Texas Comptroller Susan Combs says surplus will be $8.8 billion

AUSTIN (KXAN/AP) -- Texas will enter the 2014-15 budget cycle with nearly $8.8 billion left in the bank, state Comptroller Susan Combs said Monday.

The state's top financial officer said better-than-expected revenue collections in sales taxes, oil and natural gas production taxes and motor vehicle sales taxes are fueling the surplus.

Combs' biennial revenue estimate sets the limit on what lawmakers can spend for 2014 and 2015.

The release of the official  revenue estimate comes one day before lawmakers open the 2013 legislative session. The number did not surprise budget observers, who had expected Combs to announce a large surplus after two consecutive cycles of tightened spending policies,

Two years ago when lawmakers went to work, the state was still reeling from the recession and leaders adopted a cut-to-the-bone budget.

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At the time, unemployment in the state was the highest in a decade and the Legislature faced a $27 billion shortfall. But unemployment now is at a four-year low of 6.2 percent, sales tax receipts are skyrocketing and money is pouring into state coffers behind a new energy boom.

“Texas experienced a very strong rebound from a severe recession,” Combs said. “The state’s robust economic recovery led to better-than-expected revenue collections in major taxes such as the sales tax, oil and natural gas production taxes and motor vehicle sales taxes. The outlook for both the economy and state revenue is for continuing expansion as the fast-growth of the economic recovery gives way to moderate, sustained growth.”

Dick Lavine of the Center for Public Policy Priorities said the added revenue should not be considered "surplus" because the state has a plethora of unfunded needs.

"Our schools and roads and everything else aren't going to recover, unless the Legislature is willing to use the Rainy Day Fund or willing to generate more money," Lavine said.  "We're a fast growing state, and the things that the state pays for cost more every single year."

Lawmakers don't have to spend all the money Combs will say is available — and chances are they probably won't. Gov. Rick Perry and Lt. Gov. David Dewhurst want a budget cap that would limit any increase in state spending to a sum of population growth plus inflation, which would likely come in below the revenue forecast.

Combs also said that some $3.6 billion will be added to the state's rainy day fund in the upcoming budget cycle.

Meanwhile, as lawmakers set to work on the upcoming budget, the state still has bills to settle before writing the next budget. Among the obligations are a $4.7 billion Medicaid tab and about $600 million spent battling wildfires in 2011.