Despite a pandemic that started with predictions that the economy would be hammered as severely as public health, Texas is headed into an election year with forecasts that more than $24 billion would be left over at the conclusion of the current budget, according to the state comptroller.
The political elite will be able to grant — or suggest granting — requests for budget-busting luxuries that their constituents want, such as reduced property taxes and more expenditure on public education, health care, roadways, and law enforcement.
Comptroller Glenn Hegar recently said that the state would bring in over $23 billion more in general income during the current two-year budget term than he predicted.
He expects the state to complete the current fiscal year, which runs through August 2023, with over $12 billion in the bank and $12.6 billion in the state’s Economic Stabilization Fund, also known as the Rainy Day Fund.
Hegar warned state politicians and budget writers in spring 2020 to cut expenditure and prepare for an economic slowdown as the coronavirus spread. Since then, the official prognosis has improved steadily and dramatically. The state’s sales tax collections have above $3 billion in each of the past seven months, surpassing the previous high of $3 billion just three times in state history.
According to the comptroller’s latest revenue prediction, “Texas personal income climbed by a projected 6.5 percent in fiscal 2021, after 5.4 percent rise in fiscal 2020, supported by assistance from federal pandemic relief funding.” According to the research, the gross state product grew 7.9% in 2021 and is predicted to expand 8.3% following year.
The usual disclaimer on comptroller projections was in the tiny print: COVID-19, supply-chain issues, inflationary pressures, and labor shortages, according to Hegar, might delay or derail the economic locomotive.
This is the start of an election cycle, so it may as well have been left unsaid. Candidates are submitting their candidacies for public office. The primary and general elections will be over by this time next year, and freshly elected and reelected legislators will be gearing up to travel to Austin to approve new laws and craft a new budget.
Given the amount of cash on hand, incoming officeholders will be living out every politician’s dream: there’s money in the state treasury, and we can make major proposals without imposing additional taxes or budget cutbacks to fund the expenditures.
They don’t have to wait until the 2023 session to get started. Both challengers and incumbents have begun talking to voters. Inflation and other economic problems are causing fear among some individuals. For example, Hegar and others have claimed that we are in a “K-shaped recovery,” in which certain sections of the economy are fast strengthening while others are deteriorating.
The state seems to be one of the winners, which is a windfall to anybody who needs money for one of the state budget’s big-ticket items — or campaign wishlists.
Money isn’t the only thing that’s piling up. According to the comptroller, federal income to the state’s Coronavirus Relief Fund totalled $44.1 billion in the previous budget, and another $36.9 billion is predicted in the current two-year budget term. Over the next five years, Texas is expected to receive $35.4 billion from the federal infrastructure package, the majority of which will go toward transportation.
It lays the groundwork for anybody constrained by a tight state budget. In tough circumstances, it’s simple for budget writers to say no. They don’t have the excuse of “sorry, no money” when there’s money in the bank.
During the political election season, discipline is more rare than during the subsequent governing season. Politicians may create the most beautiful images they want until the general elections in November, offering additional programs, services, tax incentives, and anything else they and their consultants come up with. Voters will turn to those bright estimates of expanding state treasury vaults when asked how they’ll pay for it.
They’ll have to wait until after the elections to do the math.