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State Revenue Picture Brightens for State Lawmakers

- Legislature Convenes Among Security, COVID Threat

Texas Comptroller Glenn Hegar affirmed this week that, while state lawmakers will have less revenue to fund the state’s next two-year budget than they did the current budget, the decline is not the multi-billion-dollar plunge many had feared at the start of the pandemic. Nonetheless, a $1 billion deficit in the current fiscal year budget and additional demands stemming from the pandemic and population growth mean budget-writers will be challenged.

The current-year deficit is substantially less than Hegar’s mid-summer forecast of a $4.2 billion deficit. For historical perspective, state lawmakers faced a $4.3 billion deficit in 2011 and had a cushion of $9.4 billion in the Economic Stabilization Fund, commonly referred to as the Rainy-Day Fund.

The ESF is projected to total $11.6 billion at the end of the upcoming two-year budget, and lawmakers may tap a portion of it to help fund their biggest policy priorities just as their predecessors have done.

The Comptroller said the revenue estimate – which forecasts a 0.4 percent decline from the current biennial budget – “remains clouded with uncertainty” as consumer and business behavior during the ongoing pandemic is unpredictable and will remain so until after disaster is contained.

Unlike his predecessors, Hegar routinely shares updates to his revenue forecasts with lawmakers as significant changes occur, so if the revenue picture improves markedly in the next few months budget writers will likely know just how much extra breathing room they have.

Lawmakers for many years have deliberately underfunded the state’s share of the Medicaid program to make ends meet, backfilling the shortfall when they convene in the following session with surplus revenues generated during the interim. Some Capitol observers suggest that practice might extend to other significant portions of the budget if necessary.

In any event, while building the state’s next two-year budget will be challenging, it appears that lawmakers will be able to do so without raising taxes either directly or indirectly through the repeal of existing tax exemptions and exclusions.

Security, COVID Threats Mark Session Opening
With COVID cases in Austin among the highest levels of the pandemic, lawmakers convened this week with tight controls on who could attend the swearing-in ceremonies. The additional celebrations and other events that typically occur the first week of the session were canceled.

With the session opening coming on the heels of last week’s insurrection at the U.S. Capitol, security concerns at the Texas Capitol have been heightened, and at least one potential security threat to lawmakers was known publicly ahead of time.

Groups calling themselves Patriot March Texas and the Texas Freedom Coalition included the following statement in the description of the event called “Patriot March on the State Capitol”:

“We will demand unfettered access to the State Capitol on par with previous sessions, and without restrictions stemming from the perceived COVID-19 situation, so that we may advocate for our legislative priorities, and advocate for the end of unconstitutional mandates and directives from state and local governments.”

As TAB has reported, the rules for visiting the Capitol personally this session are changing, with more information on how journalists will be accommodated soon to come as the House adopts its rules for the 2021 session.

Questions? Contact TAB’s Oscar Rodriguez or call (512) 322-9944.

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