(Central Plaza) — As Texas continues to lead the U.S. in job growth, energy production, population, and GDP, the State Comptroller announced another first for Texas: a record $188.2 billion in revenue over the next two years and a record $32.7 billion billion US dollars. surplus.
Comptroller Glenn Hegar on Monday released an estimate of his office’s two-year earnings ahead of the 88th Legislature on Tuesday. It says Texas is projected to generate a record $188.2 billion in revenue for general purpose spending during the 2024-2025 biennium, up 26.3% from the 2022-2023 biennium.
It also adjusted a surplus initially projected at $28 billion last year to $32.7 billion.
The estimate includes collections of $165.9 billion in 2024-2025 in total revenues, after the state reported record sales tax receipts each month, “complemented by an expected balance of total revenues at the end of 2022-2023 of $32 .7 billion US dollars,” the report says.
As state legislators prepare to begin the 88th legislative session, Hegar urged them to “spend money wisely and prudently.”
He said the historic growth was “a direct result of robust economic growth following the lifting of COVID-19 pandemic restrictions, energy price spikes and, sadly, the highest level of headline price inflation in 40 years.”
He also acknowledged that every penny and dollar reported came from Texas taxpayers.
“We cannot and will not lose sight of the fact that every dollar of taxes received by the state goes out of the pockets of Texans,” Hegar said. “I know very well that the Legislative Assembly decides how to use all the money it has, but I must advise you to be careful when making such decisions: frankly, do not count on me to announce another revenue spike in two of the year. The increase in revenue we have seen has been unprecedented in many ways and we cannot reasonably expect it to repeat. It is unlikely that we will have such an opportunity again. This budgeting session really comes once in a lifetime.”
Hegar said the legislature could wisely invest some of the revenue in the state’s power grid, broadband, port and water infrastructure, adjust the salaries of government employees, teachers and nurses, and develop the state’s skilled sales force.
“Legislators should also consider making big tax cuts to ease the burden on Texans who are struggling with inflation, economic uncertainty and rising home prices,” he said. “Well-designed spending proposals can have positive outcomes without creating overall revenue requirements that may be difficult to meet in the coming years.”
Several groups have already called on the legislature to return money to taxpayers in the form of property tax breaks and tax breaks.
Of the total, $10.2 billion in oil and natural gas taxes in 2024-2025 is to be set aside and transferred to the Economic Stabilization Fund (State’s Rainy Day Fund) and the State Highway Fund. Another $155 million is to be used to cover the shortfall in the Texas Guaranteed Tuition Plan, known as the Texas Tomorrow Fund, according to Hegar.
In the absence of any legislative appropriation, the Rainy Day Fund’s balance sheet will stand at a record $27.1 billion at the end of the 2024-2025 biennium, but will be $4.5 billion more unless a constitutional cap is placed on it, Hegar said.
Projected ending balance reflects savings of $3.8 billion in total state revenue carried forward from 2021 through the use of pandemic-related federal funds, according to the report, and $4.3 billion in total revenue reductions for the Foundation Program school. record high and higher-than-expected growth in local school property tax revenues.
The final closing balance for the 2024-2025 biennium and the opening balance for the next will be determined by the budgetary actions the 88th Legislature takes and actual revenue collections for the remainder of the fiscal year, the Comptroller’s Office said in a statement.
Sales tax collections are the largest source of government revenue, accounting for 53% in 2024–2025. The Comptroller’s Biennial Revenue Estimate projects sales tax revenue to increase by 9.1% over the 2022-2023 biennium to reach $87.9 billion in the 2024-2025 biennium.
The most significant source of revenue for the general fund has been sales taxes levied on oil production, which is projected to generate $13.3 billion, up 11.9% from 2022-23, already a record year. Despite a 4.3% decrease from the previous biennium, natural gas tax revenues are expected to be $8.6 billion.
The largest source of tax revenue is the Texas oil and gas industry, which has made Texas a leader in US energy production and job growth. Record taxes on production in the industry exceeded $10 billion in fiscal year 2022.
Todd Staples, president of the Texas Oil and Gas Association, said the historic budget was “a continuing testament to the tremendous benefits of oil and natural gas production for all Texans. By providing billions to fund public schools, roads, universities, first responders and the Rainy Day Fund, the taxes paid by this industry are helping to make the Lone Star State the envy of the nation.”
Vehicle-related taxes, including taxes on sales, rentals, and home production, are expected to generate the next largest amount of $12.7 billion, up 4.6% from 2022-23.
Franchise tax collections are projected to be $8.8 billion, up 6.7% from 2022-23; all funds are projected to receive $12.6 billion, up 6.7% from 2022-23.
“Government revenues from all sources and for all purposes are expected to reach $342.3 billion in the 2024-2025 biennium, including about $108.4 billion in federal revenue, as well as $68 billion in other income and income earmarked for specific purposes and therefore not available for general purposes. target spending,” the budget says.