As you probably know, our agency’s duties include tracking the Texas economy and the revenues that support our state government. I’d like to report on two recent events that concern both.
One of our agency’s most important duties is estimating the amount of revenue that will be available to the Legislature over each two-year budget period. We prepare the Biennial Revenue Estimate (BRE) before each regular session and, after the session, we follow up with a Certification Revenue Estimate (CRE) that updates the BRE to reflect the effects of new laws and any economic changes that have occurred in the intervening months.
And right now, economic conditions are changing.
When I took office, I pledged to keep lawmakers and the taxpayers of our state informed on our economy and the state revenue on which it depends. That’s why, on July 11, we updated the CRE estimates. As we prepared to provide the updated estimate, I was surprised to learn that this would be the first time in 30 years this agency has updated a CRE for a reason other than a legislative session — since Bob Bullock held my job.
The update was prompted by unexpectedly strong economic growth. Both the state and national economies are expanding rapidly, and in Texas rising energy prices and production have given us a further boost. The state’s tax collections through June are up by nearly 12 percent compared to last year, oil and natural gas tax collections have risen by more than 50 percent, and unemployment is at historical lows. Texas’ conservative fiscal policy has helped the state economy create hundreds of thousands of new jobs.
The new CRE reflects this trend:
- We now expect the Texas economy to grow by 4.5 percent in fiscal 2018 and 4.2 percent in fiscal 2019. That’s up from 3.7 percent and 3.2 percent, respectively, in our October 2017 CRE.
- We also raised our estimate of the revenues available for general spending in the current budget period, from $107.3 billion to nearly $110.2 billion. That’s enough to support the Legislature’s 2018-19 budget with an ending balance of nearly $2.7 billion.
- We also estimate that the state’s “rainy day fund” will contain nearly $12 billion at the end of fiscal 2019, the largest ending balance in its history.
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Thank you for all you do for Texas, and God bless,