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Texas House and Senate agree to $321 billion 2024-2025 budget

The 10-member conference committee on the 2024-2025 state budget released its final settlement on the next-biennium appropriations bill, including an increase to border security funding, $17.3 billion toward property tax relief, and contingency funding on school choice and the construction of natural gas plants.

Overall, the final budget appropriates $321 billion in all funds and $144 billion in general revenue funds — substantially higher than the chambers’ initially passed versions: $302 billion by the House and $308 billion by the Senate. The budget is a $72.5 billion increase from the 2022-2023 biennium in all funds and a $27.6 billion increase in the general revenue fund.

Much of that increase is an allocation of the state’s record $32.7 billion projected treasury surplus that stemmed from higher-than-expected consumption tax collections.

The budget appropriates $5.1 billion for a variety of border security purposes — up half a billion from the earlier proposed $4.6 billion line item.

It includes $2.3 billion to the Texas Military Department (TMD), which is in charge of the state’s Operation Lone Star border security endeavor. The budget section includes $74 million for pay raises for active duty Texas military members in each year of the next biennium. Currently, active duty guardsmen make $179 in base daily pay and the appropriation would raise that by $8.33 in Fiscal Year 2024 and $16.67 in Fiscal Year 2025.

The state’s supplemental budget — additional appropriations made for the current biennium, 2022-2023 — appropriated an additional $300 million to the Office of the Governor for border security operations.

On property taxes, the budget appears to have moved forward generally with the House’s plan — $12.3 billion for new compression of school district Maintenance & Operations rates and $5.3 billion in continuing previous levels of compression.

The budget does not include any appropriations for homestead exemption increases. The House sent over a substitute of Senate Bill (SB) 3 with their compression levels, but added to it $4.3 billion to raise the standard homestead exemption to $100,000 — double the increase the Senate proposed. But the lower chamber paired all that with its preferred 5 percent appraisal cap extension for all property, which has thus far been a nonstarter for the Senate.

That House substitute for SB 3 has not moved in the upper chamber, but the budget release provides some illustration of what will ultimately be decided upon. The House’s appraisal cap extension carries no fiscal note so it is conceivable it also will be implemented, but that remains unclear right now.

Another large line item in the budget is contingency funding for SB 2627, the proposed loan and bonus program for the construction of new dispatchable power plants. It is the Senate’s second attempt at a natural gas plant subsidization program after SB 6 stalled out in the House.

In its budget, the Senate included a $10 billion rider for SB 6, but that was left out of the initial settlements by the conference committee as that proposal died. But in this final budget, the committee cut that total in half as contingent on SB 2627’s passage — $5 billion for the Public Utility Commission to disburse these loans and completion bonuses.

SB 2627’s final product is still pending.

A total of $5.3 billion is appropriated in public education system funding contingent on other pieces of legislation.

The budget includes $2.7 billion to the Texas Education Agency for the purpose of implementing an education savings account program should the Legislature pass some plan to that end. Sen. Brandon Creighton (R-Conroe) revived the issue this week when he tacked that school choice language onto the House’s school funding and teacher pay raise bill HB 100. The fate of that remains in limbo, but the line item is in the budget if the Senate is able to force it across the finish line.

It also includes a $5 billion allocation to the Teachers Retirement System for the purpose of providing a $5,000 supplemental payment to most retired teachers and implementing a cost-of-living increase of 4 percent for pre-2014 pensioners and 2 percent for pre-2021 pensioners.

In total, there is $32.9 billion in funding contingent on passing the legislation.

Included in the budget is a prohibition against the Office of the Attorney General using appropriated public funds to pay for the pending $3.3 million settlement against Ken Paxton in an ongoing “whistleblower” lawsuit on abuse of office allegations.

On Thursday, the House General Investigating Committee recommended Paxton be impeached and the House will likely take up the vote on the floor in the next couple of days.

The final budget includes the prohibition against diversity, equity, and inclusion offices at institutions of higher education; earlier this week the Legislature passed SB 17, which began as a straight ban of those offices in the Senate but was tempered somewhat in the House.

Decisions still remain, but with the budget essentially set, Legislators have a clearer picture of what is feasible and what isn’t within the strictures of the biennial appropriations bill.


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