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Budget deficit for the state legislative session smaller than expected

Published: Jan. 13, 2021 at 8:45 PM CST
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BRYAN, Texas (KBTX) - Texas lawmakers will begin the 87th legislative session this week with an estimated $112.5 billion available to allocate for general-purpose spending in the next two-year state budget. That’s down slightly from the current budget but is significantly higher than what was estimated this summer when the coronavirus began to devastate the economy.

Texas Comptroller Glenn Hegar announced that number Monday in his biennial revenue estimate, which sets the amount lawmakers can commit to spending when they write a new budget this year.

Hegar also announced a nearly $1 billion deficit for the current state budget that lawmakers must make up, a significantly smaller shortfall than the $4.6 billion one Hegar expected over the summer.

Hegar’s estimates portend a difficult budget-writing session for lawmakers. But Hegar acknowledged that things could have been a lot worse. The $112.5 billion available is down from $112.96 billion for the current budget.

Comptroller Hegar joined First News at Four to explain how the state was able to keep the budget deficit low.

“Principally that’s because revenues into the treasury, while negative compared to last year, have not been as negative as we anticipated,” Hegar says.

He says one of the biggest contributors to that was sales tax. Hegar says both the standard sales tax revenue and the online sales tax revenue, which was enacted in the last legislative session, exceeded expectations.

He says federal funding increased this year through a number of ways including the COVID-19 relief bill. Hegar says most of that money went to funding increased expenses incurred because of COVID-19 but explains that part of it covered some expenses that the state would have funded regardless of the pandemic.

But one of the more interesting ways the state was able to save money in the past year was through education funding. Hegar says that schools received more funding than they expected from property taxes which meant that the state did not provide as much funding to keep schools running.

“As local property values increase,” Hegar explains, “that means us as local property taxpayers pick up a larger share.”

He says the state decided to decrease the amount of property taxes that are used to fund schools and increase the share provided by state revenue in the last legislative session. But estimates on property values were lower than what actual property values were during that two-year period and that left the state with more money than expected.

So what does that all mean for me as a taxpayer?

To provide some perspective on what that means for the average Texan taxpayer, First News at Four sat down with Dennis Jansen, the Director of the Texas A&M Private Enterprise Research Center.

“I think the Comptroller is not completely confident in that number,” Jansen explains.

He says much of that estimate is dependent on predictions for the future. Jansen adds that the estimate does not factor in Governor Greg Abbott’s request for a 5% reduction in state spending, possible further increases in federal funding, nor possible increases in state appropriations.

He says the unanticipated “savings” from education funding are difficult to fully break down but assured that schools did not receive less funding than they anticipated.

“Schools that don’t receive what’s considered to be sufficient funding,” Jansen explains, “then receive funding from the state, or state tax revenue.”

Jansen says because property values were higher than Comptroller Hegar expected, the property taxes were too and therefore the state was able to spend less while schools received the same amount of funding.

Jansen also elaborates on all the factors that contributed to a smaller-than-expected deficit here through the Texas A&M Private Enterprise Research Center’s website.

Watch the full interview with Comptroller Hegar and Texas A&M PERC Director, Dennis Jansen, in the player above.

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