The Texas Economic Stabilization Fund, also known as the Rainy Day Fund, is Texas’s emergency savings account.
Forty-five other states have some form of rainy day fund, but Texas has the second highest balance at $14.5 billion.
The ESF was created in 1988 to allow the state to have access to money during difficult economic times.
In the past, Texas would cut public programs when they did not have enough money to pay for them. This fund made it so those programs would not have to be cut again.
Until 2014, 75 percent of the tax revenue from oil and gas production was required to go to the ESF, so most of the money in the fund has come from a booming oil and gas industry.
In 2014, the Texas legislature passed a constitutional amendment to transfer a portion of the tax revenue from oil and gas production to the State Highway Fund to address road and other transportation issues.
These transfers to the State Highway Fund are set to expire in 2024 unless further action is taken by the legislature to extend them.
If nothing is done, the ESF will once again receive 75 percent of the tax revenue from oil and gas production beginning in 2024.
Since it was created, there have been far more deposits into the fund than withdrawals, allowing Texas to maintain one of the largest savings accounts in the United States.
According to the Texas Comptroller, the fund is projected to increase by almost $5 billion over the next three years.
J.M. Lozano is the State Representative for District 43. Readers may contact him at his Austin office at (512) 463-0463.