Comptroller Hegar: Budget Shortfall ‘Not Nearly as Dire’ as Feared - Texas Scorecard

Texas’ revenue outlook is “not nearly as dire as we feared in July,” says Comptroller Glenn Hegar.

He made the comments on Monday during a hearing of the Legislative Budget Board, a committee consisting of the lieutenant governor, the speaker of the House, and eight additional members from the House and Senate that make recommendations for budget appropriations ahead of each legislative session.

Back in July, Hegar projected that lawmakers would face a $4.6 billion shortfall when they returned to Austin in January 2021. At the time, Hegar noted that the prediction came with “an unprecedented amount of uncertainty.” 

Now Hegar says certain sectors of the economy—such as tax collections from online purchases—have outpaced projections, softening the blow from the decrease in overall sales tax collections across the state.

Hegar stopped short of providing a new estimate of how bad the budget shortfall will be, instead saying he will provide the new data when he releases his biennial revenue estimate on January 11, 2021, one day before the legislative session begins.

The LBB met briefly on Monday morning in the state Capitol (with no public testimony and plexiglass separating each committee member in the otherwise empty hearing room) to hear Hegar’s update on the revenue forecast and to vote on a 7.06 percent spending limit increase for the upcoming 2022-2023 budget, based on an estimate of population growth plus inflation. The increase was approved unanimously by the 10-member committee.

The Texas Constitution requires the Texas Legislature to pass a balanced budget each biennium. The Constitution also prohibits the growth of revenue from exceeding “the estimated rate of growth of the state’s economy.” That limit only applies, however, to non-constitutionally dedicated general revenue, or half of the state’s budget. 

Efforts to pass a stronger, all-encompassing spending limit have been passed out of the Texas Senate for the past three legislative sessions, only to be killed in the Texas House.