Preparations for next session’s budget process are moving along as opening day for the 89th Legislature inches closer, providing yet another front for the long-running feud between two of the state’s top officials.
Texas Comptroller Glenn Hegar notified legislators last week that his office projects a $21.2 billion treasury surplus for the end of this fiscal biennium, pending some other appropriations on school finance and Medicaid. The biennium ends at the beginning of September next year. That’s a large pot of money legislators will have at their disposal, though not quite as big as the record $32.7 billion surplus last session.
Following this notification, the state’s top three leaders — Gov. Greg Abbott, Lt. Gov. Dan Patrick, and Speaker Dade Phelan (R-Beaumont) — jumpstarted the appropriations process outlining priorities to account for in budget requests, though not in a united front.
“Texans deserve to know that their tax dollars are used to fund efficient government that serves their needs,” Abbott and Patrick’s letter reads. “We are committed to a budget process that adheres to these principles.”
“As you prepare your Legislative Appropriations Requests (LAR) for the 2026-2027 biennium, please use this opportunity to detail how your agency requests meets [sic] the tax-payer needs for cost effective, good customer service.”
The priority items laid out by the pair include property tax relief; added appropriations for the Texas Energy Fund (TEF) for the purpose of constructing more natural gas power plants; more financing to mental health facilities; the creation of an Education Savings Account (ESA) program; and increased dollars for border security operations.
“Under these instructions, an agency’s baseline request for General Revenue Funds and General Revenue-Dedicated Funds may not exceed the sum of those amounts expended in Fiscal Year 2024 and budgeted in Fiscal Year 2025,” it adds.
Exceptions to that include maintaining the Foundation School Program, debt obligations, employee payroll and benefits, and Medicaid funding levels.
Phelan’s separate letter made all the same instructions, but differed on priority items. Instead, he wrote, “While I am confident the next budget will prioritize critical items such as additional property tax relief and border security, it will ultimately be up to all members of the Legislature to determine the spending priorities next session.”
Omitted from the list were ESAs and power plants.
The disagreement over school choice between the two chambers of the Texas Legislature is well documented — the scrap that led to a bloody GOP primary and the ouster of a dozen Republican House members.
But there was also disagreement over the TEF, with the Senate budgeting $10 billion for the program at first but which was halved in negotiations over the final budget.
Patrick took to social media to reignite his long-running feud with Phelan, saying, “For weeks this summer, Speaker Phelan sat on the letter Governor Abbott and I sent him for his signature. Rumor has it that the Speaker would not sign the letter because school choice was listed as a priority. Looks like the rumor was true.”
“With time ticking for agencies to begin their budget planning, Governor Abbott and I issued our letter. Moments later, Speaker Phelan issued his own letter with one major difference … He removed school choice as a priority.”
Patrick, who campaigned against Phelan in his primary and is the loudest voice calling for his ouster as speaker, said, “This is yet another confirmation that he will work against conservative legislative priorities this upcoming session.”
Phelan responded, saying, “This is a routine, technical letter to kick off the budget making process, it is not a bill or a law. Interim hearings are ongoing on all of these issues — including education — and more.”
“The members of the Texas House will drive the budget process and priorities in the session. That is exactly as it has always worked and will continue to work in the Texas House.”
The House Public Education Committee will meet next month to evaluate, again, the issue of school choice — a directive included in the speaker’s interim priorities.
ESAs did not have enough votes to pass in the Texas House last year — though that has likely changed following the Republican primary — and Phelan remained publicly neutral. His opponents criticized him for not pushing the envelope enough on the issue.
Exactly what form next year’s ESA legislation, or education omnibus alongside a per student funding increase and teacher pay raises, will take remains an open question.
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