-------- Original Message --------
Subject: RE: Backup
Date: Fri, 2 Sep 2011 16:41:02 -0500
From: RJ DeSilva
To: Gardner Selby <wgselby@statesman.com>


The Tax and Revenue Anticipation Notes (TRANs) have been issued by Texas every year since fiscal 1987. The state front loads payments to schools early in the fiscal year, so the TRAN is used to ensure cash is available to fund public schools and help the state manage its cash flow between the early part of the fiscal year and the arrival of tax revenues throughout the rest of the year.  The TRAN is paid off at the end of each fiscal year.

Wall Street rating firms have given the TRANs their highest ratings, and there’s high demand for these notes in the investment community in recent years reflecting their confidence in the Texas economy and the state’s fiscal management.  This year buyers bid more than three times the amount offered for sale, and that high demand drove down the interest rate to 0.27 percent – the lowest interest cost the state has received on its annual short-term sale.

With the early fiscal year expenditures, the state sees a temporary maximum cash need in December. The TRAN is used every year to make sure cash is available in time for the early payments. This year the maximum temporary cash need is $13.2 billion and state’s Cash Management Committee (at its July 19 meeting at the Capitol) authorized the TRAN, issuance of commercial paper and intrafund borrowing for that cash need.

The TRAN is not used to cover deficits. The TRAN is a cash flow tool that allows the state to handle the ebbs and flows of revenues and expenditures within a fiscal year.  Periodic negative cash balances occur within each year due to a timing mismatch between state expenditures and revenue deposits. Any negative cash balance at the end of the 2012 fiscal year will be handled by issuing a new TRAN for the 2013 fiscal year on the same day the Comptroller pays off the 2012 TRAN. 

Looking at the cash flow expenditures or revenues at any one point in time during the biennium does not provide an accurate analysis of revenues and expenditures for the biennial budget. In July the Comptroller certified a balanced general revenue budget passed by the Legislature for the 2012-13 biennium, and that has not changed.  




R.J. DeSilva

Spokesperson, Texas Comptroller

(512) 463-4070


From: Gardner Selby [mailto:wgselby@statesman.com]
Sent: Thursday, September 01, 2011 3:58 PM
To: RJ DeSilva
Subject: Backup


Now the Wall Street Journal reports Texas just borrowed a record $9.8 billion to fund government. The paper said, “In an offering document, the Texas comptroller projected a maximum temporary cash shortfall of $13.2 billion within fiscal year 2012 before the note proceeds and other available borrowing. The state said it expects to start fiscal year 2012 with a $1.8 billion negative cash balance in the general revenue fund’s unrestricted accounts, and to end the 2012 fiscal year with a negative cash balance of $6.7 billion.
The $9.8 billion represented the largest amount sold since the state first began selling short-term notes in 1987, according to the comptroller’s office’ (Wall Street Journal 8/23/11)
The offering document for new debt shows Rick Perry is spending $1.8 billion more than the state takes in this year (page 17). https://www.trantexas.com/pma/Texas.TRAN.2011.pos/TRAN.2011.POS.pdf

W. Gardner Selby
Editor, PolitiFact Texas
Austin American-Statesman
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