Texas House and Senate release state budget proposals


The one constitutional requirement of the Texas Legislature every two years is to pass a budget for the next biennium, and the first draft of the 2024-25 budget shows a 16 percent spending increase.

House Bill (HB) 1 by state Rep. Greg Bonnen (R-Friendswood) proposes $288.7 billion in all funds spending — a $23.9 billion increase from the current biennium. In general fund spending, the proposal features a near-$11 billion increase from 2022-23, below the $12.5 billion spending cap established by the Legislative Budget Board back in November.

At that point, there was $5.1 billion in funds left unspent in the current biennium. If that was spent this time around, it would increase the next cycle’s cap to $13.1 billion.

The draft budget estimates nearly $94 billion in federal funds and prefaces a forthcoming supplemental appropriations bill to distribute $6 billion in various expenditures for hospital construction, a salary increase and bonuses for employees of a state pension system, school safety facilitation dollars, and more.

The Senate’s version was also filed Wednesday by Sen. Joan Huffman (R-Houston).

A subsequent release by Lt. Governor Dan Patrick details provisions of the upper chamber’s version, such as:

$15 billion for property tax relief

$4.6 billion for border security operations, including a pay raise

$3 billion to build and expand hospitals

$2.5 billion for a higher education fund that benefits universities that aren’t the University of Texas or Texas A&M University

$900 million to pay off unfunded law enforcement pension liability

$650 million for a performance-based boost to community colleges

$600 million for school safety enhancements

$500 million for Gulf Coast Protection District projects

$400 million to complete the Alamo Restoration Project

$350 million for a rural law enforcement fund and pay bump for sheriffs

Patrick’s list also includes “fully fund[ing]” the “Robinhood” school recapture program, along with a teacher pay raise and a 13th check or cost-of-living adjustment for retired teachers.

“As of today, our state’s economy has become the envy of the world,” Huffman said in a statement. “It is important to note that Senate Bill 1 is the starting point, but I am confident that the final product will make historic advances for the people of Texas, while also keeping an eye on the future, for generations to come.”

The Legislature has an estimated $32.7 billion treasury surplus to spend along with $27.1 billion expected in the Economic Stabilization Fund, also called the “state savings account.” The proposal leaves roughly $50 billion of those pots untouched.

State officials have said they will not spend all of the surplus dollars, but a large chunk of it is likely to be spent on infrastructure, property tax cuts, and more.

In his release, Patrick said, “We must prioritize spending that will keep Texas the nation’s economic powerhouse. It is also imperative that we save a sizable portion of the money for the future. Our conservative policy is to never spend all the money because you never know what challenges or opportunities lie ahead.”

It appears likely that the Legislature will evaluate the establishment of a property tax fund outside general revenue spending so that a large tranche of the surplus can be used to compress local tax rates without busting the spending cap. The Legislature already has $3 billion of leftover federal COVID-19 aid earmarked for compression this year.

Gov. Greg Abbott has called for using “at least half” of the surplus to provide the “largest tax cut in Texas history” this cycle, though the proclamation was made when the surplus estimate was just $27 billion. The $15 billion is not quite half of the new total, and accounting for inflation, the largest cut in history to date occurred in the mid-aughts with $14 billion. This proposal would eclipse that in strict dollar terms, but adjusted for inflation, it would take about $20 billion to break the record.

The property tax item of the Senate’s version includes $3 billion for increasing the standard homestead exemption to $70,000, something identified specifically in Patrick’s inauguration speech Tuesday.

Because the Senate led on the budget last cycle, it’s the House’s turn, and the upper chamber will lead on the supplemental appropriations bill. Next for the budget and supplemental appropriations is to move through committees in their respective chambers, which have not yet been named.

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