Good times for energy = cash for state
The “good times” in the oil industry have created “good times” at the state capital.
Having a surplus of money in the state treasury has created a much different atmosphere than two years ago, when there was a deficit.
However, the surplus of cash is like a double-edged sword in some respects. It seems just about everyone in Austin has an agenda to get his hands on the extra money.
Gov. Rick Perry began the debate when he opened the legislative session saying that he believed the Legislature should spend $2 billion on water resources and $1.7 billion on roads, all coming primarily from the Rainy Day Fund.
The Rainy Day Fund has about $12 billion in it. The primary source of the fund is from oil and gas severance taxes collected by the state over a specific amount.
If the Legislature allocates the money, it will be the first time any funds have been spent from the Rainy Day Fund.
There is little debate about the positive economic impact that the oil and gas industry is having on Texas. Even though the industry is the largest taxpayer in the state through property, sales and severance taxes, some officials are asking for more because the increase in exploration and production activity has damaged roads.
One idea is to take half of the $1.4 billion that Gov. Perry talked about for roads and split it evenly between state and county roads, which would be $700 million to each. This probably would be a one-time cost.
Another idea that has gained some support is creating Transportation Reinvestment Zones or local funding mechanisms that could issue bonds.
Obviously, an increase in vehicle registration fees and oversize and overweight vehicle permit fees and fines are on the table, too.
More than 90 bills have been filed dealing with securing more funding for roads.
Texans remember the tough days in the 1980s and 1990s when the economy struggled and the oil and gas industry was depressed. Thanks to the planning of our state leaders many years ago when they created the Rainy Day Fund, the state now has the seed money to deal with water and road problems without having to increase taxes.
Alex Mills is president of the Texas Alliance of Energy Producers.
The opinions expressed are solely those of the author.