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Comptroller estimates $112.5 billion available to spend
Texas Comptroller Glenn Hegar released the Biennial Revenue Estimate (BRE) today for the 2022-23 biennium, and said that the State is expected to have $112.5 billion in funds available for general-purpose spending. To bottom line what that means, he doesn't think it's going to be nearly as bad as we once feared.

If you were to compare that to the $119.1 billion amount estimated exactly two years ago for the 2020-21 biennium, it would represent a 5.5% percent reduction. Such a comparison doesn't take into account the fact that actual appropriations adopted in 2019 amounted to $118.9 billion and the impact supplemental appropriations bills have on both those estimated amounts. It also doesn't address the billions in savings the state realized over the past 16 months from federal stimulus dollars and higher than expected property values, both of which resulted in less state spending for schools. But such a comparison perhaps helps put things in perspective when it comes to what lawmakers may have available to spend.

The last revenue estimate we saw from the Comptroller came back in July 2020, when he projected a $4.6 billion shortfall in the current biennium. Today's BRE projects that shortfall won't be nearly as bad, as the Comptroller estimates that the Texas economy will continue to recover at a rapid a pace in the current fiscal year, and that the 2020-21 biennium will close with a shortfall of only $1 billion--something which can be all but wiped out with the 5% reductions called for among state agencies.

The Economic Stabilization Fund (ESF, or "Rainy Day Fund") balance is expected to be $8.9 billion at the end of FY2021, and absent any expenditures from the Texas Legislature, the Comptroller estimates that fund could total $11.6 billion by the end of the 22-23 biennium. That certainly leaves room for some of the one-time only expenditures.

Keep in mind that this BRE from January is often updated in March when more data becomes available from which to make projections, but at this point in time the shortfall projected by this estimate isn't nearly as bad as the shortfalls projected during previous recessions (in 2003 and 2011). If the economy continues to rebound and rebuild at the pace projected by the Comptroller, the state could largely avoid many budget cuts. If the economy doesn't grow at the same pace as projected, then things may not be quite so rosy in March.

For now, it would certainly appear that the funding is available for the state to continue the hold harmless for schools and protect against potential cuts caused by enrollment decline in school districts during the pandemic. It remains to be seen if state leaders will take the steps in order to make that happen.

Federal Stimulus Dollars
The 2008 recession wasn’t really felt in Texas school finance until 2011 due largely to the fact that the US Congress sent federal stimulus to Texas in 2009 that helped fill budget holes in FY 2010 and FY 2011. Then, when the Texas Legislature convened in 2011, those federal dollars were gone and the state was left to contend with those holes that remained. The current recession is a little different animal, so things may not play out in exactly the same way, but the billions headed our way from the federal government certainly help.

In the Spring, the US Congress adopted the CARES Act, which delivered $1-2 billion for schools in Texas (which was off-set by a nearly equal reduction in state funding that helped postpone state funding cuts). The latest package adopted by the US Congress through the 2021 Coronavirus Response and Relief Supplemental Appropriations Act will send $55 billion of supplemental coronavirus relief funding to the State of Texas. From that total, Texas school districts are expected to receive $4.9 billion and the Texas Education Agency will receive another $553,000. While we fully expect state leaders to deliver those funds in much the same fashion, it is still a very meaningful investment because it once again forestalls/mitigates state any funding cuts.

In addition to the funding mentioned above that will flow directly to school districts, there are also pots of money that will flow to state governors for use at their discretion and $3.2 billion put towards an emergency broadband connectivity fund.

President-Elect Joe Biden has also indicated that he plans to pursue additional such relief aid dollars following his inauguration, so it remains to be seen whether there may be even more in federal aid dollars to come.

What to expect for the legislative session
The 87th Legislative Session will begin at noon tomorrow in both the House and Senate chambers of the Texas Capitol. While opening day festivities will be well, less festive...both legislative bodies will convene and conduct business.

The Texas Capitol is open again to the public, with some new rules and requirements in place. If you plan to visit the Texas Capitol in-person this session, it is recommended that you make appointments in advance and communicate with someone in each of the offices you plan to visit before you make the trip. Each legislative office has their own set of requirements and protocols. Some are open by appointment only, some require a coronavirus test prior to entry, etc. It is best to know before you go.

Keep in mind that as always, you can follow along and watch the proceedings on the House and Senate floor, as well as any public hearings that may occur.

Tomorrow, the House will elect a new Speaker, and we expect them to make things official with Presumptive Speaker Dade Phelan (R-Beaumont) by removing the "Presumptive" from that title. The Senate will take care of the business of electing Senator Brian Birdwell (R-Granbury) as their President Pro Tempore. Both bodies will also adopt rules for how they will conduct business during the legislative session that will take place during a pandemic.

If you would like to receive notice of House and Senate actions, committee hearings that are posted, or when bills are certain subject matters are filed, any member of the public can sign up for the My TLO alerts of your choosing at the Texas Legislature Online website.


Conversation with Presumptive Speaker Dade Phelan
We say "Presumptive Speaker" because until Tuesday at noon, Speaker Dennis Bonnen still holds that title. But we know that State Affairs Committee Chairman Dade Phelan has the support necessary to be elected to the position of Speaker of the House tomorrow afternoon. Given that fact, the Texas Tribune's Evan Smith sat down with him today for a one-on-one. Here are some of the main points that emerged out of their conversation:

Phelan told Smith that “nothing is off the table for cuts,” when it comes to the state’s need to adopt a balanced budget within the confines of what the Comptroller says the state has to spend. However, Phelan also said that he believes Article III of the budget (Education) will remain the biggest state expenditure, stating that “[education] remains our priority.”

When asked about whether he will continue to support bans against taxpayer funded lobbying like he did last session, Phelan stated that he thought the issue had merit last session, but that it is up to the members of the House to determine what bills have the support necessary to make it through the legislative process.

Phelan also responded to questions regarding whether the state can find the money to continue to support the school finance reforms adopted in 2019, saying “we will do everything we can to be certain we fulfill our responsibilities.” He continued by explaining that “It was a monumental bill that solved a lot of problems; but it is not an easy task to dig yourself out of a hole.” Phelan also explained the newfound respect he now has for teachers after helping his four sons through remote learning in the spring.


Resources for Members
With the new legislative session, we have a whole host of new resources headed your way in the Members Area of our website. Your email address and the password you establish grant you access to that page. If you forgot or don't know your password, you can reset it at any time.

First up, we have profile pages and district maps for every member of the Texas Senate (House profile pages/maps are coming soon). You can use these resources to give you an idea of how districts in that Senate district compare to the state as a whole, get the details from a few highlighted school districts for that legislator, and more. The resource has proved a valuable tool for our members in the past.

You can also find talking points and other resources on fund balances (more to come on other topics), presentations, and more.

If there is something you're looking for that you can't find there, please let us know and we will be happy to add it.
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