House panel advances new Texas budget with property tax cuts, teacher pay raises

The proposal recommends spending billions on programs including property tax cuts, teacher pay raises, mental health services and border security. It leaves out pay raises for retired state employees, rent relief and childcare programs.

click to enlarge The state has a historic $32.7 billion surplus and record amounts of cash in reserves. - Flickr / Ed Schipul
Flickr / Ed Schipul
The state has a historic $32.7 billion surplus and record amounts of cash in reserves.
A key Texas House panel on Thursday gave final approval to a two-year $302.6 billion spending plan that includes property tax cuts, border security initiativesand the first pay raises for state employees and teachers in more than a decade.

The House Appropriations Committee’s signoff with a 23-3 party-line vote on the 2024-25 plan, which spends $136.9 billion in general revenue, sends it to the full House. The committee’s budget plan also recommends an additional $5 billion for public schools, more funding for higher education, $3 billion to boost mental health services and another $3.5 billion for cost-of-living adjustments for retired teachers — their first in nearly 20 years.

“You should be very proud of the work that you guys have done, committee chair Greg Bonnen, R-Friendswood, told committee members. “You’ve worked extremely hard for many hours and made some very difficult decisions, and I’m very proud of what you have delivered.”

But at a time when the state has a historic $32.7 billion surplus and record amounts of cash in reserves, the two-year budget before the House Appropriations Committee comes in well under the amount they have available to spend — and yet leaves out tens of billions in requests ranging from affordable child care and rent relief programs to pay hikes for state retirees.

It also tables some $350 million in requests from Gov. Greg Abbott to replenish his disaster and economic-development accounts, which can be used to fund migrant busing programs, disaster recovery and grants. The funds are viewed by his critics as slush funds with little lawmaker oversight of how they are spent. The budget also rebuffs, at least for now, a request by the Texas Facilities Commission to upgrade its border operations, including bridges, fences, cameras and ground sensors.

San Antonio Democrat state Rep.
Trey Martinez Fischer said more money should have been put into education and that changing the amount of funding for schools would be more difficult after the budget bill hits the House floor. Amendments are allowed during the floor debate, but rules generally require that money put into the budget during the floor debate must be equal to the same amount coming out of another section of the budget.

“I’m not convinced that these numbers do anything to confront the inflationary costs in our schools. I want to see something [more] that’s just not set in concrete, and if there are opportunities to make different investments, that we have that," said Martinez Fischer, a member of the committee who voted against the bill. “When I take this vote, I want to be able to tell my constituents that I’m still working for money for pub ed.”

The committee’s budget proposal, which is more than 1,000 pages, is expected to hit the House floor for debate right before Easter weekend. The new version is the culmination of 95 hours of testimony by more than 700 witnesses from across the state in 25 separate public hearings over the past six weeks.

After it leaves the House floor in about two weeks, with more anticipated changes, the proposal will go to the Senate Finance Committee, which has been working similarly to craft its own version of how Texas should spend its money in the next two years.

Once the Senate passes its plan, the two chambers will attempt to hammer out the differences in a series of nonpublic meetings over the next month before presenting a compromise bill to both chambers for a final vote in late May.

It would then go to Abbott, who has line-item veto power in the budget, and then to the state comptroller to certify that the budget is balanced, as required by the Texas Constitution.

Budget writers, led in both chambers by Republicans, have said they are determined not to break spending caps that severely limit their ability to spend all of the estimated $188.2 billion in general revenue expected to be available to them in the next budget. Bonnen said Thursday that his panel’s proposal stays under those limits.

Several budget strategies, including putting the spending before voters in a constitutional amendment election, can help lawmakers avoid those limits with some programs, including property taxes.

The House committee also approved an $11.5 billion supplemental budget bill that spends $5 billion of the state’s surplus during the current biennium on items including school safety measures as well as mitigating electricity rate hikes caused by the 2021 winter storm. That measure passed the full Senate last week.

State leaders learned in January that lawmakers would be convening their 140-day session with a treasury balance higher than the budgets of nearly half the states in the U.S. — even as the nation faces a potential recession. The Legislature convened for its 2023 session on Jan. 10. Passing a balanced budget is its only constitutional obligation during the session.

The new version of the bill adds nearly $7 billion in general revenue spending to earlier proposals. As initially filed, the House and Senate versions propose $130.1 billion in general revenue spending and nearly $289 billion in state and federal funds for the cycle that starts in September.

Strong pushes to add more money are continuing, including pressure to give retired state employees a financial boost, as the state appears to be doing for retired teachers, more money for schools, and additional targeted raises to employees in agencies that are particularly overwhelmed.

“Turnover is higher in state government than ever, so the two 5% pay raises [for state employees over the next two years] will finally help agencies recruit and retain good employees,” said Ann Bishop, executive director of the Texas Public Employees Association, which advocates for state workers, among other groups. “We hope the budget can also include targeted raises for agencies that have identified critical needs and a pension boost for retired employees — who haven’t had one since 2001.”

The marquee item in the House budget bill is a $17 billion buy-down of school property taxes. On Wednesday, the Senate passed a $16.5 billion property tax relief package with proposals targeting the taxes homeowners pay and requiring school districts to lower their tax rates.

Just like in the Senate, budget writers in the House want to use at least $5.3 billion from the state’s surplus to lower property taxes.

The House’s chief tax cut proposal contains an additional $12 billion in school property tax cuts. The most controversial element would tighten a cap on how much the value of a homeowner’s main residence taxed by school districts can rise each year — a proposal that has drawn opposition from Lt. Gov. Dan Patrick and state Sen. Paul Bettencourt, the Republicans driving thes Senate plan, as well as tax-cut advocates and business lobbying groups.

It also includes additional funding for higher education. The bill would provide additional funding to cover tuition for veterans’ children, known as the Hazlewood Legacy Program, provide additional funding for regional public universities and employee insurance if public universities agree to keep tuition flat for the next two years. It also provides $650 million in additional funding for a proposed overhaul to how the state funds its community colleges, and $3.5 billion for a new endowment to boost research universities, including Texas Tech University and the University of Houston.

The legislation also includes a series of directions, known as riders, to lawmaker and agencies on how the funds in various parts of the budget may be used. One rider that passed on Thursday banned the use of state funds for offices that promote diversity, equity and inclusion in their hiring practices or on campuses.

Last month, Abbott’s office sent a letter to public universities and state agencies saying that DEI hiring practices violated federal and state employment laws and barring them from hiring on factors “other than merit.” Legal experts have said the governor’s office mischaracterized the legal practices employers use when considering diversity in their hiring.

Children at risk

House budget writers approved new funding for a $33.6 million behavioral health campus in Uvalde, the site of the Robb Elementary School mass shooting last year. That facility would include an outpatient clinic, a 16-bed crisis respite or residential facility for adults and another for children.

The panel also approved $23.9 million for the local mental health authority to operate the Uvalde facility and another $30.5 million to expand access to therapy services for at-risk youth and families in the area.

While the budget includes $100 million for rate increases for foster care providers. Budget writers tabled a request for $45 million to care for those staying in group homes or sleeping in state offices.

And even as some 44% of child care programs in Texas say they may close after federal COVID-19 relief payments dry up later this year, lawmakers declined to commit to a proposal for more than $2 billion in the Texas Workforce Commission’s budget for child care funding.

“The Legislature needs to provide funding to keep high-quality child care open for working parents,” said David Feigen, director of Early Learning at Texans Care for Children. “The child care crisis in Texas is getting even worse, as more and more child care providers are saying loud and clear that they are getting close to shutting down. The only question is whether the Legislature is listening.”

Staff writer Kate McGee contributed to this report.

Disclosure: Texans Care for Children, Texas Tech University and University of Houston have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.

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