Texas Comptroller Glenn Hegar has projected that the state will have $194.6 billion available for the 2026-27 biennium, including a $23.76 billion surplus. In a recent opinion piece, Hegar emphasized the need for lawmakers to prioritize investments in water infrastructure, address housing affordability, and tackle rising insurance premiums as they craft the state’s budget.
As the state’s chief financial officer, Hegar oversees the collection of taxes and fees, manages the treasury, and ensures the economic health of Texas’ multi-billion-dollar government. His office is responsible for everything from revenue estimation to disbursing funds, making it a cornerstone of the state’s fiscal management.
One of the most challenging responsibilities lawmakers face during the legislative session is crafting the state’s two-year budget. This process is guided by the Biennial Revenue Estimate (BRE) from Texas Comptroller Glenn Hegar’s office, which outlines the funds available to support state programs and services over the next two years.
“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.”
In his recent op-ed, Comptroller Hegar makes it clear that he does not intend to “prescribe” what lawmakers should or shouldn’t do this session, stating, “That’s their responsibility. But when I talk with Texans, they often ask about the challenges that keep me up at night, and I think my answers are in line with lawmakers’ priorities.”
Hegar identifies several key priorities for the state, starting with infrastructure. He emphasizes the importance of water supply, transportation systems, broadband access, and reliable energy as essential components to support Texas’ continued growth.
Housing affordability also ranks high on Hegar’s list of concerns. A recent report from his office highlights how rising property taxes and insurance premiums are making homeownership increasingly unattainable for many Texans.
Finally, Hegar points to the steep increases in insurance premiums as a major issue. Homeowners have experienced year-over-year premium hikes of 10.8% in 2022 and 21.1% in 2023. While he anticipates this growth will eventually slow, he cautions that Texans across the state continue to struggle with the rising cost of home insurance.
Ultimately, Hegar says Texas has tools to address these challenges, including the Economic Stabilization Fund (ESF), commonly referred to as the “rainy day fund.” By the end of the 2026-27 biennium, the ESF is projected to exceed $28.5 billion, despite a constitutional cap on its balance.
Common Ground
Last week, both legislative chambers unveiled their initial state budget drafts, prioritizing voucher-style school programs, property tax reductions, teacher pay raises, and the continuation of the state’s border crackdown.
Some of the proposals where the chambers most aligned include; allocating $6.5 billion across multiple agencies to secure Texas’ international border, $1 billion in initial spending plans for education savings accounts, and $2.5 billion for comprehensive funding for water and flood infrastructure.
Both chambers’ budget proposals share similar spending priorities, allocating just over $150 billion in general revenue — Texas’ primary funding source for essential services like public education and law enforcement. Both proposals stay within the spending cap set last week by the Legislative Budget Board, according to The Texas Tribune.
The Senate’s $332.9 billion plan, Senate Bill 1, was introduced by Sen. Joan Huffman, R-Houston, chair of the Senate Finance Committee. Meanwhile, the House’s $335.7 billion proposal, House Bill 1, was filed by Rep. Greg Bonnen, R-Friendswood.
“Our conservative approach to budgeting has allowed Texas to maintain a pristine balance sheet going into the next biennium. I look forward to the legislature’s final product,” said Lt. Gov. Dan Patrick in a statement.
Infrastructure
The Senate’s draft budget includes significant investments aimed at strengthening infrastructure and addressing key state priorities:
- $5 billion for a second transfer to the Texas Energy Fund, bringing the total to $10 billion to bolster the state’s electric grid.
- $2.5 billion for water and flood infrastructure, with a focus on developing new water supplies (to be addressed in the supplemental budget).
- $40.4 billion allocated to the Texas Department of Transportation for the 2026-2027 biennium.
On the other hand, the House has highlighted its own priorities, including:
- $1.7 billion in anticipated federal funds to expand rural broadband access.
- $36 billion for highway projects, alongside $2.5 billion for water infrastructure and $34 million for flood control dam projects.
Housing Affordability
The Senate’s budget prioritizes extensive property tax relief, proposing $32.2 billion to continue last biennium’s record-setting tax cuts. This funding aims to provide additional tax rate compression under House Bill 3 (86R, 2019) and increase the homestead exemption to $140,000 for most homeowners and $150,000 for seniors. In total, these efforts bring state-funded property tax relief to $51 billion since the passage of HB 3.
Meanwhile, the House’s budget allocates $26.3 billion to sustain the ongoing costs of the $100,000 homestead exemption and the 10.6-cent tax rate compression adopted by the 88th Legislature. Additionally, the House proposes $3 billion for an extra 6.8 cents of tax rate compression by FY27 and sets aside $3.5 billion for new property tax relief, contingent on future legislation. Altogether, the House’s plan introduces $6.5 billion in new tax relief measures.