03/15/2011 11:07 pm ET Updated Dec 06, 2017

Rick Perry Reverses Course On Rainy Day Fund

AUSTIN, Tex (Reuters) - Texas Governor Rick Perry admitted on Tuesday that the state will have to use about a third of its rainy day fund to close a budget deficit this year, abandoning his stance that the fund should not be used.

Perry said he supported using up to $3.2 billion of the $9.4 billion fund to close a deficit in the 2011 budget.

But the Republican governor said that he still does not support using the fund to address the shortfall in the 2012-2013 budget.

Perry said that using a "one-time amount" from what is officially called the Economic Stabilization Fund would "help our budget deal with the impact of the national recession." Earlier this year he had opposed using the fund at all.

"I remain steadfastly committed to protecting the remaining balance of the Rainy Day Fund, and will not sign a 2012-2013 state budget that uses the Rainy Day Fund," Perry said in a statement that indicated that he, House Speaker Joe Straus and Comptroller Susan Combs agreed on the plan.

Texas, which has a two-year budget cycle, is about $27 billion short of the money it needs to extend current programs and services through 2012 and 2013. That includes a $4 billion deficit in the 2011 budget, which ends August 31. The deficit had been $4.3 billion, but Combs on Monday revised the state's revenue estimate, saying an additional $300 million is available because of increased sales tax collections.

The House Appropriations Committee on Tuesday approved a bill to use money from the rainy day fund for the current budget. The measure now heads to the full House.

Appropriations Committee member Mike Villarreal, a Democrat, said that without using the rainy day fund for 2012-2013, the state budget will lead to closing nursing homes, firing teachers and packing more children into classrooms.

"The governor doesn't mind using the fund to avoid the embarrassment of not paying our bills for the next five months, but he refuses to use a single dime from the fund to limit the damage to our children's schools," Villarreal said.

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