How could Texas spend its record $32.7 billion surplus?

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$32.7 billion.

Thanks to taxpayers, that’s a whopping Texas budget surplus by the end of 2023.

Texas legislators are required by the state constitution to enact a balanced budget. They can spend any amount of the surplus before the end of the 2022-23 biennium on 31 August, or add all or part of it to the 2024-25 budget. Or they can’t do anything about it at all. How exactly they decide to use this huge windfall is now a central issue before the Texas Legislature.

Need help to deal with such a large number? Let’s break this down in simple terms.

How big is the $32.7 billion budget surplus?

The number will not be finalized until all receipts are received later this year, and lawmakers determine how much of it they want to spend in the current budget cycle by the end of August.

The cash surplus has grown over the past 18 months due to a historic increase in government tax collections.

When the COVID-19 pandemic restrictions ended, the Texas tax treasury saw explosive economic growth that boosted the state’s revenues as consumers increased their spending. Spikes in energy prices and the highest level of headline price inflation in 40 years also resulted in government tax collection exceeding expectations when lawmakers approved the latest budget.

Because the Texas Legislature meets every two years, its budget covers the state’s expenses for two years rather than one.

So when the 2022-2023 budget was passed two years ago, the state’s projected revenue for that two-year period was about $119 billion. The total estimated total revenue-related funds for the 2022-23 biennium is currently $149 billion.

Think of it this way: if Texas were a $40,000-a-year household, it would make $80,000 in two years.

Now imagine that during this time, the household unexpectedly receives money, perhaps a generous bonus. So in the same two years, the household instead earned about $97,500—about 22% more than expected. That’s an average of $731 extra money each month they can spend over the next two years. These funds could be used to set up a savings account, increase rent or mortgage payments, buy a car, or pay for childcare.

Texas’s surplus is larger than the entire budget of many other states.

Texas’ $32.7 billion surplus is roughly the size of South Carolina’s budget. This is more than the budgets of 24 states.

Texas’ total budget is the third largest after California and New York, followed by Illinois, Pennsylvania and Florida, according to a 2022 survey by the National Association of Public Accountants.

That’s more than the economy of some Texas metropolitan areas.

According to the US Bureau of Economic Analysis, budget surpluses exceed 2021 gross domestic product, or total output of goods and services, in 18 metropolitan areas, including McAllen, Corpus Christi and Beaumont-Port Arthur. Only six metropolitan areas—Dallas-Fort Worth, Houston, Austin, San Antonio, Midland, and El Paso—had higher GDP.

Most people don’t understand the $32.7 billion figure. So let’s scale this down to financial situations that touch the lives of Texans.

If the $32.7 billion surplus was divided equally, each Texan would receive $1,088.

According to the US Census, there are about 30 million people living in Texas. If the surplus were distributed equally among each Texas, each would receive about $1,088.

How many avocados could each Texan buy with $1,088?

Texans love guacamole, so let’s break it down using avocados. According to the Hass Avocado Board, the average price of an avocado in Houston in 2022 was $0.79. If we take this price, the budget surplus could buy 41 billion avocados, which means 1,378 avocados for every Texan. That’s over three avocados a day for a year.

If the $32.7 billion surplus was distributed equally among all families in Texas, each family would receive $3,192.

According to the US Census, there are approximately 10.2 million households in Texas. If the surplus were distributed equally among all Texas households, each would receive about $3,192.

How many months of products will it pay for?

Inflation drives up food prices, causing Texans to pay high food bills. What happens if the budget surplus goes to food? The Bureau of Economic Analysis estimates that an individual Texan spends $3,471 per year on groceries, totaling $9,719 per year for an average household size of 2.8 people. If every Texas household received $3,192 in budget surplus, that would cover their grocery bills for just under 4 months.

How long can a budget surplus cover rent?

The population in Texas has skyrocketed over the past few years, as has rent in Texas. The Legislature is considering lowering the property tax for homeowners, but what happens if the budget surplus goes to renters instead? The median monthly rent in Texas is $1,146, and about 3.8 million households pay rent in Texas. If the budget surplus were distributed equally among all tenant households in Texas, they would each receive $8,490. This will cover their rent for seven and a half months.

How many electricity bills will each family cover?

In October 2022, the average residential electricity rate in Texas was 14.77 cents per kilowatt-hour, according to the U.S. Energy Information Administration. The same agency found that in 2021, the average electricity consumption in Texas was 1,262 kilowatt-hours per month, making the average Texas household’s monthly electricity bill about $186.

If every household in Texas received $3,192 in budget surplus, that would mean they could pay their electricity bills in about 17.1 months—more than a year and five months.

If the surplus goes to gas, how far can every Texas driver go?

The average gas price in Texas was $2.96 a gallon during the week of March 6, according to the US Energy Information Administration. This means that the budget surplus could buy about 11 billion gallons of gasoline.

In addition, data from the US Environmental Protection Agency shows that the average fuel economy per gallon for all vehicles in 2022 is about 26.4 miles. 11 billion gallons of gasoline would be enough to drive a car 292 billion miles. As of August 2021, there are approximately 25.1 million vehicles registered in Texas, which, if split evenly, would mean each vehicle would have enough gas to drive 11,634 miles.

This means that car owners in Texas can drive…

How many school lunches could you buy?

According to the School Meals Association, the average price of a school lunch as of November 2022 was $3 for high school and middle school students and $2.75 for elementary students.

State education data shows 1.6 million high school students, 1.2 million middle school students, and 2.4 million elementary school students enrolled in the 2021-22 school year. One day of school lunches for every Texas student would cost about $14.9 million. A budget surplus of $32.7 billion will cover school lunches for 2,190 school days.

Texas schools have 180 school days a year, which means the surplus is large enough to pay for every Texas student’s lunch for 12 years and 30 school days—almost from kindergarten through high school graduation.

How about a pay raise for Texas teachers?

State education data shows that there were 370,431 teachers in Texas in the 2021-22 school year. Their annual minimum wage ranged from $33,660 for a novice teacher to $54,540 for a teacher with 20 or more years of experience in the 2022-23 school year.

For a teacher just starting her career, a $32.7 billion budget surplus would give at least a 9.3 percent pay rise over a 20-year career. This would mean a new teacher’s starting salary would start at $37,588 and go up to $59,612 at age 21—a total of $87,435 more money over 20 years.

In fact, what will this money be spent on?

For the record, there is no discussion among legislators of spending surpluses on most of the things on the list above, with the exception of raising teachers’ salaries. Other ideas that are gaining traction include $15 billion in real estate tax cuts, as well as major investments in water and broadband infrastructure, rural health care, a redesign of the public school funding formula, higher salaries for government employees, improvements to the power grid, investments in mental health services and other major projects. Lawmakers will spend the next few months debating how to spend the state’s revenue before voting on the final budget, which will be sent to the governor towards the end of May.

Disclosure: The Texas Comptroller of Public Accounts provides financial support to The Texas Tribune, a non-profit, non-partisan news organization funded in part by donations from members, foundations, and corporate sponsors. Financial sponsors play no role in Tribune journalism. Find their full list here.

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