"Texas economy has outperformed the national economy, and the economic outlook included with this revenue estimate does not assume a recession in Texas.”
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 two 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. This CRE also serves as an estimate of available revenue for the third called session expected to begin Oct. 9.
The CRE revises estimates in the BRE to reflect legislative activity and current economic information and considers 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 2024-25 to total about $194.57 billion, up 24.8 percent from the 2022-23 biennium. This revenue will support the $176.28 billion in general-purpose spending called for by the 88th Legislature and will result in a projected fiscal 2025 balance available for certification of $18.29 billion.
“For well over a year now, consensus macroeconomic forecasts have indicated a recession this year or next,” Hegar said. “Despite sharply higher interest rates, household budgets stressed by inflation and adverse economic conditions among major trading partners, the national economy has continued to grow. Meanwhile, the Texas economy has outperformed the national economy, and the economic outlook included with this revenue estimate does not assume a recession in Texas.”
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 2024 transfers will total $3.06 billion each to the ESF and SHF based on severance taxes collected in fiscal 2023, and each fund will receive an estimated $2.76 billion in fiscal 2025 from severance taxes collected in fiscal 2024. Additionally, in fiscal 2024 the ESF will receive a transfer of $2.52 billion, half of the unencumbered and unobligated fiscal 2023 General Revenue Fund ending balance.
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 2025 ending Rainy Day Fund balance of $23.77 billion.
“In view of the significant uncertainty and potential risks to the economic outlook, revenue is estimated conservatively for the 2024-25 biennium,” Hegar said. “It may well turn out that robust economic growth, and consequently revenue growth, will continue unabated. But it would not be prudent to simply assume that will be the case.
“I will continue to monitor the Texas economy and state revenues closely and will keep the public informed of any significant events as they arise.”
The Comptroller's office has created a useful infographic (PDF) featuring highlights from the CRE. Detailed tables and the CRE can be found on the Comptroller's website.
