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Texas' current budget cycle will end on an economic high with a surplus of $725 million in general revenue.
This comes as an unexpected surprise after Texas Comptroller Glenn Hegar predicted in January the state would suffer a $1 billion deficit due to the COVID-19 pandemic, The Texas Tribune reports.
"Texas' economic recovery is accelerating and I have updated my forecasts for revenues and the overall economy," Hegar said in a May 4 tweet.
According to a release by the Hegar's office, the new estimate shows 2020-21 revenue for the Biennial Revenue Estimate (BRE) ending with $113.billion available for general-purpose spending with the ending balance for the General-Revenue-Related (GR-R) funds at $725 million. This is a $1.67 billion increase from the negative balance projected in January, the release said.
“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 in the release. “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.”
Hegar has since increased the projections of funds for the 2022-23 budget by $3 billion, The Texas Tribune reports.
“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 during a Monday press conference, as reported by The Texas Tribune. “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.”
According to The Texas Tribune, the estimate does not factor in federal relief funds, and the "all funds" total of available revenue is now $294 billion.
Hegar said in a May 3 letter to lawmakers that the revisions or revenue are based on an updated Legislative Budget Board estimates of the Foundation School Program (FSP), nor does it account for appropriation by the 87th Legislature. Hegar further said the projected ending balance also does account for state agency budget reduction savings, "replacement of eligible GR-R appropriations with federal relief funds or reductions in non-FSP appropriations made in House Bill 2," the press release from Hegar's office said.
House Bill 2 (HB2), introduced by Rep. Greg Bonnen (R-Friendswood), "relates to making supplemental appropriations and reductions in appropriations and giving direction and adjustment authority regarding appropriations," and was approved.
HB 2 will now be sent to the state Senate for further consideration.