Estimated Time to Read: 4 minutes
The Texas Legislative Budget Board (LBB) has released its Fiscal Size-Up (FSU) for the 2026–27 biennium, providing a detailed summary of how the 89th Texas Legislature allocated taxpayer dollars during the 2025 regular and special sessions. While the document offers useful reference material, its greatest value lies not in what is new, but in what it confirms.
Viewed in the context of recent state budgets, the 2026–27 Fiscal Size-Up reinforces a broader and increasingly undeniable trend: Texas state government continues to grow well beyond what population growth and inflation would justify, locking in higher baselines and long-term obligations that future Legislatures will struggle to unwind.
The Fiscal Size-Up as a Retrospective, Not a Scorecard
The Fiscal Size-Up is often mistaken for a verdict on fiscal restraint. It is not. The document is a retrospective summary of legislative actions, focused primarily on initial appropriations adopted through Senate Bill 1 (SB 1) and selected supplemental legislation. It does not capture the full scope of spending that will occur over the biennium, nor does it account for future supplemental appropriations, emergency spending, disaster funding, or federal matching pressures.
As a result, the Fiscal Size-Up should be understood as a baseline snapshot, not a ceiling on government growth.
The 2026–27 Budget in Context
According to the LBB, total All Funds appropriations for the 2026–27 biennium total approximately $338.5 billion, making it the largest budget in Texas history. While the Fiscal Size-Up emphasizes modest changes compared to adjusted figures from the prior biennium, those comparisons obscure the more important reality.
Compared to the 2022–23 biennium, State Funds have increased by more than 40%, and All Funds spending has grown by more than 27%. Over the same period, combined population growth and inflation have been roughly half that rate. Even when accounting for economic growth, Texas is spending far beyond what taxpayers can sustainably support.
The Fiscal Size-Up does not dispute this reality. It simply presents the data in a way that minimizes its significance.
Concentration of Spending Remains Unchanged
The Fiscal Size-Up confirms that Texas state spending remains heavily concentrated in two areas: education and health and human services. Together, these functions account for roughly 70%% of total budgeted spending.
Article III, which includes public and higher education, continues to dominate General Revenue appropriations. Article II, Health and Human Services, remains the largest driver of All Funds growth, with Medicaid alone consuming an ever-larger share of state dollars as federal support declines.
Despite repeated promises of reform in both policy areas, the Fiscal Size-Up shows that lawmakers once again chose expansion over restructuring.
Inflation Adjustments Do Not Equal Fiscal Discipline
As in prior cycles, the LBB relies heavily on inflation- and population-adjusted comparisons to argue that spending growth has moderated. These adjustments may be analytically convenient, but they are poor proxies for fiscal discipline.
State government does not experience inflation the way households do. Healthcare costs, employee benefits, pensions, and construction expenses consistently outpace CPI. Applying consumer inflation metrics to state budgeting masks real growth rather than constraining it.
Measured consistently from initial appropriations to initial appropriations, the 2026–27 budget reflects continued structural expansion, not restraint.
What the Fiscal Size-Up Leaves Out Matters Most
The most important limitation of the Fiscal Size-Up is what it cannot capture. The document does not fully reflect:
- Supplemental appropriations adopted mid-biennium
- Disaster and emergency spending
- Long-term liabilities created by new programs and dedicated funds
- Federal matching requirements that amplify future state costs
For taxpayers, this means the Fiscal Size-Up represents a floor for government spending, not a comprehensive accounting.
Why This Matters Beyond One Biennium
The 2026–27 Fiscal Size-Up fits squarely within a longer pattern. For more than two decades, Texas budgets have grown faster than population and inflation, even under unified Republican control. Each biennium sets a higher baseline, narrowing future options and increasing pressure for higher taxes or debt.
Despite record revenues, a $24 billion surplus, and a Rainy Day Fund at capacity, lawmakers chose to expand government rather than impose durable limits on spending growth. The Fiscal Size-Up confirms that this was not an aberration, but a continuation of the prevailing approach.
The Bottom Line
The Fiscal Size-Up for the 2026–27 biennium does not reveal a restrained or temporary pause in spending growth. It documents the formalization of a much larger state government, built on elevated baselines and long-term commitments.
Absent a strict constitutional spending limit tied to population growth and inflation, the elimination of corporate subsidies, and structural reforms to education and healthcare finance, future Legislatures will inherit fewer options and higher costs.
The data in the Fiscal Size-Up makes one thing clear: the trajectory of the Texas state government remains upward, and taxpayers will bear the consequences.
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