In Michigan, teachers have already received preliminary layoff notices. In Arizona, a proposed legislative budget could strip health coverage from tens of thousands of residents. Several states this year are staring at the same math: health care costs rising faster than tax revenue, with schools and hospitals first in line to absorb the pain. Texas families watching that news from Houston or Amarillo have a fair question. Is the same squeeze coming here?
The short answer, based on the state’s own numbers, is that Texas entered its current two-year budget cycle in a far stronger position than the states making headlines. It walked in with a surplus, not a hole. But “no shortfall today” is not the same as “no pressure ahead,” and a few structural risks deserve a Texan’s attention. Here is what the primary budget documents actually show, and where the real exposure sits.
What the Comptroller’s numbers show
Every two years, the Texas Comptroller publishes a Biennial Revenue Estimate (BRE) that tells the Legislature how much money it has to work with. For the 2026-27 budget, Comptroller Glenn Hegar’s office projected about $194.6 billion in revenue available for general-purpose spending. That figure includes roughly $176.4 billion in new general revenue collections plus an estimated ending balance carried over from the prior cycle.
That carryover balance is the headline most Texans missed. The Comptroller estimated Texas closed the 2024-25 cycle with about $23.76 billion left over — money the state collected but did not spend. A surplus of that size is the opposite of the structural gap that Medicaid-heavy states are wrestling with. When other states talk about shortfalls, they mean projected spending exceeds projected revenue. Texas projected the reverse.
Counting federal money and dedicated funds, the Comptroller put total “all-funds” revenue for the cycle at roughly $362.2 billion. So the framing some national coverage invites — that every large state is in fiscal trouble — does not fit Texas as of the most recent official estimate.
Why Texas sits in a different spot
Two features of the Texas budget explain the gap between Austin and the capitals now cutting programs.
The first is the Rainy Day Fund, formally the Economic Stabilization Fund. It is fed largely by oil and natural gas production taxes, and during high-energy-price years it fills quickly. The Comptroller’s office tracks the fund’s balance, which has stood in the multibillion-dollar range in recent years and is capped at a percentage of general revenue set by the state constitution. When energy revenue runs strong, Texas builds a cushion the way few states can.
The second is the absence of a state personal income tax. Texas leans on sales tax, severance taxes on oil and gas, franchise (business margins) tax, and fees. That mix is more volatile than an income tax — it swings with consumer spending and energy prices — but it also kept the state’s revenue base growing through recent high-inflation, high-energy years. The Comptroller’s revenue reports break that mix down in detail on the state’s transparency portal.
Where the real pressure is
A surplus on paper does not mean every line in the budget is comfortable. The same forces straining other states are present in Texas; they are simply being absorbed rather than triggering cuts.
Medicaid is the clearest example. Texas runs one of the largest Medicaid programs in the country through the Health and Human Services Commission, and like every state it faces rising medical and prescription costs and shifting federal cost-sharing rules. The Legislative Budget Board, the nonpartisan agency that helps write the state budget, tracks those caseload and cost projections in its budget documents and fiscal-size-up reports. When Washington shifts more of the Medicaid or SNAP burden onto states, Texas feels it too — the surplus just gives the Legislature room to cover it without slashing schools.
Public education is the other pressure point. School funding is the largest category of state general-fund spending, and the way Texas funds schools is tied to local property values and a per-student formula. Districts across the state have warned of budget strain even in a surplus year, because state funding per student and rising operating costs do not always move together. The Texas Education Agency publishes how the school finance formulas work for anyone who wants to see where the money goes.
The energy-revenue catch
The same thing that built the cushion can shrink it. A large share of the Texas surplus and the Rainy Day Fund traces back to oil and natural gas taxes. The Comptroller’s own estimate noted that available general revenue for 2026-27 was projected to dip slightly from the prior cycle, in part because the record-high energy collections of recent years were not expected to repeat at the same level.
That is the structural risk for Texas. It is not a Medicaid death spiral like some states face. It is exposure to energy prices. If oil and gas revenue falls sharply, the cushion thins, and the Legislature has less room to absorb rising health and education costs without harder choices. The state’s reliance on severance-tax revenue cuts both ways: it is a strength in boom years and a vulnerability in a downturn.
Why the $23.76 billion surplus won’t touch your property tax bill
For a Texas homeowner or retiree, the state’s cash position and the size of the next property-tax bill are two different ledgers that rarely talk to each other. Unlike residents of states now debating coverage cuts and teacher layoffs, Texans are not facing an imminent, state-driven reduction in core services in the current budget. The official numbers point to a surplus, and the Rainy Day Fund adds a backstop.
But “the state has money” does not mean “your bills are going down.” Most of what squeezes a Texas household budget — property taxes set by local school districts, cities and counties; electricity costs; insurance premiums — is only loosely connected to the state surplus. A healthy state balance sheet does not lower your appraisal or your power bill, and none of the $23.76 billion carryover is earmarked as a rebate check. And because so much of the state’s strength rests on energy revenue, the comfortable position can change between budget cycles.
If you want to follow the real numbers rather than the headlines, two free sources do the work: the Comptroller’s Texas Transparency portal, which posts revenue and spending data, and the Legislative Budget Board, which publishes the appropriations detail and caseload forecasts. They will tell you, in the state’s own figures, whether the surplus is holding or thinning — long before a national headline does.
For now, the answer to the question in the headline is no. Texas is not facing the kind of budget shortfall forcing cuts in several other states. The honest caveat is that the state’s strong position leans heavily on energy revenue, and that is the thing worth watching in the next estimate.
This article was produced with AI assistance and reviewed by a human editor. Figures are linked to their primary sources; where a claim could not be verified from the public record, we say so.
