The latest revenue forecast approved Tuesday by the Economic and Revenue Forecast Council indicates growth in state revenues as a result of tax policy changes made during the legislative session that are offset by reductions in economic activity.
The June forecast projects an increase of $3.8 billion or 5.4 percent in total biennial revenue for the 2025-27 biennium beginning July 1 and an increase of $3.5 billion or 4.7 percent for the 2027-29 biennium compared with the March forecast. The growth is driven by new and expanded taxes enacted this year to address the state’s budget deficit. Not accounting for those new tax policies, the total biennial revenue forecast decreased by $490 million or 0.7 percent in the 2025-27 biennium and $638 million or 0.83 percent in the 2027-29 biennium.
Tariffs, slower growth in existing tax collections and changes in federal employment and spending are among the reasons that economic conditions have worsened since the last revenue forecast.
Despite the economic headwinds, Governor Ferguson announced Tuesday in response to the forecast that he did not anticipate calling a special session at this time. He will begin developing his first budget in September to be released in December.