State’s Spending Cap Adopted by the Legislative Budget Board

December 19, 2014
By Paul K. Emerson, TAC State Financial Analyst
Legislative News

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On Dec. 1, in a unanimous vote, the 10-member panel of the Legislative Budget Board (LBB) adopted an estimated growth rate for the next two years (fiscal years 2016-17). The members adopted the lowest out of four proposed growth rates–11.68 percent.

The vote is required by the Texas Constitution, and the growth rate limits how much money can be spent from one biennium to the next biennium. Technically, the growth rate only applies to a portion of the budget – funds that are subject to state tax revenue not dedicated by the constitution.

According to the LBB’s figures, the newly adopted spending cap is $94.2 billion. That is slightly higher than the current cap of $84.4 billion, notwithstanding any adjustments or forecast revisions by the Comptroller’s Office.

Federal funds, which make up a significant portion of the state’s budget, are not subject to the spending cap.

The method used to determine the current growth rate is the average state personal income – not including inflation and population, which some lawmakers have called for recently.

For additional information, please contact Paul Emerson, TAC State Financial Analyst, at (800) 456-5974.