Special Report: Economic Stabilization Fund Update

Background [Fiscal Brief for the Economic Stabilization Fund (ESF)]. (From the Texas Comptroller’s Office) The Economic Stabilization Fund (ESF) — commonly called the “Rainy Day Fund” — was created by the passage of an amendment to the Texas Constitution in November 1988. The ESF is established in Article III, Section 49-g of the Constitution and became effective on Sept. 1, 1989. Section 49-g spells out revenue sources deposited to the ESF and requirements for making appropriations from the ESF. In November 2014, a constitutional amendment was passed allocating at least one half of certain severance taxes to the ESF and the remainder to the State Highway Fund. Statute provided that the Legislature must establish a sufficient balance in the ESF. Depending on the amount established compared to the balance at the time of transfer, more than half of the allocated severance taxes could be moved to the ESF in order to maintain the sufficient balance. In May 2015, the 84th Legis