Texas Insider Report: AUSTIN, Texas – Texas Comptroller Glenn Hegar announced the release of the Certification Revenue Estimate (CRE) for the fiscal 2022-23 biennium.
Before each regular legislative session, the Comptroller's office issues a Biennial Revenue Estimate (BRE) that estimates how much revenue will be available for spending in the state's next two-year budget cycle. After the session — and this year, after an additional three special sessions — the agency releases the CRE to provide the detailed basis by which the Comptroller certified the budget and any other bills making appropriations, to revise estimates in the BRE to reflect legislative activity and current economic information, and to consider final revenue numbers for the recently ended fiscal year.
As a result of legislative actions and an updated economic forecast, the Comptroller's office now expects revenue available for general spending in 2022-23 to total about $135.32 billion, up 15.1 percent from the 2020-21 biennium. This revenue will support the $123.33 billion in general-purpose spending called for by the 87th Legislature and will result in a projected fiscal 2023 balance available for certification of $11.99 billion.
“The Texas economy rebounded strongly from the deep but short recession caused by the onset of the COVID-19 pandemic, and we project continued expansion of the Texas economy in this biennium,” Hegar said. “Since April of this year, the Texas economy and state tax collections, particularly from sales taxes, have continued to outperform expectations.
“Though we remain optimistic, this is a conservative estimate. Risks impacting this estimate include continued global supply chain disruptions and bottlenecks affecting a range of products. Labor shortages and inflationary pressures could impact both business and consumer demand. Volatile energy prices and the potential spread of coronavirus variants also remain uncertainties for Texas’ economic outlook.”
The State Highway Fund (SHF) and Economic Stabilization Fund (ESF; the state's “Rainy Day Fund”) both receive funding from oil and gas severance taxes. Fiscal 2022 transfers will total $1.46 billion each to the ESF and SHF; fiscal 2023 transfers are projected to be $2.43 billion to each fund. After accounting for interest and investment earnings by the ESF, along with expenditures authorized by appropriations made in recent legislative sessions, the CRE projects a fiscal 2023 ending Rainy Day Fund balance of $12.62 billion.
Also, based on a constitutional amendment passed in 2015 and because annual state sales tax revenue is projected to exceed $28 billion, an additional $2.5 billion will be deposited in the SHF in each year of the 2022-23 biennium. This amendment also stipulated that when motor vehicle sales tax revenue collected in any fiscal year exceeds $5 billion, a portion of that surplus will be transferred to the SHF. The CRE projects that the threshold, first met in fiscal 2021, also will be met in each year of this biennium, with a transfer of $297 million in fiscal 2022 and $338 million expected in fiscal 2023.
“I will continue to monitor the Texas economy and state revenues closely and will keep the public informed of significant events as they arise,” Hegar said.
The Comptroller's office has created a useful infographic featuring highlights from the CRE. Detailed tables and the CRE, as well as estimates released throughout the 87th legislative sessions, can be found on the Comptroller's website.