The Texas Legislature writes a budget for the State of Texas in 2 year cycles. That means that when we are in Session, we must write a budget that lasts for 2 years, until the Legislature meets again. Using the best economic information and based on the laws we pass, the budget should reflect our values and be financially responsible. Texas is one of the states that must have a balanced budget, we do not carry debt from year to year.
In looking ahead to January of 2017, when the Legislature meets next, we are beginning to see what some of the opportunities and challenges are for the next budget cycle. Some bright news is that the state will have more than $10 billion in the Rainy Day Fund, our "savings" account. These robust savings are helpful to maintaining our good credit score. The other good news is that Texas has a good track record of creating jobs and building the economy. Yet, some challenges lie ahead.
For one, the drop in oil prices means that some people have lost their jobs and are not spending as much, decreasing our tax revenue. Secondly, there are 2 huge lawsuits that could cost the state billions: a pending ruling on the school finance formula and a property tax case. However, the Legislature left $4 billion in unobligated funds last time to hedge these potential losses. As 2017 gets closer, budget writers will have a clearer picture of our needs.