Lt. Gov. David Dewhurst proposes dipping into rainy day fund to address water and transportation needs

Lt. Gov. David Dewhurst - joining House Speaker Joe Straus and other state leaders in focusing on challenges related to Texas' brisk population growth - said Thursday that he would consider dipping into the state's multi-billion dollar rainy day fund to address pressing water and transportation needs.

Dewhurst proposed using $1 billion from the fund, which could reach $8 billion by the end of the year, to create a new water infrastructure development bank to help cities and other municipalities build reservoirs. He said a similar bank might also make sense to facilitate highway construction projects.

"In any case - and this is a bottom line - we have to maintain a healthy balance in the rainy day fund," he said, after speaking to the Dallas Regional Chamber. "But as a fiscal conservative, we can draw down a little bit and still keep a very healthy balance."

The focus on those essential infrastructure needs - along with other basic services, such as public schools, higher education and health care - comes as Dewhurst and other lawmakers prioritize the state's needs ahead of another budget battle in the coming legislative session.

Dewhurst, who presides over the Senate, has helped lead the conservative charge over the last few weeks in pledging to spend less than the law allows in the next two-year budget. That means limiting the state's budget growth to less than inflation plus state population growth - or about 9.85 percent over the next two years.

And the lieutenant governor, still licking his wounds from a failed U.S. Senate run, further pushed that goal Thursday.

Dewhurst said Texas' economic success stems from low taxes, low regulation and low government spending. And while he noted that revenues, especially from the state business tax, are better than expected, he said Washington's unpredictable nature made it imperative to stick to the "Texas model."

He pointed to the so-called fiscal cliff, which could cause drastic reductions in federal payments if Congress doesn't approve an alternative to spending cuts scheduled for the end of the year, as evidence that spending should be kept low.

"If we were an island, completely separated from the other 49 states, I might be willing to spend more money on projects," Dewhurst said. "But we're not."