Newly released numbers from the Texas Comptroller provide insight into the fiscal health of Texas. It’s projected that Texas will have at least a $15.4 billion fund balance – the largest ever – by the end of Fiscal Year 2023.
The $15.4 billion balance is the sum of the $3.4 billion balance from the State Fiscal Recovery Fund and the projected $12.0 billion General Revenue Fund balance. The $15.4 billion projected balance would be the largest balance the state has ever had to begin a legislative session. In addition to this historical fund balance the Economic Stabilization Fund (or the rainy-day fund) is projected to have a $12.6 billion balance at the end of fiscal year 2023, which is also the largest balance held in this fund. These historical fund balances reflect the Legislature’s desire to conservatively budget during the pandemic to avoid creating fiscal cliffs and address any future obligations or liabilities brought on by the pandemic.
Source: Texas Comptroller of Public Accounts, Certification Revenue Estimates, Tables 1, and A-8
Revenue amounts reported by the Texas Comptroller are also showing growth. Total tax revenue collections for Fiscal Year 2021 grew 7 percent from Fiscal Year 2020 and 4 percent in comparison to Fiscal Year 2019. Recent tax revenue collections reported for the first two months of Fiscal Year 2022 are showing continued growth. Specifically, sales tax revenue reached a new monthly high with $3.4 billion in collections during the month of October.
Sales tax collections have registered over $3.0 billion in revenue each month for the past seven consecutive months. The previous $3.0 billion streak for sales tax collections lasted three months – from November 2019 to January 2020. Sales tax is an important revenue source to the state because it is the largest source of revenue for the state’s budget and accounts for nearly two-thirds of all tax collections.
Source: Texas Comptroller of Public Accounts, Monthly Revenue Watch
Aside from the large fund balance and revenue collections, Texas stems to benefit greatly from the recently passed Infrastructure Investment and Jobs Act (IIJA), which will send billions in federal funds to Texas over the next five years once federal agencies begin implementation.
This influx of federal funds provides Texas a keen opportunity to build from the recently appropriated $13.3 billion in American Rescue Plan Act funds and ensure Texas remains the best place to live and work.