THIRTEEN BILLION DOLLAR SUPPLEMENTAL BUDGET PASSES SENATE

(AUSTIN) — The Senate on Tuesday approved spending $13.2 billion of the state’s $23.8 billion budget surplus to align what was projected to be spent in 2023 with what was actually spent. Because the legislature budgets prospectively, using estimates and projections to craft a plan to pay for state services for the following two years, the supplemental budget bill that balances appropriations and expenses must be passed every session. As with the 2026-2027 primary budget bill, HB 500 sponsor and Houston Senator Joan Huffman said the supplemental budget follows a conservative approach and spends funds judiciously. “The comptroller’s projected surplus for this biennium allows us to make targeted, one-time investments to address critical state needs, with the majority of this bill’s funding items being non-recurring to maintain fiscal discipline moving forward,” she said.

The largest single outlay is $2.5 billion to the proposed Texas water fund created by SB 7, which is set for a final vote in the House Wednesday. Tuesday the Senate approved HJR 7, sponsored by Lubbock Senator Charles Perry, to ask voters to approve a constitutional amendment to direct $1 billion in state revenue into that fund every year for the next 20 years. “This is about a $153 billion dollar problem, we need $3 billion a year for the next 50 years: this plan is a good start to making that goal,” he said. In theory, said Perry, local governments will kick in a billion a year and the rest will be recouped through water recovery fees.

Other key infrastructure spending in HB 500 includes $411 million to expand Texas prison capacity to meet expected population increases as well as $104 million to build two new juvenile justice facilities in Brazoria and Ellis counties. It would spend $250 million to fund a new rail grade crossing and separation program and $100 million to plug abandoned oil and gas wells.

The bill would also put hundreds of millions towards disaster relief and preparation. It would send $64 million to the Office of the Governor to cover the response to Hurricane Beryl and the historic Panhandle wildfires last year. Wildfire response received a number of line items in the bill, like $257 million to purchase new wildfire suppression aircraft, $192 million to pay off the backlog in requests through the Volunteer Fire Department Assistance Program, and $44 million in new funding for VFDs. It would also appropriate $135 million to build three new operations centers for the Texas Department of Emergency Management.

To spur more economic growth in Texas, the bill would fund certain development grant programs, like $300 million to the Space Exploration and Aeronautics Research Fund, $250 million to incentivize high-tech industries like semiconductor production, and $350 million to fund reimbursement grants for new nuclear power projects in Texas, contingent on passage of legislation creating that fund.

Some of the bill is dedicated to paying off increased costs for healthcare, state pensions, and other entitlements. The Teacher Retirement System receives almost $370 million to cover health insurance premiums for retired educators and the state health department would get $750 million to cover Medicaid expenses. It would put a billion dollars into the state employee pension fund to cover unfunded liabilities.

Any changes made by the Senate in their version of the supplemental budget must be negotiated with the House before session ends on Monday. The final version of the full state budget, SB 1, is expected to be presented before the Senate for an up-or-down vote by Thursday.

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