A plan to transfer $2 billion from the Rainy Day Fund to create a water infrastructure bank failed Monday because the author broke a parliamentary rule about when such a bill could be considered.
The error was pointed out by House Democrats who were frustrated that the Republican-controlled Legislature was ready to spend the Rainy Day Fund on water projects, but not on restoring funding cut from public education.
Conservative Republicans welcomed the measure's failure because it saved them from having to make a politically difficult vote. Tea party members called the bill's spending reckless and fiscally imprudent.
Earlier Monday, Gov. Rick Perry had called on lawmakers to tap the Rainy Day Fund to create the State Water Infrastructure Fund to meet the state's water needs. The fund would have established a bank to help state and local authorities build $53 billion in water projects over the next 50 years.
Perry, Lt. Gov. David Dewhurst and Speaker Joe Straus all said financing the state's water plan was their top priority at the beginning of the legislative session in January. The measure appeared to have little opposition until tea party activists and the Texas Public Policy Foundation, a right-wing think tank, came out in against it.
"There is nothing more important to Texas than having the water needs addressed. I think we have a once in a lifetime opportunity to put into place a funded water infrastructure bill that will ensure future generations that they will have the water they need," Perry said Monday. But conservatives rejected that notion.
"The Texas Legislature should live within its means just like every Texan must," said Chuck DeVore, the foundation's vice president for policy. "And so it should only spend the general revenue it has available."
During heated floor debate Monday evening, tea party activists used social media to urge Republican lawmakers to oppose the bill, and at least one group said it will give a bad grade to representatives who support it.
Rep. Giovanni Capriglione, a freshman Republican from Southlake, summed up conservative concerns that taking money from the fund would bust the constitutional spending limit, which lawmakers had already bumped up against with routine spending. The Legislative Budget Board has ruled that taking money from the Rainy Day Fund and putting it into the State Water Infrastructure Fund would count toward the spending cap.
Busting that cap is allowed if two-thirds of the Legislature supports it, but conservative lawmakers didn't want to cast such a vote. The bill's author insisted his bill was an investment since the $2 billion would be loaned to finance water pipelines, reservoirs and conservation projects and would be repaid over time.
"The $2 billion is the seed capital for the water infrastructure bank, and the reason we're doing that is because the state Legislature has never stood up and provided funding," said Rep. Allan Ritter, R-Nederland. "As it revolves and such we're going to get our investment back."
Democrats voiced their support for tapping the Rainy Day Fund, but denounced any attempts to cut regular spending on public safety, education or health care to create the fund. They have called for tapping the fund to spend $2 billion on water, $2 billion on roads and $2 billion on public education.
House Democratic Leader Yvonne Davis of Dallas said there would be other opportunities to finance the water fund but that Democrats would not support any measure that left out public schools.
"We need to commit ourselves to a strong public education system," she said.
With 95 Republicans and 55 Democrats, the Legislature cannot tap the Rainy Day Fund without Democratic support.
Also Monday, the Senate passed House Bill 4, which sets the rules for how the fund would operate. Sen. Troy Fraser, R-Horseshoe Bay, said the bill is tied to the Senate's proposed constitutional amendment that asks voters to raid the Rainy Day Fund.
"Water is a way of life for us in Texas. If we don't have rain to water our crops and fill up our stock tanks, we've got a problem," Fraser said.
By choosing to allow voters to decide whether to tap the Rainy Day Fund, instead of taking that vote themselves, senators hope to avoid the fiery debate and conservative opposition that surfaced in the House on Monday.
"If finally passed, this legislation also will lead to closer scrutiny of water projects through a prioritization process for state financial assistance," said Ken Kramer, a spokesman for the Sierra Club. "We have much more work to do to manage and protect our water resources more efficiently and effectively. But the Senate action represents important progress toward that goal."
The bills will likely go to a conference committee where House members and senators will work out a final compromise.
Perry also warned lawmakers Monday that he would not sign a new state budget unless it came with tax cuts. He has proposed a $1.6 billion cut in business taxes.
"I think it's important that we send a message not only to the citizens of this state but across the country, that we can and should be able to give back some of the surplus we have," Perry said.