What percentage of Texas' state budget comes from federal funding in 2025?
Executive summary
Federal dollars make up a large and visible slice of Texas’ budget picture in mid‑decade: analysts and advocacy groups place federal funding at roughly one‑third of the state’s “all funds” budget for the 2024–25 cycle, with reporting that the federal share hovers near 30–32% and has been drifting downward as pandemic aid expires [1] [2] [3].
1. The headline number: about one‑third of “all funds” in 2024–25
Multiple policy shops and budget observers quantify federal receipts as roughly one‑third of Texas’ all‑funds budget for the 2024–25 period, with the Texas Public Policy Foundation explicitly reporting federal funds comprised 31.8% of the 2024‑25 budget [1] and budget summaries showing the 2024–25 biennial appropriations at about $321 billion in all funds [2].
2. Why “one‑third” is the right ballpark — and why the exact percentage varies
The percent depends on which ledger is used: “all funds” (which include federal grants, dedicated receipts, and state general revenue) produces the higher share for federal money; measures that combine state and local government revenues or isolate state general revenue produce lower figures (the federal share of state and local government revenues was 25.7% in FY2022, per USAFacts) [4]. Analysts note pandemic emergency aid temporarily inflated the federal slice in earlier years and that as those funds wind down, the federal share has edged lower — a point emphasized in reporting about the 2025 budget cycle [3] [5].
3. The policy drivers: Medicaid, education and pass‑through grants
A substantial portion of federal dollars flows through Medicaid and health programs, education formulas, and federal pass‑through grants for infrastructure and welfare — categories that compose the largest shares of federal transfers to Texas [3] [4]. Budget summaries and advocacy analyses point to Health and Human Services and education as major recipients within the all‑funds totals, with Medicaid drawing down matching federal support that shapes the overall federal percentage [6] [2].
4. Recent trend: from pandemic spike toward normalization
Federal support peaked during the pandemic years — one study noted federal dollars accounted for nearly half of state revenue in 2021 under emergency programs — but that level was ephemeral and subject to policy sunsets [3]. By contrast, the 2024–25 biennium is characterized by a lower, more sustainable federal share around the low‑30s for all funds, and multiple budget observers expect continued declines in federal reliance as emergency funding phases out [1] [7].
5. Conflicting measures and political framing
Observers and interest groups use these figures to argue different narratives: fiscal conservatives emphasize the long‑term growth of state spending even as federal support recedes [7], while public‑interest groups highlight the role federal matching dollars play in funding Medicaid and other safety‑net programs and the practical consequences when federal flows change [6] [8]. Different outlets also choose different baselines — all funds versus general revenue or state‑plus‑local revenues — producing legitimate but divergent percentages that are deployed in policy debates [1] [4].
6. Caveats and the best short answer for 2025
Given available reporting, the most supportable statement is: in the 2024–25 budget cycle federal funds accounted for roughly one‑third of Texas’ all‑funds budget (about 31–32%), and analysts contemporaneous to 2025 describe the federal share as trending slightly downward from pandemic highs [1] [2] [3]. Exact percentages vary by dataset and fiscal year definition; authoritative state sources such as the Legislative Budget Board provide the underlying line‑item data for anyone seeking a granular, official breakdown [9] [10].