Jerrod KingeryOn Monday, the day before the opening of the state’s 89th Legislature, Texas Comptroller Glenn Hagar released the Biennial Revenue Estimate, projecting the state would have $194.6 billion in revenue available for spending during the 2026-2027 biennium.
That’s a 1.1.% decrease from the 2024-2025 biennium, which Hegar attributes to smaller beginning balance of $23.76 billion compared with 2024-2025’s beginning balance of $39.43 billion.
The projected ending balance for 2024-2025 includes $4.5 billion in unspent contingent appropriations for public education and education savings accounts, as lawmakers failed to pass the necessary legislation that involved enacting a school voucher program.
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Hegar said that Texas is in good financial shape, adding that revenue collections will continue to increase in the upcoming biennium. However, he cautioned that many Texans are still feeling a financial pinch and that future investments should “focus on improving the lives of Texans.”
“Despite positive economic numbers, many of our residents continue to feel the higher cost of groceries, housing and other necessities,” Hegar said. “And the lingering impacts of persistently rising prices mean many are struggling to ensure a bright future for their children.”
The projected $194.6 billion includes an anticipated $176.4 billion in revenue from energy and sales tax collections, the latter of which is expected to increase by 9% over the 2024-2025 biennium to $94.2 billion.
Other significant sources of general-revenue related revenues in 2026-27 include:
- Oil production tax collections, which are projected to generate $11.8 billion, down 0.1% from 2024-25.
- Motor vehicle-related taxes, including sales, rental and manufactured housing taxes, which are expected to reach $12.5 billion, up 1.5% from 2024-25.
- Franchise tax collections, which are projected to generate $11.5 billion, up 12.6% from 2024-25.
- Natural gas tax collections, which are expected to raise $5.4 billion, up 25.5% from 2024-25.
No money will be held in reserve for the Economic Stabilization Fund (ESF), otherwise known as the Rainy Day Fund, because for the first time in its existence, the fund balance is estimated to exceed its constitutional cap. The balance of the ESF is expected to total a record $28.5 billion at the end of the 2026-27 biennium.
Notably, this forecast does not incorporate the possible impacts of one-time or unusual events.
“Potential economic disruption could come from weather-related disasters, the continued wars in Ukraine and the Middle East, China’s economic activities, changes in federal policies and the possibility that the Federal Reserve must continue restrictive monetary policy efforts to combat resurgent inflation,” Hegar said.
Hegar noted that, barring an economic crisis, Texas’s economy is expected to continue growing at a pace consistent with historical trends.
You can find the full report here.
Photo courtesy Michael Barera, CC BY-SA 4.0 https://creativecommons.org/licenses/by-sa/4.0, via Wikimedia Commons
