An Overview
- Texans for Fiscal Responsibility provided a three-step process to eliminate all property taxes over the next decade by simply limiting government spending at the state and local levels of government and returning surplus collected taxpayer dollars to taxpayers.
- Unfortunately, the Texas House’s budget (CSHB 1, Committee Substitute to House Bill 1) substantially increases all funds appropriations in the proposed 2024-25 budget above the 2022-23 budget by 14.3% to $302.7 billion, and by 9.8% to $290.7 billion (excluding the $12 billion in new property tax relief). Likewise, the Texas House increases state funds appropriations by 21.5% to $202.0 billion, and by 14.3% to $190.0 billion excluding the new property tax relief.
- These increases in appropriations would be better allocated to new property tax relief, primarily through the compression of school district maintenance and operations property taxes. This would create a path to eliminating these property taxes, thereby giving Texans more of the right to own their property instead of perpetually renting from the government.
Texas House Budget Substantially Increases Appropriations
Table 1 shows the amount by which the Texas House proposes to increase appropriations compared to what was appropriated for the 2022-23 budget. While the Legislative Budget Board shows a comparison of what is expected to be spent in 2022-23 and what is appropriated for 2024-25, this comparison is not consistent as the total spending for 2022-23 is not complete and the 2024-25 spending is not available yet. Therefore, the best way to evaluate this budget is to compare appropriations to appropriations.
Table 1
Frozen Texas Budget Compared with the House’s Budget in CSHB 1 (In Millions)
| Source of Appropriations | 2022-23 Appropriations | 2024-25 Texas Frozen Budget | 2024-25 House Budget | 2024-25 House Budget Change | 2024-25 House Budget % Change |
|---|---|---|---|---|---|
| General Revenue Funds | $119,154.1 | $136,9058 | $17,751.7 | 14.9% | |
| General Revenue Dedicated Funds | $6,319.9 | $6,751.6 | $431.7 | 6.8% | |
| General Revenue-Related Funds | $125,474.0 | $125,474.0 | $143,657.4 | $18,183.4 | 14.5% |
| Other Funds | $40,799.1 | $58,382.8 | $17,583.7 | 43.1% | |
| State Funds Total | $166,273.1 | $166,273.1 | $202,040.2 | $35,767.1 | 21.5% |
| Federal Funds | $98,531.6 | $100,612.7 | $2,081.1 | 2.1% | |
| All Funds Total | $264,804.7 | $264,804.7 | $302,625.9 | $37,848.2 | 14.3% |
The result is a massive increase in the budget that is well above the Texas Frozen Budget, thereby reducing how much money is available for property tax relief. And even if you exclude the $12 billion in proposed new property tax relief in House Bill 2 with a 15-cent compression of school district M&O property taxes, there is an unwarranted large increase in the budget. In other words, there are too many taxpayer dollars going to appropriations instead of property tax relief.
Table 2 shows a breakdown of the articles of the budget by type of funds. While there are massive double-digit and even triple-digit increases in some articles, the driving factors of the overall fund increases are the largest parts of the budgets for Article II for Health and Human Services, Article III for Agencies of Education, Article V for Public Safety and Criminal Justice, and Article VII for Business and Economic Development.
Table 2
Frozen Texas Budget Compared with the House’s Budget by Funds and Article (In Millions)
| Article/ Funds (General Revenue) | Appropriated 2022-23 | House CSHB1 2024-25 | Change | Percent Change |
|---|---|---|---|---|
| I – General Government | $5,594.2 | $7,150.6 | $1,556.4 | 27.8% |
| II – Health and Human Services | $34,447.2 | $43,475.3 | $9,028.1 | 26.2% |
| III – Agencies of Education | $64,033.9 | $63,985.9 | ($48.0) | -0.1% |
| Public Education | $47,326.6 | $44,296.4 | ($3,030.2) | -6.4% |
| Higher Education | $16,707.2 | $19,689.6 | $2,982.4 | 17.9% |
| IV – The Judiciary | $593.1 | $832.0 | $238.9 | 40.3% |
| V – Public Safety and Criminal Justice | $11,969.5 | $18,315.3 | $6,345.8 | 53.0% |
| VI – Natural Resources | $1,308.2 | $2,774.6 | $1,466.4 | 112.1% |
| VII – Business and Economic Development | $490.7 | $1,063.5 | $572.8 | 116.7% |
| VIII – Regulatory | $307.2 | $433.2 | $126.0 | 41.0% |
| IX – General Provisions | $0.0 | ($1,599.9) | ($1,599.9) | 0.0% |
| X – The Legislature | $410.2 | $475.2 | $65.0 | 15.8% |
| GR Funds Total | $119,154.1 | $136,905.7 | $17,751.6 | 14.9% |
| Article/ Funds (State Funds) | Appropriated 2022-23 | House CSHB1 2024-25 | Change | Percent Change |
|---|---|---|---|---|
| I – General Government | $7,232.6 | $8,934.8 | $1,702.2 | 23.5% |
| II – Health and Human Services | $36,171.6 | $45,350.4 | $9,178.8 | 25.4% |
| III – Agencies of Education | $83,080.1 | $96,535.1 | $13,455.0 | 16.2% |
| Public Education | $60,467.6 | $70,374.0 | $9,906.4 | 16.4% |
| Higher Education | $22,612.4 | $26,161.2 | $3,548.8 | 15.7% |
| IV – The Judiciary | $967.2 | $1,208.1 | $240.9 | 24.9% |
| V – Public Safety and Criminal Justice | $12,182.0 | $18,599.3 | $6,417.3 | 52.7% |
| VI – Natural Resources | $2,956.1 | $4,921.4 | $1,965.3 | 66.5% |
| VII – Business and Economic Development | $22,548.6 | $26,759.8 | $4,211.2 | 18.7% |
| VIII – Regulatory | $724.5 | $855.6 | $131.1 | 18.1% |
| IX – General Provisions | $0.0 | ($1,599.9) | ($1,599.9) | 0.0% |
| X – The Legislature | $410.4 | $475.4 | $65.0 | 15.8% |
| GR Funds Total | $166,273.1 | $202,040.2 | $35,767.1 | 21.5% |
| Article/ Funds (All Funds) | Appropriated 2022-23 | House CSHB1 2024-25 | Change | Percent Change |
|---|---|---|---|---|
| I – General Government | $8,476.3 | $10,232.3 | $1,756.0 | 20.7% |
| II – Health and Human Services | $86,970.3 | $101,357.7 | $14,387.4 | 16.5% |
| III – Agencies of Education | $96,053.5 | $111,820.3 | $15,766.8 | 16.4% |
| Public Education | $72,402.9 | $82,891.4 | $10,488.5 | 14.5% |
| Higher Education | $23,650.5 | $28,929.0 | $5,278.5 | 22.3% |
| IV – The Judiciary | $971.7 | $1,212.3 | $240.6 | 24.8% |
| V – Public Safety and Criminal Justice | $13,509.6 | $19,010.2 | $5,500.6 | 40.7% |
| VI – Natural Resources | $7,816.0 | $8,154.5 | $338.5 | 4.3% |
| VII – Business and Economic Development | $36,547.9 | $45,613.2 | $9,065.3 | 24.8% |
| VIII – Regulatory | $734.0 | $926.7 | $192.7 | 26.3% |
| IX – General Provisions | $0.0 | $3,850.0 | $3,850.0 | 0.0% |
| X – The Legislature | $410.4 | $475.4 | $65.0 | 15.8% |
| XII – American Rescue Plan Act of 2021 (ARPA) | $13,314.9 | $0.0 | ||
| GR Funds Total | $264,804.6 | $302,652.8 | $37,848.2 | 14.3% |
Of course, Article III also includes property tax relief efforts; those efforts do not grow the government and therefore inflate the amount of appropriations. However, there is still plenty of bloat throughout the budget, which should be reined in to provide more property tax relief.
Conclusion
The Texas House’s 2024-25 budget appropriates too much money and provides too little tax relief. In order for this to be a record amount of property tax relief, the $14.2 billion in property tax relief for the 2008-09 period adjusted for inflation would be about $20 billion in new relief today—not even accounting for population growth.
The state is expected to have an estimated $32.7 billion surplus in GRR available at the end of the current 2022-23 biennium. And if the Legislature froze appropriations to the 2022-23 appropriations, there would be more than $62 billion available in excess revenue collected. So, if 90% of this excess revenue was returned to taxpayers by compressing the school district M&O property taxes (HB 985), then $56.5 billion could put these property taxes on a path to elimination in just a few years. And with just $12 billion in new property tax relief in the House budget, it is not record tax relief. But there is more tax revenue available throughout the excessive increases in the budget outlined in this brief; this revenue could be used to get to at least $20 billion to compress school district M&O property taxes so there is a record in tax relief.
Ultimately, Texas should eliminate property taxes so Texans can have the right to own their property instead of perpetually renting from the government. By following the Texans for Fiscal Responsibility’s three-step process of passing a frozen state budget, using 90% of surplus dollars to compress school district M&O property tax rates until they are zero, and having local governments eliminate the rest of their property taxes, Texas can eliminate property taxes soon. The time to start it is now.
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