The 2026-27 Certification Revenue Estimate Transmittal Letter

October 14, 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:

In accordance with Texas Government Code Section 403.0131, I hereby present the detailed tables for the revenue estimate used to certify the General Appropriations Act for the 2026-27 biennium and other appropriations bills approved by the 89th Legislature.

The estimates in this document include actual revenue collections and disbursements through Aug. 31, 2025, and the estimated fiscal impact of all legislation passed by the 89th Legislature, Regular Session, as well as the Second Called Session. Not included is revenue the state may receive from the federal government as reimbursement for border security-related costs, as the amount and timing of such receipts is unknown and will depend on regulations not yet adopted by the U.S. Department of Homeland Security.

After accounting for statutory transfers, balances on hand at the close of the 2024-25 biennium and expected revenue collections and adjustments, the state will have a total of $203.63 billion in General Revenue-related funds available. This revenue will support general-purpose spending of $198.97 billion for the 2026-27 biennium, resulting in an expected ending General Revenue-related certification balance of $4.66 billion.

In fiscal 2026, the State Highway Fund will receive $2.52 billion in transfers from the General Revenue Fund from severance taxes collected in fiscal 2025 and a transfer of an estimated $2.46 billion in fiscal 2027 from severance taxes collected in fiscal 2026. The Economic Stabilization Fund (ESF) reached its allowable cap after a partial tax transfer of $2.05 billion at the start of fiscal 2026. There will be no transfer to the ESF in fiscal 2027. After accounting for investment earnings on the invested balance of the ESF, along with expenditures authorized by appropriations made in recent legislative sessions, we project a fiscal 2027 ending ESF balance of $28.48 billion.

This estimate assumes continued moderate expansion in the Texas economy through the biennium. There are, however, potential risks to the economic outlook that warrant caution, including possible effects of a partial federal government shutdown of unknown duration and unresolved federal funding issues, unsettled trade policy, labor supply, and energy prices, as well as implications for credit conditions of persistent inflation that currently remains above the Federal Reserve Board policy target.

I will continue to monitor the Texas economy and state revenues closely and will keep you informed of any significant events as they arise.

Sincerely,

Kelly Hancock

State of Texas — Acting Comptroller of Public Accounts

Enclosure

cc: Jerry McGinty, Legislative Budget Board