Glenn Hegar: Legislative Session an Opportunity to Invest in Texas

My office develops the BRE every two years to project the funds available to finance state programs and services through the upcoming biennium.

Texas Insider Report: AUSTIN, Texas – The 89th Legislative session has begun, and lawmakers have an essential financial task on their to-do list — writing the next two-year state budget with guidance from the Biennial Revenue Estimate, or BRE.

My office develops the BRE every two years to project the funds available to finance state programs and services through the upcoming biennium. We spend months studying tax and non-tax revenue and trends to produce it, checking and rechecking projections, research and expert opinions. Here’s the short version: Texas’ economy is in good shape, and we have billions of dollars in the bank, with a projected $23.76 billion cash carry forward balance from the current budget period.

There’s always uncertainty in the BRE, because our estimates will be affected by world and national events. But our prospects are bright: People and businesses continue to move to Texas, lured by freedom and opportunity.

If we want to keep things bustling, we must confront housing availability and affordability issues and invest in the infrastructure necessary to support this growth.

I left the world of lawmaking when I became state comptroller, so I’m not prescribing what lawmakers should or shouldn’t do this session. That’s their responsibility. But when I talk with Texans, they often ask about the challenges that keep me up at night, and I think my answers are in line with lawmakers’ priorities.  

An ongoing challenge is keeping up with infrastructure, including water, transportation, broadband and reliable power sources. This has long been a priority for me, and I’m grateful lawmakers have made significant investments in recent years. Infrastructure investments will remain crucial as long as our population is growing.  

Housing affordability (PDF), which my office examined in a recent report, also is top of mind. We must tackle this issue because hard-working Texans are finding home ownership is out of reach. They’re not only struggling to afford a mortgage, but the ongoing expense of property taxes and insurance premiums — two of the biggest cost drivers.

In recent sessions, lawmakers have taken key steps to lessen the property tax burden on Texans, and I am confident that they have the resources necessary to make further progress and provide greater tax relief this time around. The cost of insurance remains a concern, and one I have continued to highlight as homeowners have seen average year-over-year premium increases of 10.8 percent in 2022 and 21.1 percent in 2023. I expect that growth to slow, but it remains an issue for Texans in every part of our state.

Fortunately, lawmakers have many tools at their disposal as they confront the state’s challenges.
One sizeable asset is the Economic Stabilization Fund, or ESF — our Rainy Day Fund. I’m projecting it will grow to more than $28.5 billion by the end of the 2026-27 biennium; that figure would be even higher if not for a constitutional limit on its balance.

I’m pleased lawmakers gave me the authority a few years ago to prudently invest most of the ESF while maintaining its liquidity. I pushed for this flexibility because I thought it would pay off in a big way, and it certainly has.  

Some folks believe we should spend our Rainy Day Fund because it’s grown so large. I agree with judiciously spending some of it, but I also believe it’s important to maintain a strong ESF balance that insulates future generations from economic uncertainties and provides the means to meet their own responsibilities in areas such as infrastructure. This will preserve financial security for our children, and our children’s children, as they follow in our footsteps to strengthen Texas. I can think of no better legacy.