Senate Files Budget That Would Lower Property Taxes, Fund School Choice

SENATE FILES BUDGET THAT WOULD LOWER PROPERTY TAXES, FUND SCHOOL CHOICE

(AUSTIN) - The Senate version of the state budget for the upcoming biennium includes $32 billion for property tax cuts. The bill, filed Wednesday by Houston Senator and Finance Committee Chair Joan Huffman, would spend $151.6 billion in non-dedicated general revenue, significantly less than the $194 billion in estimated revenue for the 2026-2027 biennium. "The Senate's base budget ensures that the State of Texas continues to have the strongest and most successful economy in the nation," said Huffman in a statement. "We have an obligation to the people of Texas to make investments that will keep Texas as the best place to live, work, and raise a family." Including federal funds and dedicated state revenue, the filed budget would spend $332.9 billion next biennium, nearly identical to the amount finally allocated by the legislature in the 2023 budget.

The $32 billion earmarked for property tax cuts would bring the total amount of tax savings passed by the legislature to $51 billion since 2019, according to Huffman. In addition to paying for on-going cuts passed in previous sessions, the money would go to further raise the homestead exemption, that amount of the value of a house a homeowner can write off their property tax bill, to $140,000, and up to $150,000 for individuals 65 or older. Last session, lawmakers approved an increase in the homestead exemption from $40,000 to $100,000, which was estimated to save the average Texas homeowner almost $700 on their annual property tax bill. The budget filed Wednesday would also continue to compress property tax rates.

Lt. Governor Dan Patrick declared in November that school choice legislation would be his top priority this session. The Senate passed bills creating education savings accounts five times during the 88th Session: once in the regular session and in all four called sessions. The legislation never won House approval. The final version of the school choice program passed by the Senate in December 2023 would've let parents receive up to $8,000 to use towards private school tuition, funded with $500 million in state revenue. The current budget proposal would double that funding, but Senate authors haven't yet released a plan on how that will be allocated. The budget proposal also includes $4.85 billion for teacher pay raises, including a $4,000 across-the-board raise for all teachers, additional increases for rural teachers up to $10,000, and increases to the teacher merit bonus pay program.

The filed budget would also increase public safety funding, from the border to school campuses. It would allocate $6.5 billion to support Operation Lone Star, the state's border security program. It includes $400 million to hire 560 new DPS troopers, and continues to fund the state's rural criminal justice grant program with an additional $331 million. The bill would double security funding available for public schools, at a cost of $400 million.

The plan makes significant health care outlays, including $3 billion to create a new brain health program, the Dementia Prevention and Research Institute of Texas, modeled on 2007's successful Cancer Prevention and Research Institute of Texas. "DPRIT will be laser-focused on dementia, just as CPRIT is laser-focused on cancer," Lt. Governor Patrick wrote in a statement announcing the program back in November. "Like CPRIT, this investment will draw leading researchers and companies to Texas and require them to be based in Texas, leading to their further investment in our state." Other healthcare priorities funded in the base budget include $1.8 billion for community care attendant pay raises and nearly $500 million in women's health programs.

The Senate Finance Committee will open hearings next week, considering funding appeals from all state agencies. Members will then work on a final proposal to present to the full Senate. Once both chambers have approved their respective budget plans, they will have to work out the differences in the proposals before presenting a final, unified budget for approval by both bodies.

The Senate will reconvene Friday, January 24, at 10 a.m.

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