" /> For Second Consecutive Year, Texas Comptroller AnnouncesTexas Will Not Borrow to Meet Cash-Flow Needs – EastTexasRadio.com
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For Second Consecutive Year, Texas Comptroller AnnouncesTexas Will Not Borrow to Meet Cash-Flow Needs




Comptrollers OFfice

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.”