In his state of the state address, the governor said Texas is "a low-tax state" but taxes could be even lower.
"In a legislative session where we can see billions still on the table after we've funded our services and met the needs of our ever-expanding population, I think providing tax relief of at least $1.8 billion over this biennium is a good place to start," he said.
"We also need to do away with the practice of using dedicated funds and specific fees for anything other than the purpose for which they were intended. If we don't need taxpayer money for that purpose, let's not collect it at all.
"Today, I'm calling for a mechanism to be put in place so when we do bring in more than we need, we'll have the option of returning tax money directly to the people who paid it," the governor said. "Currently, that's not something our constitution allows.
"Our bank balance is healthy, our economy is growing, our future is limitless."
While calling for lower taxes, he also urged spending more on water and transportation infrastructure.
"Doing that without breaking the budget will require creativity and some 'outside-the-box' thinking, Perry said, suggesting the state spend $3.7 billion from its "rainy day fund."
He said Texas is "the nation's prime destination for employers and job-seekers alike," and has created "all kinds of jobs -- low paying, medium paying and high paying."