Texas Lawmakers Grapple with Still-Soaring Budget Surplus

posted on 1.09.2023

- Focus on Property Tax Relief, Services

Texas Comptroller of Public Accounts Glenn Hegar confirmed this week that the State of Texas’ record budget surplus has grown even more, further expanding lawmakers’ opportunities to deliver greater relief from the state’s high property tax burden and increase funding for core government services.

Hegar delivered an updated revenue estimate one day before Texas state lawmakers were sworn in to commence the 140-day legislative session in which the only task required by the state constitution is to adopt a two-year spending plan.

Lawmakers are looking at a $49.7 billion surplus, including $32.7 billion in greater than anticipated tax revenue in the current two-year budget cycle, $14 billion in the state’s savings account, and $3 billion in unspent federal funds from the American Rescue Plan Act passed by President Joe Biden in 2021.

In his announcement, Hegar noted that while some of the increase is tied to inflation, it’s primarily driven by economic growth. He urged lawmakers to ensure any large investments they’re planning be made toward things that can drive further economic growth, such as improving the “electrical grid, broadband connectivity, port and water infrastructure, salary adjustment for state employees, our teachers and nurses, and development of our skilled trade workforce.”

With respect to taxes, Hegar urged legislators to consider meaningful tax reduction that avoids creating “demands on general revenue that might be difficult to meet in years to come.

Spending Limit, Dueling Priorities

Lawmakers are subject to spending limits they can waive on their own, so how much of the surplus will be invested in Texas this session has yet to be determined. Nervousness about waiving the limits could prompt them to seek voter approval in a statewide referendum.

What is clear, is that there are varying priorities among lawmakers for how to invest these dollars.

Gov. Greg Abbott pledged in his re-election campaign to direct half of the surplus to reducing property taxes. Other leaders are focusing on reducing the business franchise tax burden, and investing in infrastructure needs, education, health and human services and other core government services.

While property taxes are set by local governments, the costliest portion – for local public schools, is directly influenced by how much state funding lawmakers direct to public education.

Recent tax-cutting efforts by state lawmakers has resulted in actual reductions in local property taxes in some of the state’s most populous counties, while the rate of increase for others has declined substantially.

TAB supports changes to the state’s property tax system and franchise tax that provide relief to the broadest base of businesses possible without compromising the resources needed to invest in core government functions.

Some proposals being floated so far could meet that test, such as repealing the business personal property tax and implementing appraisal caps for commercial property.

One idea – to eliminate the business franchise tax altogether – would cost the state $5 billion annually, but smaller businesses whose revenue fall below the taxable threshold would not benefit.

Talk with Lawmakers at TAB’s Jan. 31 Conference

Station owners and managers can discuss these options and more at TAB’s 2023 Legislative Day Conference in Austin on Jan. 31. The event concludes with a luncheon where broadcasters are seated with their local lawmakers to discuss legislative issues and community concerns.

TAB is advancing a suite of Open Government measures, including one to ensure journalists’ access to certain dates of birth records, eyeing proposals that would legalize new gaming enterprises and watching out for measures that would restrict or improperly regulate advertising.

REGISTER

Running from 10AM to 2PM, the event features in-depth policy briefings on TAB’s agenda, as well as major state issues that will dominate the session which opened Jan. 10 and concludes May 29.

Station owners, general managers and news directors’ personal involvement in the lobbying effort is critical to TAB’s success as lawmakers respond more readily to constituents, than lobbyists.

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

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