Comptroller Glenn Hegar informed lawmakers this week that the revenue estimate for the current biennium, which lasts through August 2021, is $11.5 billion lower than was predicted last October.

Federal stimulus funding has helped mitigate the shortfall. Also, local property appraisal values continue to rise, which benefits the state because it will have to pay out less to school districts. There was also an upswing in online sales tax revenues.

Taking those factors into account, the current shortfall comes to $4.6 billion. This means that unless circumstances change dramatically or action is taken, the state cannot pay for its current budget. State agencies have been asked to identify budget cuts totaling at least 5% (excluding the foundation school program, TRS contributions, and other key obligations). These projected savings are not included in the comptroller’s figures.

The revenue estimate for the budget that the legislature must adopt in 2021 could reveal an even larger deficit. Hegar noted that “This revised estimate carries an unprecedented amount of uncertainty,” due to the unpredictable effects and duration of the coronavirus pandemic.

Lawmakers may consider tapping into the Economic Stabilization Fund (commonly known as the Rainy Day Fund) to help cover the shortfall. The projected value of the Rainy Day Fund in August of next year is just under $9 billion. Lt. Gov. Dan Patrick noted that many school districts have large reserves that could help them deal with funding issues. He also expressed optimism that Texas was in a better position than other states to experience an economic rebound.

The revenue estimate for the legislative session will be released shortly before the session begins in January.