Seal of the Senate of the State of Texas Welcome to the Official Website for the Texas Senate
Seal of the Senate of the State of Texas
Welcome to the official website for the
Texas Senate
May 21, 2021
(512) 463-0300



(AUSTIN) — This week, members of the Senate Finance Committee sent two major spending bills that must pass to the full chamber - measures that capitalize on the rebound of the economy as the pandemic wanes in Texas. Sales tax collections came back strong following the state's vaccine rollout as Texans eager to get out and spend drove record tax revenue, leaving money in the bank as the state exits the current biennium and more flexibility as it looks to cover state services for the next two years. "Since adjourning sine die last session, we have been through many unforeseen challenges, natural disasters, oil price wars and a global pandemic that dramatically changed both our revenues and our expenses," said Finance Committee chair and Flower Mound Senator Jane Nelson. "We were able to tighten our belts and find savings across state agencies, we received several pots of federal dollars - most importantly, Texas is coming back strong and our revenue situation has much improved."

State revenue projections have been on a rollercoaster since the pandemic started, as Nelson laid out at Friday's Finance hearing. Coming into 2020, the state treasury held a surplus of nearly $3 billion. As the pandemic spread across the country, shuttering businesses and driving consumers into their homes, and a crash in oil prices drove state revenues down further, that surplus vanished into a projected deficit of $4.6 billion by July, leaving lawmakers concerned that they couldn't maintain a historic investment into public education made in 2019. As the year progressed, however, revenue collections consistently beat projections, reducing the projected shortfall to just under a billion dollars as lawmakers began the session in January. Sales tax collections were especially robust in the spring, with the state setting a single-month all time record in April, bringing in $3.4 billion in tax revenue, up nearly a third over last year. State Comptroller Glenn Hegar told legislators in early May that his office was now projecting a $725 million budget surplus when current biennium ends in September.

Thursday, Finance Committee members negotiating the state budget joined with their House colleagues to release a final draft, one that keeps the additional funding for teacher pay raises and classroom instruction approved through last session's HB 3. The budget approved for the upcoming biennium would spend slightly more than the current biennium but still would be within constitutional spending limits and lower than the rate of inflation when population growth is factored in, according to Nelson.

Friday, the Finance Committee approved the supplemental budget bill, a measure passed each session to align state accounts between what was appropriated two years ago and what was actually collected and spent. Better-than-expected property values, lower-than-expected attendance and federal funds put the cost of public education below projections by more than $5 billion. Combined with other federal COVID-19 relief funds and agency spending reductions, this year's supplemental bill will realize savings of $2.7 billion below 2019's spending projections. "We are presenting a supplemental budget that meets our needs in this biennium and leaves us with a balance to address our budget needs for the next two years," Nelson told members. The bill also taps the state's rainy day fund for just over half a billion dollars.

Also included in the supplemental is just over $1 billion in state and federal funds to pay for reforms to the state employee retirement system passed in SB 321 earlier in the session. That plan calls for $510 million to be paid annually toward the pension fund's outstanding liability through 2053.

Next stop for the two bills will be the full Senate. "We will be bringing to the floor of both chambers a responsible budget that keeps Texas strong and successful," Nelson told budget conferees Thursday. Lawmakers have until May 31st to approve these must-pass measures.

The Senate will reconvene Saturday, May 22nd at noon.

Session video and all other Senate webcast recordings can be accessed from the Senate website's Audio/Video Archive.