Until fiscal 2015, the rainy day fund received 75 percent of each year’s oil and natural gas production tax revenues in excess of the amounts they yielded in fiscal 1987 — $531.9 million for oil and $599.8 million for gas. In fiscal 2015, despite faltering energy prices and production, these taxes yielded nearly $2.9 billion and $1.3 billion, respectively. In fiscal 2016, by contrast, the oil production tax brought in just $1.7 billion; the natural gas tax didn’t reach the 1987 threshold for an ESF transfer.

A November 2014 constitutional amendment shifted half of the ESF’s share of oil and gas tax revenue to the State Highway Fund to address urgent transportation needs. Without further legislative action, this arrangement will end in December 2024, and the fund’s share will return to 75 percent of oil and gas tax collections above the fiscal 1987 threshold in fiscal 2026.

Other rainy-day revenue includes half of any unencumbered balance in general revenue (that is, revenue not reserved for any specific purpose) at the end of each biennium, and all interest earned on the balance and investments made with it. The Legislature also may make direct appropriations to the fund, although it has never done so.

Money Rolls In… and Out

Since its inception through February 2017, the rainy day fund has received deposits of $19.9 billion and earned $832.4 million in interest.

The Comptroller’s office has up to 90 days after the end of each fiscal year to transfer revenue to the fund; typically, these are made in late November. The agency’s most recent transfer, in November 2016, totaled about $439.5 million, with an identical sum transferred on the same day to the State Highway Fund.

The Texas Constitution authorizes the Legislature to make appropriations from the ESF in response to three circumstances:

a budget deficit during a biennium;

a projected revenue shortfall in an ensuing biennium; or

any other purpose the Legislature chooses at any time.

Appropriations for the first two circumstances require approval by three-fifths of the Legislature, while a general-purpose appropriation needs a two-thirds majority for passage.

The Legislature has made seven appropriations totaling $10.6 billion from the ESF since its inception, most recently in 2013. All were approved by two-thirds votes. The purposes for these appropriations have included water projects, disaster relief, public education, economic development and health and human services. Only one appropriation — $3.2 billion in 2011, representing 34 percent of the fund balance — was made to cover a budget gap (for fiscal 2011).