KRGV.com

AUSTIN, Texas (AP) Gov. Rick Perry on Wednesday proposed taking nearly $1 billion from the Rainy Day Fund for tax relief on top of the $3.7 billion he wants to spend from the state's emergency account to pay for water and road projects.

Tapping the Rainy Day Fund for tax relief, which Perry outlines in his proposed state budget to lawmakers, is somewhat of a surprise. Perry left that out of his State of the State speech on Tuesday, when his mere seal of approval to use some of the projected $11.8 billion in the fund for one-time infrastructure projects was itself a change in stance.

Speaking to a group of business leaders in Dallas on Wednesday, Perry again didn't mention the $840 million in tax relief from the Rainy Day Fund. But while discussing with reporters later ways in which the state could return money to taxpayers, Perry indicated the fund might be a place to look.

"That money could do more good in the hands of people than it does the state of Texas sitting there," Perry said.

Perry's resistance to use the Rainy Day Fund in previous years despite hefty balances has bewildered Democrats and those wanting to raid the fund to blunt deep state spending cuts. Before this session, Perry had insisted keeping a tight lid on the state's emergency piggybank, saying a stockpile of cash is needed in the event of natural disasters.

Now Perry has giving his blessing to use $4.7 billion of the fund about 40 percent of the fund's balance.

Lt. Gov. David Dewhurst was noncommittal Wednesday about using the fund for tax relief. He said he would review Perry's proposal but pointed out how the fund was traditionally used for one-time expenses and not tax relief.

Perry's budget does not specify exactly how money from the fund would be used. During his seventh State of the State address as governor, Perry called for $1.8 billion in tax relief but didn't say how the state might do it. Hitting the rest of the target would pull $960 million from general revenue, according to Perry's budget.

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TEXAS SENATE CHAIRMAN SEEKS HEALTH BUDGET CHANGES

Texas will use "all the money that there is available to spend" in the state budget just paying the health care costs of the growing number of poor, disabled and elderly unless dramatic changes are made to the Medicaid system, the chairman of the Senate Finance Committee said Wednesday.

Tommy Williams, R-The Woodlands, called on fellow Texas lawmakers and state agency chiefs to prepare themselves to make tough choices but offered no details on how he would change Medicaid, the joint state-federal health program for 3.6 million Texans. More than 2.7 million children, 531,000 disabled and 244,000 elderly rely on Medicaid.

State budget analysts testified that the draft Health and Human Services budget calls for a 3 percent increase in state spending in the 2014-2015 budget cycle but acknowledged that Republican leaders asked them not to factor expected growth in Medicaid caseload or medical inflation into their budget forecast.

The Republican-controlled Legislature in 2011 failed to fund Medicaid growth, and now lawmakers must pass an emergency $3.4 billion spending bill to cover those costs. After questioning by Democratic senators, Williams explained why he didn't want the anticipated costs included in the draft budget.

"If we do that, our work is done, folks. We've spent all the money that there is available to spend," Williams said. "We're not looking to narrow the number of people we serve; I'd like to see it expanded. But we can't do it the way we've always been doing it."

Williams said he was looking to proposals introduced by Sen. Jane Nelson, R-Flower Mound, to reduce costs and fight fraud, waste and abuse. Nelson asked a budget analyst how much money similar cost-containment measures from 2011 had saved, and the board reported savings of $1.8 billion, though the target had been $2.9 billion.

The Republican leadership in Texas has rejected any proposal that would raise state revenues, and Gov. Rick Perry on Tuesday called for a tax cut. Democrats and advocates for the poor, though, complain that the cap Republicans have placed on state spending will result in a cut in services to people who desperately need them.

Democrats complain that Republicans have set up a false choice between funding education and caring for children and the disabled. They have called for eliminating tax loopholes and using the Rainy Day Fund to pay for the state's needs.

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STUDY SHOWS 50 PERCENT OF TEXANS DON'T HAVE SAFETY NET

The Corporation for Enterprise Development has found that more than half of Texans have no savings to fall back on in case of an emergency.

If these people were to lose their jobs or suffer a catastrophic illness or injury, they would have no way to support themselves. The non-profit group said Wednesday that about half of Texans live below the poverty level, earning roughly $23,000 a year for a family of four. But a third of middle class Texans also have no savings. The organization advocates for policies that help low- and middle-income people build up a personal safety net.

The annual report ranks Texans 39th in the nation in terms of financial security. About 13 percent of Texans do not have a bank account, the study found.

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QUOTE OF THE DAY:

"I hope all the people that have come here (to Texas) are all good Republicans and good business people," Lt. Gov. David Dewhurst, speaking to the Texas Association of Business about Texas' growing population.