Texas faces almost $1 billion budget shortfall

by | Jan 11, 2021 | Budget, Policy

Texas Comptroller Glenn Hegar released the biennial revenue estimate on Monday, informing lawmakers the state is projected to have $112.5 billion in revenue for the 2022-23 budget. 

That’s a 0.4 percent decrease from 2020-21 biennium, which Hegar is projecting will end with a negative balance of $946 million.

In other words, state lawmakers face an almost $1 billion budget shortfall as they enter session this week.

Hegar said that estimate is “clouded with uncertainty” due to the recovery path of the pandemic and behavior of businesses and consumers.

“As a result, there is a wide range of possible outcomes for state revenue through the end of fiscal 2023, with the possibility of revenue falling short of this forecast but also a chance revenue could exceed it, perhaps substantially,” Hegar said.

The comptroller’s estimates also don’t include the across-the-board cuts Gov. Greg Abbott ordered last year for about a quarter of state agencies.

Lawmakers have a few options for getting out of the hole this year. They can either make more sweeping cuts or they can pass a supplemental appropriations bill to cover the costs (which they will pay out of pocket for from the next biennium). Or they could tap into the state’s rainy day fund which now boasts $10.5 billion dollars. 

Texas’ rainy day fund is expected to grow by $1.1 billion at the end of 2022-23 — more than enough to cover the projected revenue shortfall. At least 17 states in 2020 tapped into their own rainy day funds and savings to address budget gaps and the pandemic. None boast a more sizeable and dustier rainy day fund than Texas. 

With Democrats now in control of the Senate and White House, there’s also a good chance a new COVID relief bill could include funding for state and local governments to address budget gaps. In December, Congress passed the latest COVID-19 relief bill that included a $600 stimulus check but no funding for states and local governments that Democrats were pushing for.

Republicans still control the government in Texas, so debate this session could spiral into how much of the budget to cut. The state party has a history of using bleak revenue estimates to make deep cuts, and then drag their feet for years in restoring funding when those bleak projections don’t materialize. 

Photo: Bill Clark/CQ Roll Call

fernando@texassignal.com | + posts

Fernando covers Texas politics and government at the Texas Signal. Before joining the Signal, Fernando spent two years at the Houston Chronicle and previously interned at Houston’s NPR station News 88.7. He is a graduate of the University of Houston, Jack J. Valenti School of Communication, and enjoys reading, highlighting things, and arguing on social media. You can follow him on Twitter at @fernramirez93 or email at fernando@texassignal.com

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