Texas comptroller: 2023 Legislature will have extra $27 billion to spend

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Record-high tax revenues during the last 12 months will give Texas lawmakers an astounding extra $27 billion to spend within the 2023 legislative session, the state’s prime accountant stated Thursday.

In complete, lawmakers will have $149.07 billion generally funds, Comptroller Glenn Hegar stated. Going into the final common legislative session in 2021, lawmakers had $112.5 billion at their disposal.

And that quantity may proceed to develop. The extra $27 billion comes from extra income coming in to the state than anticipated through the present biennium. Other components may proceed to push it up.

Lawmakers within the upcoming legislative session will additionally have $13.6 billion of their financial savings account, often called the wet day fund — a $3.5 billion enhance that’s greater than double the quantity the financial savings account usually grows heading right into a legislative 12 months, Hegar stated. The Texas Legislature convenes each different 12 months.

“Oftentimes we start [legislative sessions] with a billion dollars, we start with $2 billion, we start with $5 billion,” Hegar instructed The Texas Tribune. “But starting with $27 billion, plus, oh by the way, we got a nest egg over here of $13.6 billion. That’s unprecedented.”

The large revenues are largely a results of inflation and the Russian invasion of Ukraine, each of which have harm Texans purchasing at grocery shops, filling up their automobiles with gasoline and paying their home energy bills.

Sales taxes are the first driver of state revenues, so Texas coffers benefited from elevated costs of products during the last 12 months. The different fundamental income stream for Texas is oil and gasoline manufacturing taxes. After Russia, one of many world’s prime pure gas-producing international locations, launched the conflict in Ukraine in late February, many international locations, particularly in Europe, have tried to wean off importing Russian power. That has triggered the value of oil and pure gasoline to skyrocket globally, and Texas is a prime oil and gasoline producer.

“Most of that [increase] on [oil and gas] tax is based on oil and natural gas prices, not necessarily an increase in production,” Hegar stated. “While production has slightly gone up, most of that is price-induced.”

The “staggering” quantity of oil and gasoline manufacturing taxes collected by the state will assist give lawmakers quite a lot of spending choices.

The extra funds characterize an ironic profit for Texas’ prime leaders: For months, they have been blasting President Joe Biden over inflation and gasoline costs. Now, these tendencies will give them an unprecedented amount of cash to spend on their priorities in 2023.

When requested how lawmakers ought to spend the cash, Hegar advisable funding water infrastructure, street infrastructure and broadband internet connectivity. A panel of lawmakers this week requested Hegar for suggestions, and Hegar additionally talked about a necessity to deal with rising property taxes and enhance pay for state staff, particularly since Texas is rising by 1,000 individuals per day.

“Making sure that we have good, qualified employees and can retain them,” Hegar stated of the necessity to enhance pay for presidency workers. “Because you have to have a healthy state government to operate.”

Hegar has pushed a few of these points for years, and his advice to spend money on water infrastructure comes as 75% of the state is in an excessive drought.

“Moody’s considers 203 of our 254 counties at high risk for scarce water resources, a risk mitigated through Texas Water Development Board water financing programs,” Hegar wrote forward of the 2021 legislative session in a column published in the Dallas Morning News.

The state’s prime elected officers, in the meantime, have already set their websites on slicing property taxes in 2023. Gov. Greg Abbott, Lt. Gov. Dan Patrick and House Speaker Dade Phelan, all Republicans, have already stated they plan to use $3 billion in COVID aid funds on property tax discount. The incoming tax windfall will give them much more to spend on slicing taxes if they want.

Patrick on Thursday re-emphasized his want to lower property taxes and he proposed suspending the state motor automobiles gas tax. In Texas, gasoline and diesel gas are topic to a 20-cent tax per gallon.

Thursday’s announcement additionally opened the door for others to suggest how lawmakers ought to spend the cash. The Texas School Coalition expressed a want to enhance funding for college security, know-how and new services. Christy Rome, the group’s govt director, additionally famous state leaders’ want to deal with rising property taxes.

“However, property tax relief should not come at students’ expense,” Rome stated in an announcement.

While Hegar stated his income estimate will be revised earlier than lawmakers convene on the state Capitol in January 2023, he stated the state’s revenues will probably stay excessive due to ongoing inflation, which he stated is a results of “last year’s stimulus programs and savings accumulated during the pandemic when normal spending activities were curtailed” in addition to “unresolved supply chain disruptions and labor force participation still remaining below pre-pandemic levels.”

That, coupled with spikes in oil and pure gasoline costs after the Russian invasion of Ukraine, will nonetheless probably lead to record-high revenues for lawmakers to spend subsequent 12 months.

But Hegar cautioned that lawmakers have a Constitutional spending restrict, which may constrain them.

“There’s going to be more money than they can spend, which normally is not the case,” Hegar stated, including that the restrict is predicated on a method that components within the state’s inhabitants and inflation.

Lawmakers can void the cap by a two-thirds majority of every chamber — the House and Senate — voting to remove it.

“I’ve not seen a Legislature yet that’s willing to do that,” Hegar stated.

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