Texas is one of only 11 states with a AAA+ bond rating. In a recent press release, Standard and Poor’s stated that it gave Texas its highest rating because of its “strong revenue forecasting and cash management practices, low overall net debt and below-average unfunded retirement liabilities.” Those positives are not only the result of good fiscal management, but are also largely due to an increase in oil and gas production.
I recently participated in a Texas Tribune panel discussion centered on the windfall to Texas resulting from the increase in oil and gas production. Much of the conversation focused on how we could capitalize on the boom and take advantage of this windfall to ensure the long-term health of our state.
Increased oil and gas production could not have occurred at a better time. Over the course of the last 10 years Texas has suffered through two major hurricanes, two economic recessions and a court-ordered restructuring of school finance.
One can credibly argue that the increase in oil and gas production allowed Texas to not only weather these storms but also expand its economy. These unexpected revenues allowed the Legislature to reduce the tax burden on Texans while maintaining basic state services.
Texas is now in the enviable position of not only being able to pay its bills but also put money aside. This is exactly how the Rainy Day Fund was designed to work. In 1987, the Legislature decided that 75 percent of any future increases in oil and gas production tax revenue should be set aside in a “Rainy Day Fund.”
For years, oil and gas production remained level, but in 2002 increased production started pouring hundreds of millions of dollars into the fund.
The challenge for us is to take advantage of this good fortune by using our surplus dollars in a way that will best benefit our children and grandchildren.
Oil and gas is a depleting resource and it would be fool hardy to spend the revenue generated on new programs that could not be sustained when the revenues eventually decrease.
It is important that we invest in the future of our state by building a sound infrastructure that will benefit not only us in the near future, but more importantly, future generations of Texans.
One of our most basic and most critical infrastructure needs is water. We tend to take water for granted until we watch our lawns die, or we read that a business chose to locate somewhere else out of concern for a lack of a reliable water supply. This is not some futuristic, think tank-debated theory. Our need for more water is real, immediate and unchallenged.
Recent rains have improved drought conditions across the state, but according to the Texas Water Development Board, more than 90 percent of Texas is still experiencing some level of drought and the majority of Texas falls within the “moderate to severe” drought category. Texas lakes and reservoirs are currently only 60 percent full.
On Nov. 5, Texas voters will have the opportunity to greatly improve our water infrastructure.
Proposition 6, if approved, will authorize the transfer of $2 billion dollars from the Rainy Day Fund to an investment account that will be used to finance needed water infrastructure projects throughout the state.
It is important to note that the investment account created by Proposition 6 will be a revolving account that will replenish itself. As water projects are finished, they will begin to pay into the account and allow for the financing of new projects for generations to come.
By investing $2 billion of our excess oil and gas revenue into water infrastructure, Texans can actually turn oil into water.
There is a small but noisy group who will oppose Proposition 6 in the name of fiscal conservatism. They are misguided. Oil and gas revenue continues to flow into the Rainy Day Fund and it is now projected to have a balance of more than $11 billion by 2015. Should Proposition 6 pass, the resulting transfer would only slightly reduce an overflowing fund that is projected to grow by $2.5 billion to $3 billion per year for the foreseeable future.
The choice is clear — Texans have a chance to invest $2 billion of the Rainy Day Fund for critically needed water infrastructure projects that will benefit Texas for decades, or we could allow those funds to accumulate for future legislatures to spend as they please. It is time to invest in our water infrastructure.
I urge you to join me in voting yes on Proposition 6.
MYRA CROWNOVER is the representative for House District 64 in the Texas House of Representatives. District 64 includes Denton, Lake Dallas, Corinth, Shady Shores, Hickory Creek, Krum and the northwest part of Denton County.