The state's finances are in better shape than previously believed, with a new projection showing $1.6 billion more than lawmakers expected for the 2012-2013 biennium, even after the state covers part of the its Medicaid shortfall and restores some cuts to state agencies and universities.

Comptroller Susan Combs, in her certified revenue estimate, told the governor and legislative leaders that sales and motor vehicle sales taxes rose strongly. Those increases, along with a rise in severance tax revenues, are driving higher state revenues.

"The recent national recession is over and the economy is once again expanding," Combs wrote in her letter to Gov. Rick Perry, Lt. Gov. David Dewhurst and Speaker Joe Straus. "However, our state and nation continue to face the effects of the economic dislocations that occurred."

She said Texas has recovered 94 percent of the jobs it lost, and cautioned that economic troubles elsewhere in the nation and the world could cause problems. "The overall picture is one of slower-than-normal recovery with above-average risks of a new recession," she wrote.

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Her projections are conservative. For instance, her projection is that the state's sales tax revenues will increase by 5.3 percent during the current fiscal year; during the first three months of the fiscal year, the increases have been in the double digits. Combs said in her cover letter that she'll revise the numbers if needed between now and the end of this two-year budget in August 2013.

Combs' 36-page report includes a footnote saying that four contingent appropriations — spending that was budgeted in case the money becomes available — will be funded in the 2013 fiscal year. One of those was a $250 million across-the-board cut in state agencies and colleges and universities; lawmakers said that cut wouldn't be needed if the money becomes available, which it apparently has. Another would restore $200 million in cuts to the state's Children and Medically Needy programs. The comptroller says she'll have the money to fund $238 million in Medicaid managed care cuts if insurance premium tax collections fall short. And a fourth item would trim $262 million from a Medicaid spending shortfall built into the 2012-13 state budget. 

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