The new figures show a $725 million surplus — up significantly from the near-billion-dollar shortfall back in January — for the end of the 2020-2021 biennium. Last summer, the state was in dire straits with a $4.6 billion shortfall on the horizon. But Texas’ economic health drastically improved as businesses opened back up and commerce abounded.
Last month, the state set a record-high monthly total with $3.4 billion collected in sales tax revenues — a 31.4 percent increase above April 2020.
Looking ahead to the next biennium, the comptroller estimates $115.65 billion available for general purpose spending — $3.12 billion higher than the January projection. However, it is still about $2 billion less than the legislature is considering spending in its current budget blueprint. Based on the upward trend, it appears likely that gap will be covered naturally.
Currently, the House and Senate are involved in conference committee negotiations to settle on a final version.
“When we finalized our economic forecast for the January BRE, COVID case counts and hospitalizations were on the rise, and the rollout of vaccines had just begun,” Texas Comptroller Glenn Hegar said of the latest projection.
“Those conditions warranted caution about the near-term economic outlook. Since then, case counts and hospitalizations have plummeted, many restrictions have been lifted and economic activity in the state — and across the country — has accelerated.”
On top of the immediate budget items, the projected balance for the state’s savings account, the “Economic Stabilization Fund” (ESF), is now $12.12 billion. Responsible for funding the ESF are oil and natural gas production taxes, which each drastically rose in April. The hotel occupancy tax also posted a staunch increase, illustrating an upsurge in travel as vaccinations rise.
“Texas remains well-positioned to recover from the COVID outbreak and return to its norm of economic growth in excess of the national rate — if we haven’t already,” Hegar concluded.
The state is still not in calm fiscal waters, but Monday’s update is another plot along the line of economic improvement since the pandemic and government-mandated closures first eviscerated it.
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Brad Johnson is an Ohio native who graduated from the University of Cincinnati in 2017. He is an avid sports fan who most enjoys watching his favorite teams continue their title drought throughout his cognizant lifetime. In his free time, you may find Brad quoting Monty Python productions and trying to calculate the airspeed velocity of an unladen swallow.