Each January in an odd-numbered year, the Texas Legislature plays the role of Rod Tidwell and Comptroller Glen Hegar could be our Jerry Maguire. “Show us the money” takes the form of the much anticipated Biennial Revenue Estimate (BRE), the comptroller’s best estimate for how much money state budget writers have as they write the Appropriations Bill to fund Texas government - including our public schools - for the next two years.
On Jan. 9, just prior to the Legislature gaveling in, Comptroller Hegar announced the state would have $188.23 billion of revenue available for general purpose spending. That’s about a 26% increase from the previous biennium (2022-2023), and it provides a historic opportunity for once in a generation investments in education, infrastructure, workforce, and tax relief.
Let’s break that $188.23 billion in revenue down further to drill down into what monies state lawmakers have to fund key programs, including our fast growth school priorities:
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$7.34 billion will be transferred to the State Highway Fund
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$2.86 billion transferred to the Economic Stabilization Fund or “Rainy Day Fund, leaving a historic balance of $27.8 billion in the ESF.
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That Rainy Day Fund total puts the ESF at its cap for the first time ever, meaning $690 million will remain in General Revenue for budget priorities.
Good news, right? It’s enough to make Rod Tidwell and Jerry Maguire shout out loud. Or, is it?
The Texas Legislature has a significant amount of money to spend, but not necessarily the ability to do so. Texas has five limits on appropriations: the debt limit, the welfare spending limit, the pay-as-you-go limit, the constitutional spending limit, and the consolidated general revenue limit.
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The pay-as-you-go limit simply says that except in case of emergency, the Legislature cannot allocate more money than they are projected to have in tax revenues.
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The constitutional spending limit prohibits the growth of appropriations in state tax revenues not dedicated by the constitution from exceeding the growth in the state’s economy.
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And finally, the consolidated general revenue limits the growth in general revenue-related funds from exceeding the growth of the state’s population times the inflation rate. This is the first biennium in which that limit will be effective and it also exempts appropriations for tax relief and disaster recovery.
There are ways around many of these provisions such as dedicating money via a constitutional amendment. Simply put, though, the Legislature will run out of the ability to spend money before they run out of money to spend this Session.
Everyone has ideas about how to spend it, too. The Governor and Lieutenant Governor have made clear that property tax relief is a leading priority, though each has a slightly different approach and focus:
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Governor Greg Abbott has proposed using at least half of the budget surplus on property tax reductions, making it the largest property tax cut in history.
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Lieutenant Governor Dan Patrick has also suggested a significant property tax cut, such as increasing the homestead exemption for homeowners, as well as improving the state’s electrical grid, continuing the state’s investment in border security (which could cost billions to match in the next biennium).
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