Texas Legislators Have Less Money for the State Budget This Time Around

Texas legislators are about to start putting together the budget with less money than last time around.
Texas legislators are about to start putting together the budget with less money than last time around.
Photo from the Office of the Texas Legislature
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Once the 85th biennial Texas legislative session convenes on Tuesday, one of the primary tasks for state legislators will be putting together a workable budget. But this time around, there's not going to be quite as much money to work with, based on Texas Comptroller Glenn Hegar's biennial revenue estimate released on Monday.

The biennial revenue estimate is a projection issued by the state comptroller at the start of every legislative session. Because the Texas Constitution mandates that the state government cannot spend more money than it receives, the estimate lets state officials know exactly how much money they can expect to have coming in over the next two years.

This time around state lawmakers will have $104.9 billion that can be used for general purpose spending, according to Hegar's report. That's about $9 billion less than they had to play with when they were writing the state's last two-year budget, during the legislative session in 2015.

The main reason there's less money sloshing around now is the recent weakness in the energy industry. The oil industry downturn in the past few years has led to thousands of layoffs and a sharp decline in production and a number of bankrupt companies. The oil industry seems to be perking up a bit now, but that won't show up in the state coffers for a while.

When Texas lawmakers started crafting the budget in 2015, the state had a balance of more than $7 billion in the general revenue fund. But since then, the amount of funds available has also decreased because the state's balance has dropped significantly. The state budget was so tight last July that  Lieutenant Governor Dan Patrick and House Speaker Joe Straus told state agencies to cut their budget requests by 4 percent.

So Texas officials have to work with what they've got on hand. The state still has a $1.5 billion balance in the coffers. With those funds plus the revenue garnered through state sales taxes, motor vehicle sales taxes, oil and natural gas production taxes and a few other sources of state tax revenue, Texas is predicted to have $108 billion in revenue that will go to the general revenue fund.

Of that money, $4.7 billion is slated to go to the State Highway Fund because of Proposition 7, a 2015 voter-approved constitutional provision that kicks in with the 2018-2019 budget. In addition to that, $3.1 billion has to be set aside for the Economic Stabilization Fund and the regular State Highway Fund. This leaves $104.9 billion on the table for the state legislature to spend.

Hegar put a positive spin on the situation. "While our state revenues were down in 2016 and we face some difficult decisions in the coming months, Texas remains fiscally healthy," Hegar stated. "Despite energy-related headwinds, Texas has gained 210,000 jobs in the last year, and while our gains have not been at the same rapid rate as a few years ago, it is important to note that we have added jobs in 19 of the last 20 months. We have also seen signs of possible improvement in recent months, with some modest acceleration in job growth and oil prices and rig counts rising. And December brought the best monthly sales tax revenue collections since May 2015."

So that's something.

Governor Greg Abbott also chimed in with a statement encouraging the Lege to come up with a budget that he can approve.

“Texans expect their government to live within its means, and I fully expect to sign a budget that does just that," Abbott stated in a release. "As fiscal conservatives, we must treat our state budget the way families do – by funding our priorities, while constraining the size and growth of government. I will work with the Legislature this session to craft a budget that funds our most vital services without growing faster than the growth of population and inflation.”

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