The Legislative Budget Board met Monday morning to receive an updated state revenue estimate from Texas Comptroller Glenn Hegar, which predicts a budget shortfall of $4.58 billion by the end of the 20-21 biennium.
The last Certification Revenue Estimate, from October 2019 (pre-pandemic), projected a budget surplus of $2.89 billion. Now, due to the shutdown and slowdown of the state’s economy, as well as under-performing oil prices, and the like, the Comptroller reduced the amount of available revenue by $11.57 billion.
The projected shortfall is less than that amount due largely to savings the state has achieved in the Foundation School Program (FSP). The state used $1.2 billion in federal funds from the CARES Act to supplant state funds that would have otherwise been required to fund the FSP along with savings due to lower than estimated student attendance and higher than estimated property value growth, which generated more in local property taxes and therefore an estimated $600 million more in recapture over the biennium than was previously projected. All that amounts to requiring less in state funding for the FSP.
The Comptroller explained that “All revenue estimates have clouds of uncertainty. This one has even more clouds.” He also stated that the estimate was generated based on the assumption that there would be no further closures once current restrictions are lifted, with things returning to normal by fall. If that is not the case, estimates and numbers could certainly change again.
Lt. Governor Dan Patrick offered assurances that public education would be fully funded in the current biennium. He explained that the $8.8 billion in the Rainy Day Fund gives the state some comfort, as well as the $14.2 billion in the “Rainy Day Fund for schools,” indicating combined total for school district fund balances.
Hegar responded to questions from the Lt. Governor and Senator Larry Taylor (R-Friendswood) regarding whether the estimate included the resources necessary to fund public education during the current biennium. The Comptroller explained that he state has the tools necessary to manage the shortfall in the current biennium, but said it is too early to make any such projections for the 22-23 biennium.
This will likely be the last updated estimate until the Comptroller provides the Biennial Revenue Estimate for 2022-23 the day before the 87th Legislative Session begins in January.
If you would like to go back and watch the meeting for yourself, it's available
in the archives. You can also access more information on the
2020-21 Certification Revenue Estimate Update on the Comptroller's website. That link includes the 30-page report, along with summary graphics, visuals, the data behind the estimates, and more.
