Agencies May Limit Exceptional Funding Requests in Upcoming Budget

Texas agencies will likely file their next Legislative Appropriations Requests (LARs) in August, giving lawmakers and vendors an early look at funding priorities ahead of a 2027 legislative session expected to have less discretionary funding than the last two.

LARs are formal budget submissions to the Legislative Budget Board and the Governor’s Office of Budget, Planning and Policy. They help shape the next two-year state budget by outlining agency baseline needs, requested changes and exceptional items for funding outside an agency’s base request.

The next regular session, the 90th Legislature, begins in January 2027. The official due date for those LARs has not yet been posted in public Legislative Budget Board materials, but the prior budget cycle and agency notices point to August 2026 as the expected filing window.

The upcoming cycle is expected to differ from the last two sessions, when lawmakers began with large cash carry-forward balances. In a June panel discussion at the Texas Digital Government Summit, Lisa Craven, the state's deputy comptroller, said the next session is expected to have less discretionary funding available, even as Texas continues to see economic growth at a more moderated pace.

That tighter funding picture gives added importance to the question of whether agencies will be allowed, or encouraged, to include exceptional items in their next budget submissions.

Industry Insider — Texas has heard from a knowledgeable source that agencies may be discouraged from including exceptional items in the next round of LARs, but that could not be confirmed through public Legislative Budget Board or Governor’s Office materials.

Any formal limit on exceptional items would likely appear in the 2028-29 policy letter, detailed LAR instructions or related agency-facing guidance once posted. Such a change would matter for vendors because exceptional items are often where agencies identify requests outside their baseline budgets, including new or expanded technology initiatives that require legislative approval.

For technology vendors, the filings can provide an early signal of projects agencies may try to advance through the budget process, including cybersecurity, modernization, cloud services, data projects or other IT needs. The requests do not guarantee funding, but they show how agencies frame their priorities before legislative budget hearings and negotiations begin.

If agencies are limited to base requests, some new technology initiatives may have fewer obvious paths into the formal budget process unless they are already tied to existing operations, statewide priorities or separate legislative action.

Once LARs are filed, the budget process moves into hearings before recommendations are prepared for lawmakers. During the prior cycle, the Legislative Budget Board and the Governor’s Office of Budget, Planning and Policy held hearings on each agency’s strategic plan and LAR from September through December 2024.

Until the new instructions are released, agencies and vendors should monitor the Legislative Budget Board’s budget submissions page for the 2028-29 LAR packet and the board’s budget documents for completed agency filings.