Texas’ state government has a $24 billion surplus and a $28.5 billion Rainy Day Fund. Instead of using this overcollected taxpayer money to substantially cut taxes, government spending, and regulations, the 89th Texas Legislature is often advancing legislation in this session that grows government rather than shrinks it.
Gov. Greg Abbott should help steer things toward pro-growth, pro-liberty legislation to improve the state’s economy and fiscal situations along with his legacy.
This should include pushing for sustainable budgeting, prioritizing substantial tax relief, creating universal school choice, and reducing regulations. Unfortunately, the current legislative trajectory is not bold enough, and other states are moving faster toward pro-growth reforms.
With too much spending, too little tax relief, and too much regulation, Gov. Abbott can—and should—steer this session toward limited government and more prosperity for all Texans.
Here’s how.
🚨 A Sustainable Budget: Stop the Spending Explosion. Texas Has the Resources for Big Reforms—But Is Squandering the Opportunity
- Texas has $194.6 billion available for general spending in 2025-2027, including a $24 billion surplus from the previous budget cycle.
- The Rainy Day Fund will hit its $28.5 billion cap, meaning excess revenues could be returned to taxpayers instead of more spending.
- Yet, the proposed total budget is more than $330 billion, marking the largest budget in state history. It will grow by more than 40% over two budget cycles, well beyond population growth plus inflation.
Texas must stop growing government at a pace faster than the average taxpayer can afford.
What the Legislature Is Doing
❌ Ignoring spending caps—Budget growth over two periods exceeds the sustainable population plus inflation benchmark.
❌ Expanding government programs—Instead of using the surplus to cut taxes, much of it is being appropriated for new spending.
What Abbott Should Champion
✅ HJR 212 / HB 5449 – Surplus Buydown & Spending Limits: Caps spending growth with pop+inf and requires surplus funds to reduce tax rates, not more government spending.
✅ HB 3537 / HB 325 / HB 5267 – State and local spending limits that tie government growth to a maximum rate of population growth and inflation.
✅ Reduce the Rainy Day Fund Cap—Excess beyond $28.5 billion should be returned to taxpayers through lower taxes, not stockpiled for future government spending.
➡️ Abbott should push for spending less now and strict spending limits that rein in government growth at the state and local levels and ensure every dollar of surplus is used for permanent tax cuts, not new spending.
_____
💰 Tax Relief: Focus on Permanent Rate Reductions. Texas has the opportunity to provide major property and business tax relief, but the current proposals fall short of their potential.
What the Legislature Is Doing
❌ Only $6.5 billion in tax relief—Despite a $24 billion surplus, only a fraction is going to permanent tax reductions.
❌ SB 4 (Homestead Exemption Increase)—While well-intended, this bill shifts tax burdens rather than reducing tax rates, making it harder to eliminate property taxes in the future.
What Abbott Should Champion
✅ HB 8 (School M&O Property Tax Rate Reduction) – Directly lowers property tax rates for all Texans, reducing the largest component of property taxes and moving Texas toward eliminating school property taxes. Also, consider HB 275 / HB 698 / HB 5226 / HJR 64 / HB 5502.
✅ HB 9 (Business Personal Property Tax Relief) – Exempts up to $250,000 in business equipment from property taxes, helping Texas businesses grow.
✅ SB 32 (Business Franchise Tax Relief) – Reduces the franchise tax, but Abbott should push for a long-term plan to eliminate it.
➡️ Abbott should ensure the entire surplus is used to compress school M&O tax rates (HB 8) and work toward eliminating school district M&O property taxes with local governments eliminating their property taxes.
______
📚 School Choice: Expand, Don’t Just Spend More on the Same System. Texas has a real opportunity to empower parents and students by expanding school choice, but current proposals throw more money at a failing government school monopoly instead.
What the Legislature Is Doing
❌ HB 2 (Massive Public School Spending Increase)—Pumps billions into the same failing government schools while only offering limited school choice.
❌ SB 26 (Teacher Pay Raises Without School Choice Expansion)—More money for public schools without accountability or competition will do little to improve teacher pay or student outcomes, better done through competition.
What Abbott Should Champion
✅ HB 3 (Education Savings Accounts – ESAs)—Better than SB 2, but should have funding for every student who applies and free of unnecessary restrictions.
✅ Shift taxpayer dollars to parents with ESAs, not failing systems—The more Texas spends on a broken government school monopoly, the harder it becomes to create real competition that drives improvement.
➡️ Abbott should demand a universal school choice bill (HB 3) and ensure state education funding follows students, not failing government schools.
_______
🤖 AI & Innovation: Keep Texas the Leader, Not a Regulated Mess. Texas is a leader in AI and tech innovation, but some legislative proposals could drive investment elsewhere through excessive regulations that help China and other states instead.
What the Legislature Is Doing
❌ HB 1709 (TRAIGA: AI Regulation Bill)—Overreaching regulations that add massive compliance costs and could push AI businesses out of Texas.
❌ HB 149 (Revised TRAIGA Bill)—Better than HB 1709 but still contains vague and burdensome AI discrimination and regulatory mandates that would stifle Texas’ ability to lead in tech.
What Abbott Should Champion
✅ HB 3808 (Texas AI Freedom Act) – Takes a pro-innovation approach by creating an AI advisory council that will sunset and a learning lab instead of heavy-handed regulations.
✅ Encourage industry-led solutions—Texas should trust businesses and entrepreneurs to develop AI standards rather than impose top-down state mandates.
➡️ Abbott should support HB 3808 and push back against unnecessary AI regulations that could make Texas a less attractive tech hub.
______
🛑 Stop Expanding Bureaucracy: Texas should reduce government interference, not expand it.
What the Legislature Is Doing
❌ HB 5 (Dementia Research Institute)—Medical research should be led by universities and private industry, not state government.
❌ SB 6 (Electric Grid Controls) is a dangerous government overreach—Texas must let private energy markets function freely rather than dictating power use.
❌ SB 22 (Hollywood Film Subsidies)—Texas does not need to subsidize Hollywood—this is classic corporate welfare.
What Abbott Should Champion
✅ Veto unnecessary spending bills—Texas should reduce government, not grow it.
✅ Support free-market solutions—Texans should be free to run businesses and access legal markets without government interference.
➡️ Abbott should reject those above, veto wasteful spending, and push for more free-market reforms.
_____
🚀 A Pro-Growth Path Forward for Texas
🔹 Cut spending now and advance spending limits (HJR 212, HB 5449) to control government growth.
🔹 Push for permanent tax cuts (HB 8) but make a larger amount of relief.
🔹 Support less regulation with HB 3808 for AI and other bills that would reduce occupational licensing.
🔹 Create school choice (HB 3) but fully fund it without excessive restrictions.
Spend Less, Prosper More! Let People Prosper.
Texans for Fiscal Responsibility relies on the support of private donors across the Lone Star State in order to promote fiscal responsibility and pro-taxpayer government in Texas. Please consider supporting our efforts! Thank you!
Get The Fiscal Note, our free weekly roll-up on all the current events that could impact your wallet. Subscribe today!
