Texas Leaders Want Smaller Budget Requests. Will Spending Follow?

Estimated Time to Read: 8 minutes

Texas Governor Greg Abbott (R), Lieutenant Governor Dan Patrick (R), and House Speaker Dustin Burrows (R-Lubbock) recently released joint budget guidance directing most Texas state agencies to submit Legislative Appropriations Requests (LARs) for the 2028-29 biennium that reflect a three percent reduction from their current base budgets.

At first glance, the announcement appears to signal a renewed emphasis on fiscal restraint. After years of historic budget growth, any recognition that government spending deserves greater scrutiny is a welcome development. But Texans should also understand what this guidance actually accomplishes, what it leaves unchanged, and why its long-term significance will ultimately depend on the decisions made by the 90th Texas Legislature.

The announcement raises an important question. Is this the beginning of a serious effort to restore fiscal discipline, or is it simply a modest adjustment to the budget process after years of unprecedented government growth?

What Is a Legislative Appropriations Request?

To understand the significance of this announcement, it is important to understand where a Legislative Appropriations Request, commonly referred to as an LAR, fits within the Texas budget process.

The budget process begins months before the Texas Legislature convenes. During the summer preceding a legislative session, the Legislative Budget Board (LBB) and the Governor's Office distribute budget instructions to every state agency. Agencies then develop strategic plans and submit LARs outlining how much funding they believe they will need during the next biennium. Those requests are reviewed by both the LBB and the Governor's Office, which conduct hearings and develop separate budget recommendations before lawmakers begin writing the General Appropriations Act (GAA).

When the Legislature convenes in January 2027, lawmakers are not starting with a blank sheet of paper. They receive the Comptroller's Biennial Revenue Estimate (BRE), review agency requests, consider recommendations from the LBB and the Governor's Office, and begin developing appropriations bills through the committee process. The House and Senate each pass their own versions of the budget before resolving differences through a conference committee. Only after both chambers approve the conference committee report does the budget go to the Comptroller for certification and then to the Governor for signature or consideration of line-item vetoes.

That context is important because the joint guidance affects only the beginning of the process. It instructs agencies to submit smaller base budget requests. It does not determine how much the Legislature will ultimately appropriate, nor does it prohibit agencies from requesting additional funding through exceptional item requests.

Understanding that distinction is essential to evaluating yesterday's announcement.

Smaller Budget Requests, Not Smaller Government

The most important takeaway from the joint guidance is that state agencies are not being directed to reduce state spending by three percent. Instead, agencies are being instructed to request three percent less than their previous baseline, not necessarily to spend three percent less. The Legislature ultimately determines final appropriations through the legislative process. Agencies also retain the ability to submit exceptional item requests seeking additional funding beyond their reduced base request.

Furthermore, the guidance expressly exempts several of the state's largest spending categories, including public education, Medicaid caseload growth, debt service, employee benefits, and Education Savings Accounts (ESAs).

In practical terms, this guidance changes how agencies prepare their initial budget requests. It does not automatically reduce state appropriations, nor does it guarantee that the budget ultimately adopted by lawmakers will spend less than previous budgets.

That distinction should not be overlooked.

Texas State Spending Has Increased Dramatically

Context matters when evaluating any discussion about the Texas budget.

Over just the last two budget cycles, Texas increased state spending by approximately 42 percent. That growth substantially exceeded the combined rate of population growth and inflation over the same period. Against that backdrop, asking agencies to submit requests that are three percent lower than their previous baseline represents only a modest adjustment.

Even if every requested reduction were ultimately reflected in the final appropriations bill, nearly all of the spending growth enacted in recent years would remain intact. That does not mean the guidance lacks value. Requiring agencies to justify their spending requests is preferable to assuming that every budget should automatically increase.

But Texans should be careful not to confuse smaller requests for future spending increases with meaningful reductions in the overall size and cost of government.

Fiscal Responsibility Requires More Than Slowing Spending Growth

Fiscal responsibility is about more than balancing a budget. It begins with respecting the taxpayers who fund the government.

Every dollar appropriated by the Legislature first belongs to a Texas family, business owner, or worker who earned it. The government has an obligation to demonstrate that every expenditure serves a legitimate public purpose and that every program remains necessary. That requires lawmakers to continually ask difficult questions.

Is this program still needed? Has it accomplished its original purpose? Can this service be provided more efficiently? Should the government be performing this function at all?

Those questions become even more important after periods of rapid spending growth. A sustainable budget is not simply one that grows more slowly. A sustainable budget is one that grows only when necessary and remains aligned with the state's population growth, inflation, and long-term economic capacity.

Beyond Budget Requests

If Texas leaders are serious about restoring fiscal discipline, the conversation should extend well beyond agency budget requests. Long-term reform requires structural changes that encourage responsible budgeting every legislative session rather than relying on one-time directives.

One important reform would be strengthening state spending limits so appropriations generally grow no faster than population growth plus inflation, except under extraordinary circumstances approved by the Legislature. Another would be making better use of Texas' existing Sunset Review process to rigorously evaluate whether state agencies and programs continue serving their intended purpose, whether they are delivering measurable value to taxpayers, and whether some functions should be reduced, consolidated, privatized, or eliminated altogether.

Meaningful budget reform should also recognize the relationship between government spending and property taxes.

Every unnecessary dollar spent by the government represents resources that cannot remain in the hands of Texas families and employers. Restraining spending creates opportunities for meaningful tax relief, including continued progress toward eliminating school district maintenance and operations property taxes.

Fiscal responsibility and tax relief are not competing priorities. They are complementary goals.

Texas Fiscal Conservatives Issue a Joint Statement

Following the release of the budget guidance, Texas Policy Research joined with several longtime advocates for fiscal responsibility to issue a joint statement expressing cautious optimism while urging Texans to understand the limited scope of the announcement.

The statement welcomes the acknowledgment that government spending deserves greater scrutiny but emphasizes that reducing budget requests is not the same as reducing government spending. It also highlights the significant exemptions contained within the guidance, explains why Legislative Appropriations Requests represent only the first step in the budget process, and calls for structural reforms that produce lasting fiscal discipline rather than temporary reductions in requested spending.

Read the full joint statement here.

Will the Texas Legislature Follow Through?

The joint guidance from Governor Abbott, Lieutenant Governor Patrick, and Speaker Burrows represents an acknowledgment that government spending deserves closer examination. That acknowledgment is important. Whether it ultimately results in a more restrained state budget remains to be seen.

The Texas Legislature has repeatedly approved budgets that significantly expanded state spending. Texans therefore have every reason to welcome greater scrutiny while remaining appropriately skeptical until actual appropriations demonstrate a sustained commitment to fiscal restraint.

Budget requests are only the beginning of the legislative process. The real test will come when lawmakers determine how much money the government actually spends.

Restoring Fiscal Responsibility in the Texas Budget

The discussion surrounding the 2028-29 budget presents an opportunity to refocus Texas government on the principles of fiscal responsibility, limited government, and taxpayer accountability.

Fiscal responsibility is not measured by how much agencies request. It is measured by how much the government ultimately spends.

The recent guidance is a positive acknowledgment that spending restraint deserves renewed attention. However, after decades of substantial budget growth and approximately 42 percent spending growth over just the last two budget cycles, Texans should expect reforms that extend beyond the budget request process.

If this guidance becomes the first step toward stronger spending limits, more rigorous oversight of government programs, and budgets that grow no faster than population growth plus inflation, it will represent meaningful progress. If, however, it serves only to reduce the size of agency requests while overall appropriations continue their upward trajectory, little will have changed.

The 90th Texas Legislature now has an opportunity to demonstrate that fiscal responsibility is more than a campaign slogan. It can show Texans that government is willing to exercise the same discipline that families and businesses practice every day by living within its means, scrutinizing every expenditure, and ensuring taxpayer dollars are spent only where they are truly necessary.

That is the standard Texans should expect, and the standard their elected officials should strive to meet.

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