Texas lawmakers are facing an issue that many other states would love to have...what to do with all the extra money.  When the 2015 Legislature convenes next January, it will start with a budget surplus projected at just over $2.5 billion as of now.  But that's only a projection.  "Quite frankly, the economy has performed better than expected, and I wouldn't be surprised if the surplus ends up being as much as twice that," says Dale Craymer, president of the Texas Taxpayers and Research Association.  "But obviously, any number better than zero is good news."

The Texas number is much better than zero, and there's good reason to believe it will get better.  "We're seeing a strong rebound in housing and commercial construction, oil and gas is going to continue to hit on all cylinders for the next several years," says Craymer.  "When you look at the underlying factors, it's very, very good for Texas."  Indeed, the regular budget surplus does not even include the state's Rainy Day Fund, which is projected to be at least $8 billion by this fall.  The Rainy Day Fund is fed mostly from oil and gas taxes.

That all leads back to the original question: what to do with the surplus?  Craymer predicts there could be some battles over that question.  "Our state has clear transportation needs, we're looking at a school finance lawsuit...in addition there's some interest in paying down debt, as well as some type of tax relief, be it property tax, sales tax, or franchise tax," he says.  Whether to spend more on roads or education, or to cut various taxes will be some of the vexing questions facing lawmakers come 2015.  "When you've got some money in the bank, then you have to say yes to some people, and you're going to pick some winners and losers, and that is politically challenging," says Craymer.