Texas' record-breaking surplus is now nearly $33 billion
Texas legislators will return to Austin on Tuesday to a $32.7 billion estimated budget surplus for the 2024-2025 fiscal year, which is even more than the record-breaking figure announced last year.
State Comptroller Glenn Hegar announced the updated budget surplus on the eve of the first day of the 88th Texas Legislature.
He also announced the state will have $188.2 billion in general revenue during the 2024-2025 fiscal year, a 26% increase from the last biennium.
“This truly is a once in a lifetime legislative session for budgeting and priorities that the Legislature might want to fund,” Hegar said.
He said lawmakers should consider spending the money on the state’s electrical grid and port and water infrastructure and on salary increases for teachers and nurses.
Hegar warned lawmakers of the risk of using the money unwisely.
“Bluntly, don’t count on me announcing a big revenue jump another two years from now,” Hegar said. “The revenues we’ve seen have been in many ways unprecedented.”
In July, Hegar had estimated the surplus to be at $27 billion. But on Tuesday he said it had grown due to inflation and higher sales tax revenues.
Spending caps limit how much of the surplus Texas legislators can spend. Hegar said this means lawmakers will either have to leave some money in the treasury to be used in the future, use a different spending mechanism or break the spending cap. (The latter is unlikely to happen, Hegar said.)
Conservatives have said the money should go toward providing property tax relief. Meanwhile, progressive groups said the money should be used to better fund public education, including boosting the state’s per-pupil funding.
Lt. Gov. Dan Patrick said in a statement Monday that “Texas taxpayers must first receive tax relief before we commit to any new spending.”
“Additionally, we must not spend all the money,” Patrick said. “We must keep a responsible reserve in case Joe Biden's inflationary policies and out of control spending causes a national recession in 2023 and 2024.”
But Dick Lavine, senior fiscal analyst for the left-leaning think tank Every Texan, said the Legislature has already put in place mechanisms that limit how fast taxes grow.
He said the Legislature should not continue to cut taxes.
“But what you can do to relieve some of the pressure that homeowners and small businesses feel is to make sure that everybody pays their fair share of property taxes,” Lavine told reporters after the comptroller’s announcement.
Lavine proposed implementing “sales price disclosure.” This would require the disclosure of real estate sales so that the correct property tax can be charged.
Lavine also said the Legislature can use some of the money to increase the Basic Allotment — or per-pupil funding. That would guarantee a pay increase for teachers, counselors, librarians and nurses.
Meanwhile, Ann Bishop, the executive director of the Texas Public Employees Association, said lawmakers should also consider helping government employees.
“State workers have not seen a general pay raise since 2014,” Bishop said in a statement. “With a historic state surplus, this is the ideal time to make an overdue investment in those Texans who are on the front lines of providing needed services throughout Texas.”
The Texas Legislature is scheduled to start their new session at noon on Tuesday.