Legislative Update: HJR 10
Rep. Giovanni Capriglione (R-Southlake) has introduced a constitutional amendment establishing the Texas Legacy Fund (TLF) and Texas Legacy Distribution Fund (TDLF) to finance certain infrastructure and long-term obligations of the state, including unfunded liabilities in the ERS Retirement Trust Fund. HJR 10 requires the Comptroller to transfer one-half of any unencumbered balances at the end of a biennium to the TLF (the other half goes to the Economic Stabilization Fund, or "Rainy Day Fund"). In a year in which the Rainy Day Fund is at or above the limit set by the Legislature, the Comptroller shall allocate that share to the TLF. To capitalize the TLF, HJR 10 directs the Comptroller to transfer $3.5 billion from the Rainy Day Fund. The Comptroller will invest the TLF as directed by law, and all interest and investment earnings will go into the TDLF. The Legislature may then appropriate money from the TDLF for only four purposes: state general obligation debt retirement, unfunded liabilities in ERS and TRS, infrastructure other than higher education or transportation, and other long-term obligations approved by a vote of 2/3 of the members of each house. If passed by a 2/3 vote of the Legislature and approved by the voters at the November 5, 2019 election, HUR 10 would go into effect on January 1, 2020.
HJR 10 mirrors a proposal made by Comptroller Glenn Hegar to establish a constitutionally dedicated fund to address Texas' long-term debt and other infrastructure needs. It has the potential to produce significant biennial payments to restore the ERS Retirement Trust to actuarial soundness. It also specifically overrides the 10% constitutional limit on the state's contribution to ERS, which, although ambiguous, can restrain legislative efforts to shore up the trust more quickly. It is heartening to see the Comptroller and Legislature addressing the long-term needs of state employees, and we applaud their efforts.