Texas Comptroller of Public Accounts
FOR IMMEDIATE RELEASE
June 14, 2016
(AUSTIN) — Texas Comptroller Glenn Hegar announced today that for the second consecutive year, Texas will not have to borrow money to meet its cash flow needs.
Sound fiscal management, conservative budgeting and responsible stewardship of the state’s Economic Stabilization Fund (ESF) will allow the state to manage cash-flow challenges without issuing Texas Tax and Revenue Anticipation Notes for fiscal 2017.
The state has historically issued these short-term (one year or less) debt obligations, also called TRANs, to address periodic mismatches between revenues and expenditures during the fiscal year. These anticipated mismatches result primarily from the state providing nearly 50 percent of its payments to local school districts in the first three months of the fiscal year.
Prior to Hegar's decision to refrain from unnecessary borrowing for fiscal 2016, Texas had issued TRANs annually for nearly three decades. Despite ongoing weakness in the energy sector, Texas’ diverse economy has generated revenues and fund balances that allow the state to again forgo issuing these short-term obligations for fiscal 2017, which begins on Sept. 1. According to the National Association of State Budget Officers, Texas’ ESF is the largest fund of its kind in the nation, accounting for 23 percent of all such revenues in the 50 states.
"As I have continued to say, Texas' diverse and dynamic economy has weathered this downturn in energy prices significantly better than other energy-producing states, meaning we still have the ability to do the fiscally responsible thing and avoid unnecessary borrowing," Hegar said. "Texans know you don't borrow when you don't need to and Texas government should follow the same principle."
The state will bridge the gap between expenditures and revenues using available funds accessed through a combination of intrafund and interfund borrowing. Intrafund borrowing taps available General Revenue Fund cash balances, while interfund borrowing taps funds outside of general revenue such as the ESF, also known as the "Rainy Day Fund."
As revenues come in, the state will repay the borrowed funds with interest as required by law. The agency anticipates all funds to be repaid by May 2017, coinciding with the receipt of 2017 franchise tax revenues. Franchise tax revenues in 2016 came in ahead of estimates in the Comptroller's Certification Revenue Estimate despite the drag continued low oil prices have placed on some segments of the economy.
"With approximately $9.66 billion currently in the state's Rainy Day Fund, Texas' available large cash balances represent tremendous assets for the state and its taxpayers," Hegar said. "We are fortunate to be in a position to put those assets to work for us. By tapping these resources rather than borrowing in the short term, we are continuing the sound fiscal management that has kept our state on solid economic footing."
In 2015, the Texas Legislature passed House Bill 855, which requires state agencies to publish a list of the three most commonly used Web browsers on their websites. The Texas Comptroller’s most commonly used Web browsers are Google Chrome, Microsoft Internet Explorer and Apple Safari.