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Revenue Estimate for First Called Session of 89th Legislature July 18, 2025

The Honorable Greg Abbott, Governor
The Honorable Dan Patrick, Lieutenant Governor
The Honorable Dustin Burrows, Speaker of the House
Members of the 89th Legislature

Honorable Ladies and Gentlemen:

As required by Article III, Section 49a, Texas Constitution, our office provides this estimate of revenue available for the 89th Legislature, First Called Session.

Based on the anticipated costs for fiscal 2025 of supplemental appropriations provided by House Bill (HB) 500 and miscellaneous claims appropriations provided by HB 4486, and appropriations for the 2026-27 biennium provided by Senate Bill (SB) 1, as passed by the 89th Legislature, Regular Session, and signed into law, as well as the estimated effects of other enacted legislation with fiscal implications, $3.1 billion is projected to be available for general purpose spending through Aug. 31, 2027.

Additionally, appropriations and transfers provided by the spending measures affect the balance and earnings of the Economic Stabilization Fund (ESF). The fiscal 2027 ESF ending balance is projected to be $28.5 billion. Because the ESF is projected to reach its constitutional cap in fiscal 2026, appropriations from the ESF, which legislators may wish to make to supplement existing disaster relief appropriations in SB 1, can affect the amount of general revenue (GR) available. The extent to which GR is affected will depend on the amount and timing of any appropriations from the ESF.

Recently enacted federal budget legislation (H.R. 1, 119th Congress) includes funding authority for reimbursement of state governments for certain border security-related costs, a substantial portion of which will likely be allocable to Texas. However, the amount and timing of any receipts are unknown and will depend on rules not yet adopted by the Department of Homeland Security and the Department of Justice. Consequently, such revenue the state may receive in the upcoming biennium is not included in our estimate of revenue available for general purpose spending.

That legislation also includes provisions affecting the state’s cost obligations and eligibility for federal funds for the Medicaid program with as yet unknown fiscal implications, and provisions increasing the state’s share of the Supplemental Nutrition Assistance Program costs in amounts not yet determined.

With heightened conflict and tension in the Middle East stoking volatility in energy prices, tariff policy in flux, and the forward path of interest rates unclear, many forecasts anticipate further slowing in economic growth. Apart from recognition of the estimated effects of legislation passed during the 89th Legislature, Regular Session, in view of substantial uncertainty regarding the economic outlook, we make no further adjustment at this time to the estimates of tax and fee revenues as provided in January in the 2026-27 Biennial Revenue Estimate.

Sincerely,

Kelly Hancock
Acting Texas Comptroller of Public Accounts

cc: Jerry McGinty, Legislative Budget Board