State budget hole from pandemic signals the need for federal investment in our schools

Comptroller Glenn Hegar came out with new budget estimates Monday that see the state facing down a $4.6 billion shortfall for the next budget cycle. Last October the picture was much rosier, and Texas was projected to have a $2.89 billion surplus, but the COVID-19 pandemic and recent volatility in oil markets have taken their toll.

The comptroller also announced new estimates for the Economic Stabilization Fund, otherwise known as the Rainy Day Fund–an $8.8 billion balance for 2021 that can be tapped to cover funding for essential healthcare and education programs such as Pre-K and Medicaid.

To avoid the mistakes made in 2011, lawmakers will need to use the Rainy Day fund to support school districts as they try to ensure every student has access to educational opportunities during this health crisis. Use of that fund also would help ensure Texas doesn’t go back on the commitments the state made in the last legislative session when it passed HB3, the school finance bill that pumped new money into public education.

Hegar warned in his update that the revised estimates come with an unprecedented amount of uncertainty. “We have had to make assumptions about the economic impact of COVID-19, the duration and effects of which remain largely unknown,” cautioned Hager. He also made it clear that these estimates do not include any additional support from the federal government since no new stimulus package has yet been passed by Congress. Additional aid would greatly improve the economic outlook for Texas next year.

As it stands, most state agencies are in the process of reducing their budgets by at least 5%, a number that could go up if the health crisis persists. Federal lawmakers must put their constituents ahead of politics and work together to pass the HEROES Act as soon as possible.

With or without additional federal aid, Gov. Abbott and the Legislature will have to prioritize funding to ensure Texas families continue to receive the services they need as they deal with high unemployment and a public health crisis. The next official update on the state’s budget will come in January, along with the comptroller’s forecast for the 2022-23 budget biennium, before the start of the 87th Session of the Texas Legislature.

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