas in peril of drowning in a sea of red ink.
By diverting dollars before they can even reach the ESF, Mr. Williams shows he is about one thing and one thing only: spending every single penny, and spending fast, without limit and without restraint.
And this guy wants to be the next state comptroller?
UPDATED: SJR 2 has been mildly improved, by requiring that the Economic Stabilization Fund have a $6 billion “floor” before the pre-deposit diversion of any oil and gas severance tax revenues. This is a positive step in the right direction.
