Focus Report, Volume 87, Number 1, March 2021 Page: PAGE3
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House Research Organization
budget and activities. As part of the process, the LBB collects
detailed data on an agency's programs and finances and
examines alternative funding levels for the agency's activities.
It also studies the relationship of an agency's program to its
mission and statutes. The 86th Legislature, in SB 68 by
Nelson, required the LBB to perform a strategic fiscal review
for each state agency under review by the Sunset Advisory
Commission. The LBB released its review of the 11 agencies
in October 2020.
The 11 entities that underwent review are:0
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0Texas Holocaust and Genocide Commission;
Teacher Retirement System of Texas;
Texas Commission on Fire Protection;
Texas Commission on Jail Standards;
Texas Commission on Law Enforcement;
Texas Department of Agriculture;
Texas Animal Health Commission;
Texas Parks and Wildlife Department;
Texas Department of Licensing and Regulation;
Texas Racing Commission; and
State Board ofVeterinary Medical Examiners.V Growth rate adopted. Under the Texas constitutional
spending cap (Art. 8, sec. 22), spending not constitutionally
dedicated to particular purposes may not increase from one
biennium to the next beyond the estimated rate of growth
of the state's economy adopted by the LBB unless the cap is
waived by a majority vote of both houses of the Legislature.
On November 30, 2020, the LBB adopted an estimated
growth rate for the Texas economy of7.06 percent from fiscal
2020-21 to fiscal 2022-23. Subject to revisions in the revenue
forecasts and subsequent appropriations, this limits spending
from non-dedicated tax revenue in fiscal 2022-23 to $105.8
billion.
Comptroller's revenue estimate. Before each regular
legislative session, the comptroller must estimate the
revenue and expenditures for the current fiscal year and the
anticipated revenue for the upcoming biennium (Art. 3, sec.
49a of the Constitution). A supplemental estimate is required
before any special session.
The revenue estimate issued in January 2021 projected
the 87th Legislature would have $112.5 billion available for
general-purpose spending for the next biennium. This is a 0.4
percent decrease from the funds available for fiscal 2020-21.This available amount takes into account anticipated
transfers of $5.83 billion to the Economic Stabilization Fund
("rainy day fund") and the State Highway Fund, $271 million
to the Texas Tomorrow Fund, the state's guaranteed prepaid
tuition plan, and meeting an expected negative balance of
$946 million at the end of fiscal 2020-21.
The comptroller may revise the initial revenue estimate
at any time. The only revenue estimate that applies in
determining if the state budget is balanced is the one made
when the comptroller certifies the general appropriations bill
(see "Certification," page 7). See the comptroller's January
2021 Biennial Revenue Estimate for fiscal 2022-23 for a
detailed description of revenue estimates and the projected
economic outlook.
Rainy day fund. The rainy day fund is expected to
reach $11.6 billion by the end of fiscal 2022-23, absent
appropriations from the fund, according to the comptroller's
biennial revenue estimate.
Revenue for the rainy day fund comes almost entirely
from oil and natural gas production taxes, also known
as severance taxes. Before fiscal 2015, the rainy day fund
received 75 percent of severance tax revenue that exceeded the
amount collected in fiscal 1987. A constitutional amendment
adopted in 2014 requires the comptroller to send half of this
amount to the State Highway Fund, with the rest continuing
to go the rainy day fund.
The comptroller must reduce or withhold allocations to
the State Highway Fund as needed to maintain a sufficient
balance in the rainy day fund. Previously, state law required a
legislative select committee to determine a sufficient balance
of the rainy day fund. In 2019, however, the 86th Legislature
enacted SB 69 by Nelson, which abolished the committee
and established provisions for the comptroller to determine
the allocations of severance tax revenue for transfer to theState Highway Fund and rainy day fund. Beginning in fiscal
2022, the comptroller must adopt a threshold for adjusting
allocations that is equal to 7 percent of the certified general
revenue related appropriations made for that biennium.
The comptroller also must transfer half of any
unencumbered balance remaining in the general revenue
fund at the end of a biennium to the rainy day fund (Texas
Constitution Art. 3, sec. 49-g(b)). Only twice has such a
balance been transferred to the fund under this provision -
once in fiscal 1992 ($20.2 million) and again in fiscal 2008
($1.8 billion).Page3
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Texas. Legislature. House of Representatives. Research Organization. Focus Report, Volume 87, Number 1, March 2021, periodical, March 8, 2021; Austin, Texas. (https://texashistory.unt.edu/ark:/67531/metapth1507622/m1/3/: accessed July 16, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu; crediting UNT Libraries Government Documents Department.