Legislative Services

On Wednesday, the Legislative Budget Board (LBB), which includes new Speaker Dustin Burrows, set two spending limits. These limits control how much of the $194.6 billion in Comptroller Glenn Hegar's 2026-27 Biennial Revenue Estimate the 89th Legislature can spend.

(See the approval letter here.)

The limits are based on the LBB's projected 8.93% growth rate for the Texas economy over the next two years. Here's what the limits allow:

1. The constitutional tax spending limit authorizes the Legislature to allocate an additional $9.8 billion out of non-dedicated tax revenue beyond what was appropriated in the 2024-25 budget.
2. The consolidated general revenue limit, established by statute, authorizes the Legislature to spend $12 billion more than the 2024-25 budget. This money would come from general revenue and general revenue-dedicated funds.

The supplemental appropriations bill for the current two-year budget, which the Legislature typically enacts alongside the budget for the upcoming biennium, will increase both spending caps. For every dollar appropriated in the supplemental bill, the spending caps will increase by $0.0893 cents.

At present, neither of these caps allow the Legislature to completely spend the nearly $24 billion surplus Hegar projects to roll over from the 2024-25 biennium. To get around this issue, lawmakers can move revenue into dedicated funds or reserves where the spending caps do not apply.

A Third Spending Limit

Although not mentioned in the letter, there is a third spending limit, known as the pay-as-you-go limit. This limit is tied directly to the $194.6 billion figure in the Comptroller's revenue estimate. Of the three limits, this one provides the most headroom for appropriations increases — almost $60 billion more in spending capacity compared to the 2024-25 appropriations from general revenue and general revenue-dedicated funds. The appropriations out of funding sources counted toward the consolidated general revenue limit align most closely with the funding sources included in the Comptroller's $194.6 billion estimate.

An official estimate of the Legislature's spending capacity under each of these limits will arrive when the Legislative Budget Board releases the 2026-27 baseline appropriations bills written by the House and the Senate later this month.

For more on the three spending limits, see this presentation. For more about this article and the 2026-27 budget process, please contact Zelma Smith.