The state’s chief financial officer announced today the 85th Legislature will have roughly $105 billion to use in the coming two years, down $2.86 billion from the previous biennium.

Comptroller of Public Accounts Glenn Hegar pointed to a decrease in sales tax revenue and struggles in the oil and gas industry as reasons lawmakers will only have $104.87 billion to budget this legislative session, which begins Tuesday. The state builds budgets in bienniums, so the next budget will take effect in September and last 24 months.

Hegar said two major reasons 2018-2019 will bring a revenue shortfall is a lower beginning balance and a change that requires a portion of the state sales tax to be reallocated to the State Highway Fund.

Hegar said in spite of the revenue shortfall, there is reason to be optimistic for the future. He noted in a press release that Texas’ economy only grew 0.2 percent in fiscal year 2016, but is projected to grow by 2.5 percent in fiscal year 2017. He projected the growth rate will increase to 3 percent in 2018 and 3.1 percent in 2019.

This is the equation Hegar used to come up with the $104.87 billion budget number:

Revenue flowing in


Beginning balance for 2018-19: $1.53 billion
The general revenue fund typically doesn't start at zero. The fund gets a boost from whatever money is left unused from the previous session. This is called the beginning balance. The beginning balance in 2016-2017 was $7.29 billion, a difference of $5.76 billion from the upcoming biennium.

Sales tax revenue for 2018-19: $61.97 billion
The majority of state revenue, roughly 53.8 percent, comes from the state sales tax. For the third time in the last eight years, 2016 sales tax revenue is down from the previous year. This also happened in 2009 and 2010, following the Great Recession. By comparison, the 2016-2017 revenue intake from sales tax equaled $56.83 billion. The upcoming biennium has a projected revenue increase of $5.14 billion, or 9.04 percent.

Non-sales tax state revenue for 2018-19: $49.21 billion
The other half of the general revenue, not provided by sales tax, is collected from the oil production tax, the franchise tax and the motor fuel tax, among others. In 2016-2017, the state took in $45.61 billion, which is 7.3 percent less than what will be used for 2018-2019.

Money flowing out


Sales tax revenue allocated to State Highway Fund in 2018-19: $4.71 billion
In 2015, voters approved Proposition 7, to give a portion of the sales tax to the State Highway Fund. This change is set to begin in the 2018 biennium. In 2016-2017, zero dollars were taken away from the sales tax revenue.

Rainy Day Fund contribution in 2018-19: $3.13 billion
The Texas Economic Stabilization Fund contains money to be used during budget deficits or for any purpose the legislature deems appropriate. It contains roughly $10 billion. In 2016-2017, the legislature contributed about $2 billion to the Rainy Day Fund.

What's left over


Total revenue available for 2018-19: $104.87 billion
The biennial revenue estimate is important to lawmakers’ agendas for the upcoming session because it dictates exactly how much the state has to spend. Per the Texas Constitution, state legislators can spend no more than is available in estimated revenue. In the 2016-2017 biennium, lawmakers had access to $107.73 billion. The 2018-2019 biennium will see a 2.7 percent decrease in the funds available from the previous session, for a total of $104.87 billion.

Look here for the full report from the comptroller.