Texas leaders set 3% lower baseline for 2028-29 agency budget requests

Texas’ top elected leaders have set a 3% lower starting point for state agencies, appellate courts and public higher-education institutions preparing budget requests for the 2028-29 biennium.

The directive, issued July 14 by Gov. Greg Abbott, Lt. Gov. Dan Patrick and House Speaker Dustin Burrows, is not an automatic 3% cut to every agency’s enacted budget. It limits the base level agencies are expected to use for their Legislative Appropriations Requests, or LARs.

Actual funding decisions will come later, after agencies submit requests and lawmakers debate and approve a budget during the 90th Legislature.

Programs protected from the baseline limit

The policy letter exempts several major categories from the 3% baseline limitation. Those include the Foundation School Program and funding needed to maintain full funding for public education.

The exemptions also include debt service; specified pension and employee-group-benefit costs; Medicaid and the Children’s Health Insurance Program; foster care; adoption subsidies; permanency-care assistance; and the Texas Education Savings Account program, including funding tied to projected participation.

Those exemptions do not guarantee that the programs will face no future budget changes. They mean the specified funding needs are not subject to the initial 3% baseline reduction in the same way as other requests.

Agencies can request more, but must show tradeoffs

Agencies seeking funding above their assigned baseline may submit “exceptional item” requests. The guidance says those requests should identify lower-priority programs or other savings that could help offset the additional costs.

That process will require agencies, universities and judicial-branch entities to explain which needs fit within a smaller base request and which require separate legislative approval. The Texas Tribune reported that the Department of State Health Services expected to include the reduction in a mid-August request, but agencies may have different submission schedules.

The Legislative Budget Board’s instructions include separate materials for state agencies, higher-education institutions, appellate courts and community colleges, along with a staggered schedule for submissions.

Why the directive matters

State leaders linked the guidance to fiscal restraint, affordability and additional property-tax relief. The current 2026-27 budget ultimately totals about $337.9 billion after gubernatorial line-item vetoes. More than $157.2 billion is in general revenue, and $51 billion is directed toward property-tax relief.

That budget is the baseline for the current biennium, not a forecast of what lawmakers will approve for 2028-29. The new guidance begins the next round of negotiations and gives leaders a way to press agencies for savings while reserving room for selected priorities.

For residents, the July 14 letter does not immediately reduce most statewide services. The practical effects will become clearer as agencies file their requests, exceptional items are reviewed and lawmakers decide which proposals to fund. Higher education, the courts and agencies outside the listed exemptions are among the areas where budget pressure could become more visible.

Sources

• Texas budget policy letter, July 14, 2026
• Legislative Budget Board 2028-29 submission instructions
• Texas Legislature 2026-27 budget summary
• The Texas Tribune budget report