Texas Legislature opens with $194.6B budget for 2026-27

TEXAS – Texas lawmakers will have $194.6 billion available for general-purpose spending during the 2026-27 biennium, a 1.1% decrease compared to 2024-25.

This report is crucial as it outlines the revenue available for state programs and services, guiding lawmakers in their fiscal planning.

• The 89th Texas Legislature opens on Tuesday. What you need to know

It comes just a few hours before the 89th Texas Legislature is set to begin on Tuesday with 181 lawmakers and more than 2,400 bills filed.

Sales taxes are the star of the show when it comes to Texas’s revenue. They’ve been the biggest source of tax income since 1988 and are expected to make up 59 percent of all tax collections in 2026-27. However, the growth of these collections might slow down a bit as things return to normal after the pandemic.

Oil production taxes are another key player. Thanks to better technology, Texas can produce more oil with fewer rigs. This means oil production isn’t as closely tied to the number of rigs as it used to be, allowing for more efficient extraction.

The Economic Stabilization Fund, or the Rainy Day Fund, is expected to hit its cap in 2026. This cap limits how much money can go into the fund, with any extra going to the General Revenue Fund. Despite this, the Rainy Day Fund’s balance is likely to grow due to investment income.

The State Highway Fund and the Rainy Day Fund get a lot of their money from oil and natural gas taxes. The Highway Fund is set to receive $5.1 billion in 2026-27, and it won’t be affected by the cap on the Rainy Day Fund.

In a nutshell, this revenue estimate gives a clear picture of Texas’s financial situation. It’s crucial information for the 89th Legislature as they make decisions about the state’s economic future.

To watch the Senate proceedings, visit the Texas State Senate website.