Texas lawmakers enter the 87th Legislative Session with an estimated $112.5 billion available for general purpose spending in the next two-year state budget, a number significantly higher than what was estimated this summer when the coronavirus began to devastate the economy.
Texas Comptroller Glenn Hegar announced that number Monday in his biennial revenue estimate, establishing the amount lawmakers can spend in the two-year budget that begins Sept. 1, 2021, and ends Aug. 31, 2023. In his remarks, Hegar indicated that the Texas economy remains uncertain and that his revenue forecast could change in the coming months, either up or down, primarily due to the pandemic.
"The forecast, however, remains clouded with uncertainty,” Hegar said in a press release. “The ultimate path of the pandemic and the behavior of consumers and businesses during a resurgence are difficult to gauge. It's also unclear how they'll respond once the pandemic is fully under control. As a result, there is a wide range of possible outcomes for state revenue through the end of fiscal [year] 2023, with the possibility of revenue falling short of this forecast but also a chance revenue could exceed it, perhaps substantially."
Hegar also significantly revised the deficit for the current budget that ends on Aug. 31, 2021, down from the $4.6 billion deficit estimated in July 2020 to $946 million. However, that number does not account for the 5 percent cuts to state agency budgets that state leaders ordered this summer or any supplemental changes to the budget lawmakers will have to make.
According to Hegar, the 5 percent cuts total $1 billion. The comptroller cited an estimated $1.5 billion shortfall in the state's Medicaid program as an additional spending requirement. Because Medicaid is an entitlement program, the state has little discretion over its funding. If the individual meets the eligibility criteria set for the program, they are "entitled" to the full array of benefits the program provides. For more on the 5% cuts that target state funding for counties, see this presentation from the TAC Legislative Services department.
Finally, Hegar also noted that his estimate of the current budget deficit does not incorporate the effects of substituting federal funds provided as pandemic-related assistance for state pandemic-related expenditures paid for out of General Revenue funds. The 87th Legislature will sort out all of these moving pieces and eliminate the current deficit when enacting the supplemental appropriations bill for the 2020-21 budget.
For more on the Biennial Revenue Estimate, go here for: