The state biennial revenue estimate looks to be better than some had feared, but will still mean lawmakers must prioritize budget decisions.
Comptroller Glenn Hegar released the biennial revenue estimate this week. This estimate of revenue to be collected over the next two-year budget cycle stands as a constitutional limit on what the Texas legislature can spend over the next two fiscal years. It's important to educators because public education represented about 42% of state general fund appropriations last biennium.
Hegar said lawmakers would have $112.53 billion in general fund revenue to spend next biennium -- down only slightly compared to what he projects lawmakers will collect in the current biennium. This forecast relies on an aggressive economic growth assumption of 6.7%.
Hegar reduced the shortfall for the current biennium to $1 billion (a significant improvement over the $4.58 billion current biennium deficit he indicated in the July update).
Remember that spending this biennium is well below what was appropriated by lawmakers last session, thanks in large part to reduced spending under the FSP, which is projected to cost roughly $3.5 billion less in the current biennium than was appropriated due to better than estimated tax year 2019 property value growth and the ESSER swap. Prior to these and other reductions, lawmakers had planned to spend $118.9 billion in the 2020-2021 biennium.
Although Comptroller Hegar stopped short of projecting the size of a deficit as compared to a current services budget, all of this will likely be taken as good news by lawmakers tasked with writing a state budget. The comptroller indicated questions on the spending side of that question (such as how new CARES Act dollars will factor in) will be up to the legislature.