Long-term impacts without long-term liabilities: Texas’ historic budget

Before state lawmakers met last week to convene the 88th Legislature, they were met with big news. Texas Comptroller Glenn Hegar announced a historic budget of $188.2 billion for the 2024-25 biennium budget cycle, positioning the state to make investments that will be felt for generations to come.

Let's break down what this all means.

Prior to each legislative session, the Texas Comptroller sets out how much funding is available for state budget writers to spend. The Legislature then uses these parameters to decide where and how much of taxpayer dollars to allocate.

This is a remarkable moment in our state’s history.

Texas is ripe for this opportunity to tackle big projects. In fact, as a nonpartisan, nonprofit policy think tank, we have been providing actionable data and analysis to help inform state leaders where to invest these resources well before the news about this historic revenue position was announced.

We are focused on investments with a high-ROI that can improve agency performance, modernize state technology and help the state tackle generational challenges. For example, now is the time to address our state’s aging water infrastructure and to restructure community college finance so that more Texans can achieve the skills they need and more.

We’ll continue to push for the need to boost pay for other categories of state employees and we’ll highlight the issues created by decreasingly competitive compensation. This issue is important because it impacts our government’s ability to attract and retain talent to deliver the excellent service that Texans expect for their tax dollars.

With big numbers, comes even greater responsibility. The budget, along with its high fund balance, signals that this is not a “no” session. Lawmakers are tasked with the challenge to navigate and prioritize the many funding requests coming their way.

But prudent spending is key.

While these figures are exciting, the state may not reach these record-breaking numbers again. This is why we’ve emphasized one-time investments without recurring costs across our policy areas of education and workforce, health, infrastructure, natural resources, justice and safety, and government performance.

As lawmakers prepare to start making hard decisions around the budget, there are a few things to keep in mind.

Economists have anticipated an economic slowdown due to the recent period of acute inflation accompanied by the Federal Reserve’s efforts to increase interest rates to bring inflation down. The Comptroller shared the sentiment during his announcement.

Given the uncertain outlook, caution is warranted, even with spending limits in place.

Texas 2036 will continue to closely track how the Legislature plans to leverage this extraordinary budget as we continue to build long-term, data-driven strategies to secure Texas’ prosperity through our state’s bicentennial and beyond.

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