As expected, the Comptroller released his Biennial Revenue Estimate on Monday … The estimate projects the amount of revenue that will be available for appropriators to craft a budget for FY2022-2023.
Here are the key things to know …
1. The Good news.
The projected shortfall is shrinking. For the CURRENT budget cycle, the deficit is now estimated to be only ~$1 billion … this number is significantly less than the ~$4.5 billion deficit that was projected in July 2020. Moreover, this projection does NOT include savings due to the budget cuts implemented in June 2020. Nor does the estimated deficit “incorporate the effects of substituting federal funds provided as pandemic-related assistance for some GR-R pandemic-related expenditures.” In our assessment, the combined effect of these two unincorporated factors may eliminate the deficit entirely.
The Rainy Day Fund remains robust. The Comptroller projects that at the end of the next budget cycle Texas will have more than $11.5 billion in its Rainy Day Fund … that assumes appropriators do not tap the fund to help with the current budget cycle. Appropriators utilized the Rainy Day Fund in a big way in the aftermath of Hurricane Harvey and we expect a similar discussion to take place this session.
2. The Bad news.
Appropriators will have LESS to spend. When the Comptroller certified the current budget, he estimated the legislature had $121.76 billion available for general-purpose spending. By contrast, the Comptroller is estimating that the legislature will have $112.5 billion available for general-purpose spending for the next budget. Appropriators will have to be creative.
3. What they are saying …
Governor Greg Abbott: “I think we have the tools and strategies to deal w/ budgetary challenges … for the next 2-year cycle, we should be … in great shape.”
Lt. Governor Dan Patrick: “"The Comptroller’s Biennial Revenue Estimate today is welcome news considering the economic challenges our state has faced. We believe that with a continuing healthy economy, a growing Economic Stabilization Fund and federal COVID-19 relief, we will be able to move forward on our budget priorities this session and balance the budget …”
Speaker Dade Phelan: “I will say we have a challenge ahead of us, there’s no doubt about it. … We have to look at everything.”
Senator Jane Nelson (Chair, Senate Finance): “Tough decisions remain, but I am confident we can pass a budget that meets our essential needs, maintains our commitment to education and follows the principles of fiscal responsibility that put us in a stronger position than other states to withstand this unprecedented pandemic.”
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