Thursday, February 9, 2023

Texas will discuss a record $188.2 billion budget

Texas is projected to have $188.2 billion in general revenue available to fund state activities during the 2024-2025 biennial — an unprecedented 26% increase over what lawmakers envisioned during the last budget cycle, Texas Comptroller Glenn Hager said Monday. said in his biennial estimated earnings statement, in front of lawmakers and state leaders.

Hager said lawmakers have far more money at their disposal than is available, with the increase in available money dwarfing any previous jump between cycles, thanks in large part to conditions that flushed the state with cash. .

“The amount of projected revenue provides the state with an extraordinary, once-in-a-lifetime opportunity for historic action this legislative session,” he said.

This is more than the Texas constitution and state law would legally allow them to spend, barring any special legislative action to circumvent those limits.

The estimate comes a day before the Texas Legislature meets on Tuesday. This includes an anticipated $165.9 billion in new revenue, most of which comes from sales and energy taxes the state collects and can only be spent in the next cycle.

It also includes a record $32.7 billion in state dollars, which is expected to land in Texas coffers from the 2022-2023 biennial, thanks to “strong economic growth,” lower gasoline prices, inflation and other factors over the past few years. 18 months, he said. Hager said all but $10 billion set aside for the highway fund and state emergency fund is available for general spending.

That amount can be spent before August to meet whatever needs lawmakers have for the current budget.

Hager said Monday that unless lawmakers decide to dip into the Economic Stabilization Fund, the official name for the state’s so-called rainy day fund, that fund will have a record balance of $27.1 billion by the end of the 2024-25 biennial. is expected to happen. , The rainy day fund is separate from the $32.7 billion left in state coffers from the previous cycle and is not included in Monday’s overall estimate of available funds.

State revenue from all sources is expected to reach $342.3 billion for the 2024–25 biennium, including $108 billion in federal revenue and about $68 billion of other revenue, such as fees, earmarked for private purposes and therefore Not available for general purposes. ,

The current two-year budget period, ending in August, totaled $265 billion in state and federal funds, including an initial $119 billion in general revenue, a figure expected to exceed $150 billion before the end of the cycle.

Monday’s budget estimate reflected a strong economic rebound as the state worked to recover from the Covid-19 pandemic, but represented a mild recession expected this year, albeit a “relatively shallow and small” one for Texas and consumer spending. , resulting in a slowdown in employment. levels and personal income, said Hager, entering his third term as a Republican comptroller.

Hager said it also signals a painful period financially for Texas taxpayers.

“We cannot and will not lose sight of the fact that every tax dollar the state receives comes from taxpayers’ pockets,” he said.

Despite an economic situation Lieutenant Governor Dan Patrick recently referred to as “rainbow skies,” Hager urged foresight and frugality on Monday. The numbers could be affected by the Federal Reserve’s efforts to tame inflation, which could deepen the recession, Heger said, and if conditions in other parts of the world such as Russia and China cause oil prices and gas to return to normal. becomes more volatile than , among other factors.

“I must advise some caution as these decisions are made. Frankly, don’t count on me announcing another big jump in revenue two years from now,” Heger said. “Being able to maintain some sort of reserve fund is important.”

The state’s revenue is heavily dependent on sales taxes: about 53% of total revenue is expected to come from sales taxes in the next budget cycle. But it also includes considerable revenue from oil and gas compensation taxes, as well as sales and fuel taxes on motor vehicles and franchise taxes collected on alcohol.

Patrick echoed that note of caution, saying Monday that while the estimate offers “further evidence of the real strength of our economy,” lawmakers should continue to take their conservative approach as a recession looms.

“Our state faces a number of challenges, first and foremost, fortifying our grid with dispatchable power, but I am confident that we can provide Texas with the best possible way to live, work, raise a family and start Can continue to strengthen to stay in place. A business Patrick said.

subject to change

Revenue projections are the primary responsibility of the state comptroller and projects for legislative budget writers how much money Texas will collect from its residents and businesses over the next biennium.

The Comptroller is the chief tax collector, revenue assessor and check writer of the state. Hager’s highest-profile moment occurs during legislative session, when he informs lawmakers of how much money is available to them as they decide how to fund state operations in the new biennial. Because the Texas Legislature meets every two years, legislators prepare a two-year budget.

Passing a balanced budget, which does not spend more than is expected to be available, is the only thing the Texas Legislature is constitutionally required to do during its 140-day regular session.

Lawmakers are expected to approve the budget before the session ends at the end of May.

Monday’s forecast for the next budget cycle could be updated later in the session as lawmakers near the conclusion of budget negotiations and the Comptroller’s Office’s team of forecasters and economic researchers gathers the most up-to-date economic information.

The projected figure is also subject to change biennially as economic conditions change, as has been the case for the past two years.

When actual collected revenue exceeds the anticipated budget, the state may have more money than it plans to spend, as it does now.

When real income falls, it can create a deficit that needs to be addressed in the next cycle.

Heger compared the income forecasting process to the challenge of predicting what one’s bank account would look like two years from now: one can guess, but the future, especially one affected by economic fluctuations and chaotic political environments, is hard to predict. Predictions cannot be made. definitely.

spend stock

Part of the state’s comfortable fiscal position in session is due to the balance that will remain in state coffers at the end of this current budget cycle, which Hager estimated Monday at $32.7 billion. That number won’t be finalized until later this year when all receipts are tallied and lawmakers are in session to determine whether to spend any remaining funds before the end of August.

Heger said, in addition to “vigorous economic growth” that has boosted state revenues since the end of the Covid-19 pandemic restrictions, rising energy prices and the highest rate of overall price inflation in 40 years also dented state tax collections. has crossed. This was expected when the MPs passed the last budget.

The ending balance also reflects $3.8 billion in savings as federal pandemic dollars replaced state taxpayer dollars, as well as state savings in school funds from skyrocketing property taxes, she said. That reduced the state’s liability by about $4.3 billion, he said.

State law and the Texas constitution are already creating constraints for legislators, who may be tempted to spend all available state revenue this cycle, whether it’s property tax relief, schools or the state workforce, or lump-sum investments like water. Like on state issues. , infrastructure and broadband.

Based on current budget figures, the spending limit is set at a 12.3% increase in the current biennial, allowing lawmakers to spend about $12.5 billion more in general revenue over the next two years. The dollar number could increase if lawmakers pass a supplemental budget bill this session that increases spending over the next two years, but it is still well short of the amount expected to be available to lawmakers.

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