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On Jan. 9, Texas Comptroller Glenn Hegar released the Biennial Revenue Estimate (BRE), which is used by the Texas Legislature to estimate the amount of available funding for the next two-year budget cycle, 2024-25. The BRE projects a record $188.2 billion in revenue available for general purpose spending in the 2024-25 biennium, a 26.3% increase from the prior biennium. Included in this amount is a budget surplus of $32.7 billion, which resulted from the state collecting more revenue in 2022-23 than it spent. In addition to general revenue funds, the state’s “rainy day fund,” known officially as the Economic Stabilization Fund, is expected to grow to $26.38 billion by the end of fiscal year 2025, due to high revenue from oil and natural gas severance taxes from which it is funded. Hegar attributed the revenue increases to vigorous economic growth since the end of the pandemic, spikes in energy prices that benefited Texas oil and gas production, continued high sales tax collections, and the highest rate of general price inflation in 40 years.
The revenue reported by Hegar will be used by the Texas Legislature when making funding decisions for the 2024-25 biennium, subject to certain “spending limits” required by the state constitution. Last week, the House and Senate filed budget bills, which serve as the starting point for the budgeting process. The early versions of House Bill 1 and Senate Bill 1 are largely the same for higher education. Both maintain higher education funding at roughly the same levels as in the prior biennium, including both formula funding rates—the largest source of funding for most institutions of higher education—and non-formula funding items. The House and Senate budgets also include modest funding increases for various statewide programs, including financial aid, nursing, research, and exemptions for military and veterans. However, the early versions of the budget are only the starting point. Both House and Senate budgets included a rider signaling intent to make $2.5 billion available for future endowment of higher education, to be determined. Additionally, House Bill 1 included a rider expressing intent to provide funding to higher education sufficient to maintain affordability by holding flat the costs of undergraduate resident tuition and fees at all public colleges and universities.
While it is still very early in the process and much will change as the two chambers of the Legislature make funding decisions for the next two years, there are encouraging signs that some higher education priorities will be addressed.
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