Comptroller Releases Updated Certification Revenue Estimate (CRE)
Comptroller Releases Updated Certification Revenue Estimate (CRE)
Comptroller Glenn Hegar today released his widely anticipated update to the Certification Revenue Estimate (CRE) for the current state budget. He now estimates that legislators will have a record-breaking $27 billion in surplus revenue available in the upcoming legislative session, an increase of $15 billion over last November’s forecast. The increase is largely attributed to sales and severance tax collections, but also reflects solid growth across-the-board.
Governor Abbott and many legislators have advocated using some of the surplus funds to further reduce taxes, particularly local school property taxes. But a portion of those surplus funds are likely to be spent, as well. Texas’ Medicaid program will need supplemental funding before closing out the current budget, and teacher pay and benefit hikes are also likely to be discussed when lawmakers convene. Others would like to see the funds used on one-time expenditures such as upgrading the state’s physical and technological infrastructure. Reducing the unfunded liability of the Teacher Retirement System and Employee Retirement System have also been mentioned.
While any surplus is good news, lawmakers will have to deal with 2 different spending limits in order to set its budget priorities next January.
The constitutional “Tax Spending Limit” restricts the rate of growth of appropriations from state tax revenues not dedicated by the constitution to the rate of growth of the state’s economy (majority vote in each chamber to exceed). Ironically, cutting local school taxes counts against the constitutional spending limit because the legislature increases state spending on schools to replace those reduced local property taxes. A second limit, in statute rather than the Constitution, restricts the biennial growth of consolidated general revenue appropriations to no more than the estimated compounded growth of state population and monetary inflation. Though property tax cuts won’t count against that limit, increases in spending for infrastructure, teacher benefits, and/or pension system stability, will.
Governor Abbott and many legislators have advocated using some of the surplus funds to further reduce taxes, particularly local school property taxes. But a portion of those surplus funds are likely to be spent, as well. Texas’ Medicaid program will need supplemental funding before closing out the current budget, and teacher pay and benefit hikes are also likely to be discussed when lawmakers convene. Others would like to see the funds used on one-time expenditures such as upgrading the state’s physical and technological infrastructure. Reducing the unfunded liability of the Teacher Retirement System and Employee Retirement System have also been mentioned.
While any surplus is good news, lawmakers will have to deal with 2 different spending limits in order to set its budget priorities next January.
The constitutional “Tax Spending Limit” restricts the rate of growth of appropriations from state tax revenues not dedicated by the constitution to the rate of growth of the state’s economy (majority vote in each chamber to exceed). Ironically, cutting local school taxes counts against the constitutional spending limit because the legislature increases state spending on schools to replace those reduced local property taxes. A second limit, in statute rather than the Constitution, restricts the biennial growth of consolidated general revenue appropriations to no more than the estimated compounded growth of state population and monetary inflation. Though property tax cuts won’t count against that limit, increases in spending for infrastructure, teacher benefits, and/or pension system stability, will.
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