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The Texas Comptroller has officially certified how much money lawmakers will have to spend over the next two years, and the numbers are big. Acting Comptroller, and former State Sen. Kelly Hancock’s (R) new Certification Revenue Estimate (CRE) confirms that Texas will have about $203.63 billion in “General Revenue” available for general-purpose spending. General Revenue is the state’s main checking account, the money that pays for schools, healthcare, public safety, and state agencies.
Of that amount, lawmakers have already approved $198.97 billion in spending for the 2026–27 budget cycle. When the bills are paid, the Comptroller expects a $4.66 billion cushion left in the account. On paper, the budget is balanced, but that small cushion shows just how quickly Texas has grown accustomed to record spending.
📊 See the Comptroller’s official infographic here for a full breakdown of revenues, transfers, and projected balances.
How the Comptroller’s Estimate Works
Every two years, the Comptroller releases an updated forecast called the Certification Revenue Estimate, or CRE. It confirms that the Legislature’s budget fits within the actual revenue the state expects to collect. This latest estimate covers the period from September 1, 2025, through August 31, 2027, and includes data from the recently finished regular session and two special sessions of the 89th Legislature.
The Comptroller projects Texas will collect about $173.4 billion in new tax and fee revenue over those two years; $153.5 billion from taxes and $19.9 billion from other sources like lottery proceeds, interest, and state fees. That’s only a small increase from the previous two-year cycle, a sign that the state’s red-hot economy is cooling to a more normal pace.
Texas’s Economic Outlook: Still Strong but Slower
The report assumes the Texas economy will keep growing, but more slowly than in past years. The state’s total economic output, its “gross state product,” is expected to rise by about 2.3 percent each year through 2027. Personal income should increase by roughly 5.6 percent a year, while unemployment could tick up to around 4.7 percent.
Energy markets are expected to stay steady, with oil averaging $64–66 per barrel and natural gas about $4 per MMBtu. Those prices keep money flowing into state coffers, but they also show how much Texas’s finances depend on the oil and gas industry. If energy prices drop, revenue can shrink quickly.
Where the Money Comes From
Most of the state’s money comes from the sales tax, which is expected to bring in nearly $94 billion over the next two years, about sixty percent of all tax revenue. Every time Texans make a major purchase, from appliances to cars, the state gets its share.
Other big sources include the franchise tax on businesses, projected at about $10.9 billion, and insurance taxes, expected to total $10 billion.
Energy taxes are a mixed bag. Taxes on oil production are expected to fall about 14 percent, while natural-gas taxes will climb roughly 23 percent thanks to higher demand for liquefied natural gas exports.
Meanwhile, non-tax income, such as state fees, fines, and interest, will drop as one-time boosts from pandemic-era federal funds fade away.
The Rainy Day Fund: Full but Untouched
The state’s Rainy Day Fund, officially the Economic Stabilization Fund (ESF), is now at its legal limit. A $2.05 billion transfer this year filled it to capacity, and no new deposits can be made until lawmakers raise the cap. The balance is projected to reach a record $28.48 billion by the end of 2027.
While a full savings account may sound like good news, and it is, it also means that any extra oil and gas money that would normally go into the fund will stay in the state’s main budget. Lawmakers could use that money to slow spending growth or return it to taxpayers. Instead, the Legislature chose to keep expanding the size and scope of state government.
Highway Fund Transfers and the Shrinking Flexibility in the Budget
The state’s constitution sends billions of dollars each year to the State Highway Fund, which pays for road construction and maintenance. The Comptroller projects that the highway fund will receive $2.52 billion in 2026 and $2.46 billion in 2027 from oil and gas severance taxes, plus billions more from sales and vehicle taxes. Those transfers guarantee stable funding for infrastructure, but they also mean a smaller share of the budget can be used for property-tax relief or spending reforms.
A Record Budget That Keeps Growing
The new CRE verifies that lawmakers’ record-setting $337.4 billion budget is technically affordable, but it also confirms how much spending has ballooned. Since the 2022–23 cycle, total state funds have increased by more than 40 percent, far faster than the combined growth of Texas’ population and inflation.
General-Revenue spending alone rose to $153.6 billion, an 8 percent increase from the previous cycle. That money funds familiar areas like education, healthcare, transportation, and public safety. But much of it simply keeps older programs on autopilot, with few attempts to review or reduce costs.
What the Numbers Tell Us About Priorities
Texas Policy Research’s analysis of Senate Bill 1, the state budget bill for 2026–27, found that lawmakers used record revenues to grow nearly every corner of state government while offering only limited new property-tax relief. Out of more than $51 billion claimed as “tax relief,” just $6 billion represented new cuts; the rest continued existing programs or temporary fixes.
Education and healthcare together account for more than two-thirds of all spending, yet the Legislature rejected major reforms such as universal school choice, pay-for-performance models for teachers, or efficiency audits for Medicaid. The Rainy Day Fund is full, but the structural problems that drive long-term spending remain unresolved.
What Texans Should Take Away
For everyday Texans, the Comptroller’s report means the state’s checkbook balances, but at a cost. The 2026–27 budget is the largest in Texas history. The government is spending more than ever before, and most of that growth isn’t tied to reform or results.
The Rainy Day Fund is full, the economy is still strong, and the state remains in better shape than most. Yet, that stability risks becoming complacency. Instead of using this moment to shrink government and deliver meaningful tax relief, lawmakers doubled down on spending growth.
The responsible path forward is clear: focus on results, cut waste, and return excess revenue to taxpayers. Texans don’t need a bigger government; they need a government that does less and does it better.
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