Several days ago, Texas Governor Greg Abbott pledged that “a very large property tax cut” is coming next session. Today, the public got a sense of what is possible.
According to Texas Comptroller Glenn Hegar’s newly-updated Certification Revenue Estimate (CRE), the Texas Legislature is expected to have as much as a $27 billion budget surplus when it meets next January. The mammoth windfall is largely the result of “rapid, historically high revenue growth,” according to Hegar.
Here’s more from the CRE:
“We now estimate the state will have $149.07 billion in General Revenue-related (GR-R) funds available for general-purpose spending for the 2022-23 biennium, up $13.75 billion, or 10.2 percent, from our November estimate. This results, after certain cost adjustments, in a projected fiscal 2023 ending balance of $26.95 billion, a substantial upward revision of $14.95 billion from our previously projected surplus of $11.99 billion.”
On top of this massive surplus—which could grow bigger still if the state’s economy continues to roar—the Comptroller also noted in the CRE that Texas’ Economic Stabilization Fund, which akin to a savings account, is teeming with taxpayer money. The Texan reports:
“Hegar projects a $13.6 billion balance in the Economic Stabilization Fund (ESF), the state’s savings account dubbed the ‘Rainy Day Fund,’ at the end of Fiscal Year 2023, which begins September 1.”
Thus, the next legislative session will see the state have a combined $41 billion in savings and surplus available for tax relief purposes. That’s a staggering amount of money that many groups, including the Texas Public Policy Foundation, are urging the legislature to use to permanently compress the school district maintenance and operations (M&O) tax rate. In so doing, lawmakers can deliver immediate tax relief, begin to end Robin Hood (a dreadful redistribution scheme enacted during the Governor Ann Richards administration), and put the surplus to use in a way that doesn’t grow government.
Of course, it wouldn’t be possible or practical to appropriate all of those funds to tax relief. After all, some of the funding is needed to pay for program overages in the current budget cycle, like those related to Medicaid and House Bill 3, and some of the monies are best held in reserve in case they’re needed to offset the cost of any natural disasters or recessions. But even still, there are tens of billions of dollars available to dramatically lower property taxes and help people through these challenging times. Let’s hope lawmakers make the most out of this historic opportunity.