The Texas economy was hit hard by the double whammy of the coronavirus pandemic and low oil prices, driving down tax revenues. In response, Comptroller Glenn Hegar, the state equivalent of a county auditor and a county treasurer combined, cut the biennial revenue estimate, projecting a $4.6 billion budget deficit for the then current (2020-21) budget in July 2020. There has been a remarkable turnabout since then, culminating in a projected $27 billion surplus available to fund the 2024-25 budget. Chart 1 shows the Comptroller's estimate of ending balances in the state’s general revenue funds for the two-year budget that ended Aug. 31, 2021, and the current budget that ends Aug. 31, 2023, which most recently is projected to be a $27 billion surplus.
2020-21 state budget surplus/(deficit)
2022-23 state budget surplus/(deficit)
Factors contributing to the turnabout:
- Three major federal fiscal relief packages.
- Legislative action – the 5% budget cuts and substituting federal relief funds for General Revenue appropriations.
- Rebounding state revenue collections – the largest one-year increase in total tax collections, as compared with the prior fiscal year, in Texas history. Hegar said elevated prices due to inflation increased state tax receipts. For more on estimated state tax collections, see Chart 2.
|CHART 2: Estimated Growth in Major State Taxes
|Major State Tax
Estimated Biennial Growth
|Motor Vehicle Sales
and Rental Taxes
|Natural Gas Production
|Total Tax Collections
|Data source: Comptroller of Public Accounts
This surplus is in addition to the $13.7 billion fiscal year 2023 ending balance Hegar projects for the Rainy Day Fund. Both ending balances could be reduced by supplemental appropriations bills for the 2022-23 two-year budget.
GR-Dedicated Accounts & the State Budget
The Legislature's long-standing practice of balancing and certifying the state budget by diverting dedicated funds intended for certain purposes has impacted many county programs and local budgets.
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