State Budget by Biennium (1996 – 2027)

For more than a generation, the Texas budget by biennium has consistently outpaced what population growth and inflation would justify. Since Republicans gained full control of state government in 2003, holding every statewide office, the Texas Senate, and the Texas House, the promise of limited government has been replaced by record-high state spending. The current 2026–27 Texas budget, totaling nearly $337.4 billion in All Funds and $237 billion in State Funds, is the largest in state history. Instead of restraining government, lawmakers have expanded it exponentially. The chart below illustrates how Texas state appropriations have surged from 1996 through 2027, offering taxpayers a clear picture of this unsustainable growth.

Texas Budget 2026-27 at a Glance

• $337.4 billion in All Funds, the largest budget in state history
• 42.8% increase in State Funds since 2022–23
• Only ~$6 billion in new property tax relief despite a $24B surplus

Texas State Spending Growth Outpaces Population and Inflation

The 2026–27 General Appropriations Act (SB 1) is the clearest example yet of runaway state spending. Compared to the 2022–23 biennium, State Funds have grown by 42.8 percent, while All Funds increased by 27.4 percent. Over the same period, combined population growth and inflation have been only about 20 percent. This confirms that the Texas budget is expanding well beyond the ability of taxpayers to sustain it.

Education and Health Care Dominate the Texas Budget

Nearly 70 percent of the 2026–27 budget is consumed by public education and health and human services. Education spending (Article III) totals $134.6 billion, including $75.6 billion for the Foundation School Program and $9.1 billion in contingent items. Health and Human Services (Article II) totals $105.2 billion, with Medicaid at $82.3 billion, a growing burden on state dollars as federal aid declines. Despite promises of school choice and healthcare reform, lawmakers instead delivered record appropriations to the same government systems.

Property Tax Relief in Name Only

Lawmakers tout $51 billion in property tax relief for the 2026–27 cycle, but most of this is simply the continuation of past measures or contingent on future legislation. In reality, just about $6 billion is new relief. Without structural limits on government growth, these savings are temporary while spending increases are permanent. The absence of durable property tax reform means Texans will continue to see long-term burdens rise.

Corporate Welfare and Constitutional Funds Expand Government

Billions are being directed to so-called “constitutional funds” like the Texas Energy Fund, Water Fund, and Nuclear Fund. These programs are structured to bypass the constitutional spending limit and funnel taxpayer dollars into politically favored industries. Combined with expanded economic development incentives, these measures reflect progressive-style central planning rather than the free-market approach that once defined the Texas model.

Republican Control and Fiscal Responsibility

It is important to note that since 2003, Republicans have had full control of the Texas government. They hold every statewide elected office and command majorities in both legislative chambers. Campaigning on the promise of limited government, they have nonetheless presided over an unprecedented expansion of state spending. The Texas budget 2026–27 demonstrates that the party most identified with fiscal conservatism has, in practice, grown government far beyond sustainable levels.

The Bottom Line on the 2026–27 Texas Budget

Despite record revenues, a $24 billion surplus, and a Rainy Day Fund at capacity, the 2026–27 Texas budget delivers more government growth, not less. Lawmakers increased spending across nearly every article while providing only token tax relief. Instead of compressing and ultimately eliminating property taxes, the Legislature poured billions into public education, Medicaid, corporate welfare, and special funds that bypass spending caps.

This budget represents a turning point. Far from exemplifying the Texas model of limited government, it mirrors the progressive budgeting practices of states like California. Unless lawmakers adopt a strict constitutional spending limit tied to population plus inflation, eliminate corporate handouts, and return surpluses directly to taxpayers, Texas risks undermining the very economic engine that made it successful.

Texas Policy Research recommended a NO vote on SB 1, calling on lawmakers to reverse course and recommit to fiscal responsibility.

Recent State Budgets (1996 – 2027)

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