Texas FY 2024 revenue is in line with estimates, projected balance in flux

Texas general fund revenue so far in fiscal 2024 remains on target with the state’s October estimate forgoing the need for a July revision in the forecast, while a projection for the yearend balance could fluctuate, state Comptroller Glenn Hegar reported Wednesday.

An $18.3 balance projected in October for the end of the triple-A-rated state’s fiscal 2024-2025 biennium shrank to $16.7 billion after lawmakers passed a bill last year during a special legislative session that increased appropriations, according to a statement from Hegar’s office.

Senate Bill 3, which was signed into law Dec. 18 by Gov. Greg Abbott, appropriated an estimated $1.54 billion from the state’s general revenue fund for the construction, operation, and maintenance of a border wall and border security operations.

The balance could rise. In a Wednesday letter to Abbott and leaders of the Republican-controlled legislature, Hegar said the October balance projection incorporated $4.5 billion for additional public school funding and school vouchers, which stalled in the Texas House of Representatives during last year’s special sessions. If the funding is not enacted before the new legislative session begins in January, the ending balance would increase to an estimated $21.2 billion ahead of supplemental appropriations for the current biennium. 

The governor has vowed to push for a voucher system during the 2025 legislative session and campaigned for House candidates who support the effort.

Meanwhile, there is no need to revise the October certification revenue estimate (CRE) for the fiscal 2024-2025 biennium before the next biennial estimate is released in January, according to Hegar. 

He said, “on net with all (general fund) sources considered together, the outlook for total 2024-25 revenue does not differ materially from the CRE,” noting some tax sources are performing below estimate, while interest rate income exceeded estimates.

General fund tax collections from September, the start of fiscal 2024, through June, totaled $59.36 billion, down just 0.24% from the same period in fiscal 2023, according to data from the comptroller’s office. Sales taxes, the biggest source of state funding for the Texas budget, were up 0.7% at $35.02 billion. The natural gas production tax generated nearly $1.89 billion, which was down 40%, while oil production tax revenue of $5.2 billion was up 4.23%.

“As always, there are risks and uncertainties that could cause the economy and revenue collections to deviate from our expectations,” Hegar said in the statement. “But at this time there are no signs of imminent recession or accelerated expansion that would necessitate a revision to our outlook for continued economic growth at a modest pace.”