Texas expects record revenue, $33 billion budget surplus for next two years

AUSTIN (Nexstar) — Texas is entering the 2023 legislative session with a record-setting $32.7 billion budget surplus, the state's top revenue estimator Glenn Hegar announced Monday, setting the stage for lawmakers to make major investments into their priorities while complicating the debate over what those priorities should be.

Comptroller Hegar's Biennial Revenue Estimate reports Texas has $188.2 billion available to spend over the next two years, more than ever before and 26.3 percent more than the last biennium.

"This is truly a historical, once-in-a-lifetime budgeting session," Comptroller Hegar said. "They have bigger opportunities to make impacts that impact Texans today that are struggling with inflation, or impact the future generations as they come forward with long-term decisions they're going to make in the next 140 days. It's truly what I deem a once-in-a-lifetime session."

Hegar says massive spikes in sales tax revenue are most responsible for the cash flow into the state treasury being "beyond what anyone could have ever imagined."

Sales tax collections make up 53 percent of the general revenue funds for the next two years, largely due to inflated prices that Hegar says have caused Texans to spend an extra $45 billion on taxable goods in the last year. He estimates sales tax revenues will climb 9.1 percent over the last biennium, to nearly $88 billion.

A 12 percent spike in oil production tax collections and a nearly 5 percent increase in motor vehicle-related taxes also contribute to the record estimate.

Hegar cautions lawmakers that despite the optimistic budget forecast, he also expects Texas to experience a mild recession this year. He urges lawmakers to prioritize one-time investments that will not require reoccurring expenses in less flexible sessions.

"Let's be prudent, let's make very important decisions for today and for the future, but also know that the budget of today won't always be there two years from now," Hegar said. "That's the biggest cautionary tale that I can make sure to stress to the legislature and to the public."