Texas is expected to run a budget surplus according to new economic forecasts.
The state is expected to end this budget cycle with a surplus of $725 million.
This comes as a surprise to some as in January, Texas Comptroller of Public Accounts Glenn Hegar anticipated that the state would run a deficit of $1 billion as a result of COVID-19.
Texas Comptroller Glenn Hegar
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"Texas' economic recovery is accelerating and I have updated my forecasts for revenues and the overall economy," Hegar wrote in a tweet.
This tweet was a continuation of Hegar's optimism regarding Texas' budget situation from a recent press conference.
“Our revised revenue forecast assumes continued economic growth through the next biennium, but uncertainty remains about the ultimate course of the economy and thus state revenue,” Hegar said in the press conference. “Texas remains well-positioned to recover from the COVID outbreak and return to its norm of economic growth in excess of the national rate — if we haven’t already.”
Hegar explained that much of the change in the estimate is driven by an improvement in the coronavirus situation.
“When we finalized our economic forecast for the January BRE, COVID case counts and hospitalizations were on the rise, and the rollout of vaccines had just begun,” Hegar said. “Those conditions warranted caution about the near-term economic outlook. Since then, case counts and hospitalizations have plummeted, many restrictions have been lifted and economic activity in the state — and across the country — has accelerated.”
Hegar wrote a letter to the state government where he said his new estimate was based on an increase in anticipated revenue and changes in the state's obligations to the Foundation School Program (FSP) funding. This does not account for appropriations passed by the 87th Legislature. It also does not account for state agency spending reductions, replacement of eligible GR-R appropriations with federal relief funds or decreases in spending that related to FSP that were created by House Bill 2.
HB 2 pertains to supplemental appropriations and reductions in appropriations and creates authority to regulate appropriations. The bill was proposed by Rep. Greg Bonnen (R-Friendswood) and passed 148-0-1-1 before being sent to the Texas Senate.