By law, Texas isn't allowed to spend more than the Comptroller estimates. They aren't allowed to run a statewide budget deficit.

In 2011, the Comptroller estimated revenue would be $27 billion lower than previously estimated (take a look at the national economy to figure out why). So what did the state do about it? They cut spending across the board. Heck, they didn't even have to tap into the "rainy day fund" that the state has set aside.

There was no budget deficit.