Honorable Greg Bonnen, Chair, House Committee on Appropriations
FROM:
Jerry McGinty, Director, Legislative Budget Board
IN RE:
HJR35 by Craddick (Proposing a constitutional amendment providing for the creation of and use of money in the Grow Texas fund and allocating certain general revenues to that fund, the economic stabilization fund, and the state highway fund.), As Introduced
If the balance of the ESF were reduced below the fund's constitutional cap, the resolution would result in a significant loss of revenue from the Economic Stabilization Fund and corresponding gain to the Grow Texas Fund.
The cost to the state for publication of the resolution is $191,689.
The resolution would create the Grow Texas Fund (GTF) in the state treasury. The GTF would consist of money transferred under amended Section 49-g, Legislative appropriations and dedications, federal funds that the Legislature transfers or deposits, gifts and grants, and investment and interest earnings. Money in the GTF could be appropriated by the Legislature only for use in areas of the state where oil and gas are produced to address infrastructure needs.
The resolution would direct the Comptroller to reduce the amount of severance taxes transferred from the General Revenue Fund (GR) to the Economic Stabilization Fund (ESF) each year by 12 percent and to transfer the 12 percent into the GTF. The transfer to the Grow Texas Fund could not exceed $250 million in each fiscal biennium. Any money remaining unobligated and unappropriated in the GTF on the last day of a biennium would be transferred to the ESF.
The resolution would create the GTF Commission, consisting of seven appointed members, to administer the money appropriated from the fund. Member of the commission would not be entitled to compensation but could receive reimbursement for expenses.
The proposed amendment would be submitted to voters at an election to be held November 4, 2025, and would take effect September 1, 2027 (beginning with the 2028-29 biennium).
Based on the 2026-27 Biennial Revenue Estimate, the ESF will reach its constitutional cap at the beginning of fiscal 2026. Once the cap is reached, severance tax transfers from GR to the ESF will cease, and the money that would have been transferred will remain in GR. Since the actual transfer of severance taxes to the ESF is projected to be zero, the allocation to the Grow Texas Fund would be zero. The transfer would remain zero unless the ESF cap is increased or expenditures from the ESF lower the balance such that a severance tax transfer could be made. If the balance of the ESF were reduced below the fund's constitutional cap, the resolution would result in a significant loss of revenue from the Economic Stabilization Fund and corresponding gain to the Grow Texas Fund.
Local Government Impact
No fiscal implication to units of local government is anticipated.