Texas comptroller revises revenue estimate to include $3.12 billion more than first projected
(The Center Square) – Texas Comptroller Glenn Hegar has revised the state’s Biennial Revenue Estimate (BRE) indicating that Texas now has $3.12 billion more in revenue than first projected in January.
Texas’ 2020-21 revenue available for general-purpose spending is projected to be $113.88 billion. Its ending balance in General Revenue-Related (GR-R) funds is projected to be $725 million, an increase of $1.67 billion from the negative balance projected in the January 2021 BRE.
The increased ending balance, combined with upwardly revised projections of revenue collections for the 2022-23 biennium, also changed to an estimated $115.65 billion available for general-purpose spending in 2022-23, an increase of $3.12 billion from the January BRE.
The Texas Constitution requires that the comptroller submit a statement showing the state’s financial condition and estimate the revenue it can expect to receive during the next two-year budget period. The BRE provides the basis for the state’s budget.
In a May 3 letter to state leadership, Hegar said the revisions are based on changes in estimated revenue collections and updated Legislative Budget Board estimates of the state obligation for Foundation School Program funding.
The estimate excludes any appropriations made by the 87th Legislature. The projected ending balance does not account for any savings reported by state agency budget reductions or replace eligible GR-R appropriations with federal relief funds or reductions in non-FSP appropriations made in House Bill 2.
“When we finalized our economic forecast for the January BRE, COVID case counts and hospitalizations were on the rise, and the rollout of vaccines had just begun,” Hegar said. “Those conditions warranted caution about the near-term economic outlook. Since then, case counts and hospitalizations have plummeted, many restrictions have been lifted and economic activity in the state – and across the country – has accelerated.”
Some of the increased revenue is attributed to increased oil and gas production tax collections. In a separate report, Hegar announced that oil production taxes were up significantly from April 2020. Oil production taxes in April totaled $334 million, representing a 75% increase; natural gas production taxes totaled $232 million, representing a 247% increase.
The Comptroller’s office is expected to transfer $1.26 billion each to the State Highway and Economic Stabilization funds in fiscal 2022. Another $1.67 billion to each fund would be transferred in fiscal 2023. Hegar said he now expects the state’s Economic Stabilization Fund balance to be $12.12 billion by the end of the 2022-23 biennium based on these projections, independent of any action taken by the legislature.
“Our revised revenue forecast assumes continued economic growth through the next biennium, but uncertainty remains about the ultimate course of the economy and thus state revenue,” Hegar said. “Texas remains well-positioned to recover from the COVID outbreak and return to its norm of economic growth in excess of the national rate – if we haven’t already.”
“With the updated BRE numbers, it is unclear what lawmakers or the current conference committee will do with the current draft of the budget document,” Michael Quinn Sullivan of Texas Scorecard said in an email to supporters. But he and fiscal conservatives throughout the state argue that the legislature use the entire $3.12 billion toward property tax relief.
Both the Senate and House passed their respective budget bills and the budget’s next step is to be reconciled in conference committee. Once reconciled, the bill would head back to the full chamber for a final vote.
One amendment adopted in the House proposed by Rep. Bryan Slaton, R-Royse City, allocates $100 million from the Texas Enterprise Fund toward property tax relief, a measure proposed before the revenue windfall Hegar reported.
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