TX Comptroller Strayhorn Reminds of Yet Another School Finance Deadline
By J. Lyn Carl, GalleryWatch.com
Austin, TX –
As if the Texas Legislature was not under enough pressure already to come to terms on a solution to the never-ending public school finance problem, State Comptroller Carole Keeton Strayhorn today threw more fuel on the fire.
In a letter to Gov. Rick Perry, Lt. Gov. David Dewhurst and House Speaker Tom Craddick, the comptroller noted that bond rating agencies - Moody's, Standard & Poors, and Fitch - have indicated they will not rate the state's Tax and Revenue Anticipation Note (TRAN) issue "unless there is some sort of concrete action on school finance."
Strayhorn went on to say that Perry's line-item veto of public school appropriations following the end of the 79th Regular Session "gives the appearance that we have significant cash reserves available in the state treasury.
"With no current plan in place to use these existing resources, there is no basis for the state borrowing money at the level we have in the past."
Strayhorn noted in her letter that Aug. 1, just 25 days away, is the last day the state can "reasonably hope" to get information to the bond rating agencies to get the FY 2006 TRAN issue completed by the customary Sept. 1 date. The First Called Session, which by law can only last 30 days, has a drop-dead date of July 26.
TRAN's are used annually to balance out the state's revenue and expenditure cycles, explained the comptroller, and because the state has large payments in the first four months of the year - mainly in payments to school districts - state revenues do not balance those out-payments until later in the year when franchise tax is collected.
Strayhorn said that last year, the state borrowed $6.6 billion, and a similar or higher level of debt is expected this year, "depending on the cash flow implications of the finance legislation you are currently considering."
Because of the requirements for securing ratings, legal filings, investor notification, etc., she said, "We need to have something to present to the ratings agencies by August 1 at the latest." While the sale date can be pushed back if necessary by using inter-fund borrowing, the comptroller pointed out that has the potential to affect the state's rating as well as interest rates.
"If the sale progresses too far into September," wrote Strayhorn, "we could run into serious cash problems when it comes time to make the school transfers that normally go out around September 23, assuming we have a public school appropriation."