Texas Comptroller Glenn Hegar Releases
Biennial Revenue Estimate
(AUSTIN) — Texas Comptroller Glenn Hegar released the Biennial Revenue Estimate (BRE) [PDF] today, showing the state is projected to have $194.6 billion in revenue available for general-purpose spending during the 2026-27 biennium, a 1.1 percent decrease from the 2024-25 biennium.
This decrease is attributable to a smaller beginning balance in the 2026-27 biennium ($23.76 billion) compared with 2024-25 ($39.43 billion).
As state lawmakers prepare for the 89th Legislature, Regular Session, which is set to kick off Tuesday, Hegar said Texas is in good financial shape and that revenue collections will continue to increase in the upcoming biennium.
Still, Hegar said, “Thoughtful consideration of spending decisions, as always, will be crucial to ensure new and existing investments can be funded in the future — and that these investments focus on improving the lives of Texans. Despite positive economic numbers, many of our residents continue to feel the higher cost of groceries, housing and other necessities. And the lingering impacts of persistently rising prices mean many are struggling to ensure a bright future for their children.”
The projected $194.6 billion available for general-purpose spending includes 2026-27 collections of $176.4 billion in general revenue-related (GR-R) funds. These collections are augmented by an expected 2024-25 ending GR-R balance of $23.76 billion. Of the total, $5.6 billion must be reserved from 2026-27 oil and natural gas tax collections for transfers to the State Highway Fund (SHF). There are no projected reserves for transfers to the Economic Stabilization Fund (ESF, or Rainy Day Fund) in the 2026-27 biennium because, for the first time in the fund’s history, the fund balance is estimated to exceed its constitutional cap from the start of fiscal 2026.
The projected ending balance from 2024-25 reflects unspent contingent appropriations of $4.5 billion for public education and education savings accounts for which the requisite legislation was not enacted. It also reflects savings of almost $6.6 billion from the substitution of federal COVID-related funds for general revenue in the budget of the Texas Department of Criminal Justice, an increase from the $5.4 billion estimated in the 2024-25 General Appropriations Act.
“The projected ending balance in this BRE comes from different sources than the huge balance of two years ago, and it reflects the fact that lawmakers didn’t spend all the available funds in 2023,” Hegar said. “That decision, coupled with their decision to limit future ongoing costs while still making a number of large and critical investments in our state, has kept Texas in a strong position relative to other states that exhibited less fiscal discipline.”
The projected ending balance does not anticipate any GR-R spending that may be authorized by a supplemental appropriations bill, which would reduce the ending balance. The final ending balance for the current 2024-25 biennium, and thus the beginning balance for the next, will be determined by actions taken by the 89th Legislature and by actual revenue collections during the remainder of this fiscal year.
Sales tax collections are estimated to make up the state’s largest source (61 percent) of GR-R revenues in 2026-27. The BRE projects sales tax revenues will increase by 9.0 percent from the 2024-25 biennium, reaching $94.2 billion for the 2026-27 biennium.
Other significant sources of GR-R revenues in 2026-27 include:
- oil production tax collections, which are projected to generate $11.8 billion, down 0.1 percent from 2024-25;
- motor vehicle-related taxes, including sales, rental and manufactured housing taxes, which are expected to reach $12.5 billion, up 1.5 percent from 2024-25;
- franchise tax collections, which are projected to generate $11.5 billion, up 12.6 percent from 2024-25; for all funds, franchise tax revenue is estimated to generate $15.7 billion, up 10.9 percent from 2024-25; and
- natural gas tax collections, which are expected to raise $5.4 billion, up 25.5 percent from 2024-25.
Absent any legislative appropriations, the balance of the ESF is expected to total a record $28.5 billion at the end of the 2026-27 biennium. This amount is constrained by the constitutional mechanisms to limit the ESF balance; otherwise, the balance would be estimated to reach $31.9 billion.
State revenue from all sources and for all purposes is expected to reach $362.2 billion for the 2026-27 biennium, including about $115 billion in federal receipts, along with $70.7 billion in other income and revenues dedicated for specific purposes and therefore unavailable for general-purpose spending.
Hegar’s forecast does not incorporate the possible impacts of unanticipated one-time or unusual events that could affect economic performance and revenue collections.
“Potential economic disruption could come from weather-related disasters, the continued wars in Ukraine and the Middle East, China’s economic activities, changes in federal policies, and the possibility that the Federal Reserve must continue restrictive monetary policy efforts to combat resurgent inflation,” Hegar said. “And the only certainty with regard to oil and gas prices is that they are volatile. Absent an economic crisis, however, I project our economy will continue to grow at a rate consistent with historical norms following the profound disruption of the pandemic, the dramatic recovery when COVID restrictions were lifted and the high inflation that accompanied booming economic growth.”
The Biennial Revenue Estimate and visuals from today’s press conference are available on the Comptroller’s website.
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