Texas’s Economic Stabilization Fund (or “rainy day fund”) is a valuable tool for covering unexpected shortfalls in tax receipts, like those during the COVID-19 pandemic, but it should be used sparingly, and budget reductions should be prioritized instead.

Key points:

  • Texas ranks high in economic growth and must maintain a balanced budget, but the current economic situation could strain Texas taxpayers’ ability to pay for the state budget.
  • Texas must exercise fiscal restraint and find responsible budget reductions before it taps into the state’s rainy day fund.
  • Texas state leaders have appropriately begun the process of finding savings in the budget, but additional savings are likely needed and should be realized before using taxpayer money in the rainy day fund.