The Texas Rainy Day Fund is one of the largest in the nation, and while its primary purpose is to act as a financial cushion during downturns, it could also be used strategically to generate long-term economic growth. If managed correctly, investments from the Rainy Day Fund could generate new revenue streams that help fund future property tax relief, reduce the need for new debt, and support vital infrastructure projects like water distribution.
The challenge is balancing economic efficiency with conservative principles of small government. If the state can increase resource efficiency and revenue without meaningfully expanding bureaucracy, it represents a prudent and responsible use of government power—one that strengthens Texas’ financial future without increasing taxpayer burdens.
This concept isn’t entirely new—Texas already partially funds public education through oil royalties. The question is how we can expand this model to maximize revenue generation without sacrificing core conservative principles.
Economic Efficiency vs. Small Government
One of the challenges conservatives face when discussing state-led economic initiatives is the tension between economic efficiency and small government.
Conservatives believe in fiscal responsibility and limited government intervention.
We also value resource efficiency and maximizing economic potential.
These two ideas are not mutually exclusive—Texas can invest in state-managed revenue generation without expanding government oversight or increasing regulatory burdens. The key is strategic investment in assets that are already part of Texas’ economic foundation.
Opportunities for Revenue Generation
The state has access to valuable natural resources and commodities that could be leveraged for profit and economic growth. Some easily supportable options include:
- Buying and Selling Oil on the Open Market
Texas already generates significant revenue from oil royalties, but the state could take a more active role in commodity trading by purchasing and selling crude oil on the open market.
When prices are low, Texas could buy oil and store it, selling it later when prices rise. This would be a variation on the strategic petroleum reserve on the national level. Only it will be for profit rather than for political and security reasons.
The state could also develop partnerships with major energy firms to create strategic reserves that generate profit while ensuring energy security.
This would not require additional taxation—just smarter management of existing resources. The state already has the knowledge to do this effectively, and already has business in the state that are experienced with implementation.
This also has a collateral effect of stabilizing oil prices, which helps Texas producers remain competitive during market downturns. By leveraging existing state expertise in energy markets, Texas can increase revenue while supporting an industry that drives a significant portion of the state’s economy.
- Investing in Nonperishable Commodities (Cotton, Rice, Cattle Futures, etc.)
Texas is a major producer of cotton, rice, beef, and other agricultural commodities. The state could create a reserve investment fund that buys and sells nonperishable commodities on the open market.
This stabilizes local markets, ensuring Texas farmers and ranchers have a steady demand for their products.
It creates a secondary revenue stream that could help reduce reliance on traditional tax revenue sources.
- Leasing State-Owned Land for Commercial Development
Texas owns millions of acres of land, much of which is underutilized. Instead of selling off public assets, the state could lease land to private companies for:
Renewable energy projects (wind, solar, and natural gas expansion).
Tech and manufacturing hubs to attract business investment without excessive tax incentives.
Commercial agriculture operations that generate ongoing revenue.
- Investing in Infrastructure That Generates ROI
Certain infrastructure projects—especially water distribution systems—have significant long-term economic value.
A state-run investment in water transport infrastructure could generate revenue while ensuring long-term water security for Texas industries and municipalities. Think Kinder Morgan, but for water—a state-managed pipeline system that facilitates efficient water distribution. This would not only create jobs and economic activity but also reduce long-term costs for farmers, energy producers, and urban centers that rely on stable water access. Texas already has the expertise and private sector partnerships to implement such a system efficiently.
Investing in logistics hubs, ports, and freight corridors would enhance Texas’ position as an economic powerhouse for global trade. Think a state version of the Harris County Port Authority.
If done strategically, these investments could reduce long-term costs (and in the instance of a port authority reduce taxation) while creating revenue streams that ultimately lower tax burdens.
How this benefits the overall state economy
The fundamental goal of any economic stimulus program should be to supplement state income in a way that benefits Texas taxpayers.
These revenue sources could be used for:
Accelerating property tax relief without risking budget shortfalls.
Funding critical infrastructure projects without taking on new debt.
Investing in long-term solutions like water redistribution infrastructure—projects that don’t yet have strong political support but are necessary for Texas’ future.
The key takeaway is that Texas has the economic resources to generate revenue without raising taxes or expanding government power. The Rainy Day Fund could be used not just as a financial safety net, but as a tool for responsible economic growth.
Conclusion: A Conservative Approach to Economic Stimulus
The Texas Legislature should consider smart, limited investments that turn existing state assets into revenue-generating opportunities.
Strategic commodity investments could create a stable revenue stream that reduces reliance on property taxes.
State-owned land leases and infrastructure projects could fund themselves while enhancing Texas’ economic competitiveness.
Water infrastructure and logistics development could ensure long-term stability while supporting Texas’ continued growth.
This approach doesn’t expand government—it makes better use of existing resources to serve Texas taxpayers.
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