Road to Nowhere

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The awkwardly named Economic Stabilization Fund, more commonly called the Rainy Day Fund, is our piggy bank, and we owe its existence to our mineral wealth. It was created in the late eighties, as rising oil prices were pulling Texas out of a prolonged economic downturn. The idea was simple: a state fortunate enough to be visited every so often by an oil boom ought to be able to set aside a little something during the good times to help out during the bad. It’s a way of spreading out our booms. The money in the fund comes primarily from oil and gas taxes, according to a precise formula: 75 cents of every dollar the state collects above what it collected in 1987 (not a boom year) gets socked away. This means that at present, thanks to the shale boom’s extremely high levels of production, our piggy bank is stuffed. With the Eagle Ford Shale, in South Texas, cranking out record numbers and the sleeping giant of the Permian Basin beginning to rise again, the Rainy Day Fund is expected to have around $12 billion in it by the time the next legislative session rolls around.

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