The 86th Texas Legislature convened and concluded with shared priorities including public school funding and property tax reform.

Here’s a little breakdown of the two big bills:

Senate Bill 2 – Property Taxes
The Governor signed Senate Bill 2 (by Sen. Bettencourt – Houston) on June 12. The new law lowers the current 8 percent revenue cap to 3.5 percent, triggering an automatic election if the tax rate is exceeded. Taxing units would not be required to hold an election if they are going beyond the 3.5 percent cap in response to a natural disaster. The new law also prohibits taxing entities from adopting a future budget or taking any action that decreases the compensation of first responders. The new law sets a uniform election date for property tax ratification elections and it also streamlines and ensures transparency in the tax appraisal, collection, and rate-setting process.

Governor Abbott noted that the bill “is a protection to make sure those reduced taxes don’t creep right back up over a few years, as has happened with past property tax reforms.”

House Bill 3 – Public School Funding
The monumental school finance reform legislation ended up with an $11.6 billion price tag. This is the first time the Texas Legislature has passed a school finance bill without a court order.

The bill carried most of the recommendations from the year-long, bi-partisan work of the Texas Commission on Public School Finance. The bill, which was signed by the Governor on June 12, includes a $6.1 billion investment in public education and $5.5 billion to lower school district taxes. As a result, the average homeowner ($250,000 home) will save about $200 per year in fiscal year 2020 and about $325 per year in fiscal year 2021.Here are a few highlights from the 300+ page bill:

  • Funds full-day Pre-K
  • Expands Career and Technical Education funding weights to 7th and 8th grades
  • Requires Free Application for Federal Student Aid (FAFSA) application completion in order to graduate from high school
  • Provides outcomes funding for every student that graduates college/career ready and access college, the military, or an industry certificate
  • Increases the basic allotment from $5,140 to $6,160
  • Provides $1.6 billion to increase educator pay (prioritizing educators with 6+ years of experience)
  • Regarding maintenance and operations (M&O) rates, the new law
    • Caps districts at 2.5 percent M&O revenue growth rate
    • Requires districts to conduct an efficiency audit before seeking voter approval to go above the 2.5 percent M&O tax rate
  • Regarding recapture (“Robin Hood”), the new law increases its share of the cost of public education therefore reducing the recapture amounts paid by school districts