How projected financial shortfall could impact next Texas legislative session - KBTX

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BRYAN, Texas (KBTX) - On Monday, Texas Comptroller Glenn Hegar projected the 2021 Texas fiscal year ending with a shortfall of $4.6 billion in a revised revenue estimate, which will impact the upcoming 2020-2021 legislative biennium.

Due to the coronavirus pandemic, Texas has been hit hard financially. In October, Comptroller Hegar estimated Texas would have $121 billion dollars for the 2020-2021 budget. But in Monday’s announcement, he says Texas will have $110.19 billion that will be used for general-purpose spending. State Rep. Kyle Kacal told News 3′s Fallon Appleton that this announcement was a shock and will have big impacts on what they had planned for the upcoming session.

“Incredible hit on our budget and a Texas economy that was just soaring and it has come to a complete halt. So this is going to affect our commitment to public education. It’s going to impact our commitment to infrastructure and transportation, all the things we had on the table to fix for this next session.”

The projected ending balance does not include any potential future assistance from the federal government or the instruction given by state leadership for most agencies to reduce their spending by 5%, according to Hegar.

Lawmakers will have to find new ways to bring in other funds for the state budget, according to Representative Kacal.

One option Texas lawmakers have is the ability to use the Economic Stabilization Fund, otherwise known as the Rainy Day Fund. It’s expected to have $8.79 billion available for the next fiscal year.

“The feather in our cap is the economic stabilization fund,” said Kacal. “It is not as big as we would hope, but the fact that we have one is truly a blessing that will be able to give us that cushion to make the right decisions and get our budget aligned for the next two years.”

Even with a deficit, Hegar says Texas is better off than other states.

“We were hit with the double headwinds of not just the pandemic, but lower oil prices, which has also had an impact in lower production volumes, which has impacted other revenue streams into the State Treasury. But Texas entered into this downturn in a much stronger foundation than many other states and many other nations, so that is helping Texas.”

Hegar and Kacal say another way to help out the state economy and budget is spending money locally.

“Anytime ever when we are in a pickle, if you will, it’s more important to shop and spend money locally, to make sure your local economy thrives,” said Kacal.

Comptroller Hegar says another revised revenue estimate will not be released until January 11, 2021. However, if the state does sees either significant positive or negative changes, Hegar will release another revision before 2021.

The 87th Texas legislative session is set to begin on January 12, 2021.

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