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House panel set to advance biennial Texas budget with property tax cuts, teacher pay raises

State representatives meet on the House floor at the state Capitol in Austin on Jan. 11, 2023.
Evan L'Roy
The Texas Tribune
State representatives meet on the House floor at the state Capitol in Austin on Jan. 11, 2023.

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

A key Texas House panel was poised on Thursday to give final approval to a two-year spending plan that includes property tax cuts, border security initiatives, and the first pay raises for state employees and teachers in more than a decade.

The House Appropriations Committee’s signoff on the 2024-25 plan with at least $130 billion in general revenue will move the proposal 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.

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 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.

The committee’s budget proposal, which is more than 1,000 pages and could change before Thursday’s vote, 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 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. In hearings this week, analysts with the Legislative Budget Board told House members that the current budget proposals still appear to come in around $1 billion below the spending 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 is also expected to approve an $11.5 billion supplemental budget bill that spends $5 billion of the state’s surplus during the current biennium on items including dmitigating electricity rate hikes caused by the 2021 winter storm and school safety measures. 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.

It was unclear in the hours before the committee meeting exactly how much money the bill will spend, but specifics are expected to be released closer to the vote later Thursday. 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.

Committee changes are likely to shift that number upward, according to documents posted by the LBB. 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, 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.

Children at risk

House budget writers are expected to add 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 programsin 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.”