According to the Legislative Budget Board (LBB), the fiscal implications of SJR 4 are significant in the short to medium term. The resolution proposes raising the constitutional cap on the Economic Stabilization Fund (ESF) from 10% to 15% of general revenue deposits, which would increase the fund's capacity to accept transfers from the General Revenue (GR) Fund. According to the Legislative Budget Board (LBB), this adjustment would lead to a negative net impact of approximately $2.95 billion to GR-related funds through the biennium ending August 31, 2027, and an even larger impact of about $6.81 billion through the following biennium ending August 31, 2029.

The fiscal mechanism behind this impact is that when the ESF is at its cap, additional severance tax revenues and investment earnings remain in the GR fund. However, by increasing the cap, these funds would again be directed to the ESF starting in the fiscal year 2028. This shift would decrease GR revenue but increase ESF reserves, including interest and investment income earnings that are not counted toward the GR. In the years 2028 through 2030, the GR would lose between $3.2 billion and $3.6 billion annually, while the ESF would gain equivalent transfers and generate increasing amounts of interest income—up to $537 million in 2030.

While the change supports the state’s fiscal stability by allowing for a larger rainy-day reserve, it reduces available GR funds in the near term, potentially limiting immediate discretionary spending or program funding. However, the resolution has no anticipated fiscal impact on local governments, and the only direct cost to the state would be the one-time expense of $191,689 to publish the amendment for voter consideration.

SJR 4 proposes increasing the constitutional cap on the Economic Stabilization Fund (ESF) from 10% to 15% of applicable general revenue deposits. While the intent is to bolster the state's ability to respond to future fiscal emergencies, the resolution fundamentally alters the purpose of the cap, which was designed as a safeguard against excessive accumulation—not an expandable threshold to enable continued revenue hoarding.

The ESF consists of taxpayer dollars that have been overcollected beyond the state’s immediate budgetary needs. Raising the cap would allow the state to withhold billions more from taxpayers, keeping funds in government hands rather than returning them through tax relief or rebates. This move is misaligned with the principle of limited government, as it allows for a broader pooling of resources without corresponding limits on spending or structural reforms to reduce the state's tax burden.

From a fiscal liberty standpoint, when the ESF reaches its cap, that should be a signal to policymakers that the state has collected more than necessary and should prioritize returning excess funds to the people—not changing the rules to allow for more accumulation. The government is not a savings institution or investment vehicle; its role is to serve, not to profit or stockpile public funds beyond prudent emergency needs.

Given these concerns, SJR 4 reflects a departure from responsible tax policy and fiscal restraint. Therefore, Texas Policy Research recommends that lawmakers vote NO on SJR 4 to preserve the original intent of the ESF cap, enforce discipline in revenue collection, and promote accountability by ensuring surplus funds are returned to Texans rather than warehoused by the state.

• Individual Liberty: While the bill doesn’t directly restrict individual freedoms, it indirectly affects liberty by retaining more taxpayer money in government control. Once the ESF hits its current cap, any additional revenue is typically redirected to general revenue, which can be used for tax relief or other services. Increasing the cap reduces the incentive to return funds to taxpayers, which undermines the principle that individuals—not the state—should control more of their own earnings.
• Personal Responsibility: By allowing the state to set aside even more surplus funds rather than return them or reduce taxes, the bill arguably shifts the burden of fiscal responsibility from the government to the taxpayer. Instead of tightening budgets or implementing targeted spending cuts, the state would hold a larger cushion, diminishing the urgency to make disciplined policy decisions and eroding incentives for efficient governance.
• Free Enterprise: While a well-capitalized rainy day fund may help the state avoid sudden tax increases or spending cuts during downturns—which can stabilize the business climate—the long-term impact of retaining excess taxpayer funds can be detrimental to economic liberty. Every dollar held in reserve is one not circulating in the private economy where it could support business investment, job creation, and innovation.
• Private Property Rights: Taxpayer income is a form of private property. When the state collects more than it needs and expands its ability to retain that surplus, it infringes upon the economic rights of individuals and businesses. The increased cap implies that the state—not the individual—is the preferred steward of those funds, which weakens the foundation of property rights.
• Limited Government: At its core, the bill undermines this principle. The ESF cap is a constitutional mechanism to restrict the size and scope of the government’s financial reach. Raising the cap without clear accountability or plans for taxpayer relief expands the state’s ability to grow reserves—and potentially spending—without returning control to the people. It creates a pathway for a larger government footprint without direct legislative oversight on how future excess funds will be handled.