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The Associated Press March 15, 2011, 5:26PM ET

Perry, House leaders agree to tap Rainy Day Fund

Gov. Rick Perry and House leaders agreed Tuesday to use $3.2 billion from the state's reserve fund to close a deficit in the current budget, according to a statement from Perry's office.

The announcement clears the way for an end to a stalemate between the Republican governor and House conservatives on the one hand, and Rep. Jim Pitts, the House's chief budget writer.

"We have worked closely with state leaders and lawmakers to balance the current budget, which includes using a one-time amount from the Economic Stabilization Fund to help our budget deal with the impact of the national recession," Perry said. "I remain steadfastly committed to protecting the remaining balance of the Rainy Day Fund, and will not sign a 2012-2013 state budget that uses the Rainy Day Fund."

A day earlier, Pitts urged Perry to agree publicly to tap the fund to address a deficit in the 2011 fiscal year. Perry, meanwhile, has said repeatedly that money in the Rainy Day Fund should only be used as a last resort.

A vote in the House Appropriations Committee is expected later Tuesday. The legislation still must win two-thirds approval in both the House and Senate before it can become law.

The Rainy Day Fund, which is expected to have a balance of $9.4 billion at the end of the next budget period, is made up of revenue from oil and gas taxes.

The agreement also would make $800 million in agency cuts in the current budget. It also would give lawmakers wiggle room to deal with a revenue shortfall, but it falls far short of sparing the state from massive budget cuts as lawmakers draft the budget for 2012-2013.

Democratic Rep. Sylvester Turner, of Houston, cautioned that people would be wrong to think the Legislature will tap the reserve fund again.

"(The) $3.2 billion of the Rainy Day Fund will only be used to cover the shortfall of the biennium that we are presently in," Turner said.

"Not one dime of the Rainy Day Fund will be used to cover the expected shortfall in 2012 and 2013."

House Speaker Joe Straus said the agreement allows the state to preserve about $6 billion of the reserve fund to cover unexpected future emergencies.

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