Lawmakers released their initial budget plans for 2026-27, House Bill 1 and Senate Bill 1, Jan. 22. The Texas Senate’s $332.9 billion proposal was filed by Sen. Joan Huffman, R-Houston, who leads the Senate Finance Committee. Rep. Greg Bonnen, R-Friendswood, filed the Texas House’s $335.7 budget draft.
Bonnen chaired the House Appropriations Committee, which is in charge of the lower chamber’s budget operations, during the 2023 legislative session. House committees have not been assigned for the current year.
Budget writers will iron out the details of their nearly 1,100-page proposals before submitting a final version to Gov. Greg Abbott this spring.
What you need to know
State lawmakers returned to Austin on Jan. 14 for the 89th legislative session. Passing a balanced budget is the only thing they are constitutionally required to do during the 140-day session, according to the House Research Organization. The two-year budget consists of state and federal dollars.
The two chambers are committed to working together to fund Texans’ priorities, House Speaker Dustin Burrows, R-Lubbock, said in a Jan. 22 statement, calling the two proposals “substantially identical.”
“Debating and passing the budget will be one of the most important undertakings of the session, as it will determine the financial boundaries under which we operate when considering all other major legislation, including school choice, water infrastructure and more,” Burrows stated.
The proposed budgets show the Texas Legislature’s priorities include maintaining a law enforcement presence at the Texas-Mexico border, building on past property tax cuts, raising salaries for teachers, solving water shortages and sending state funds to private schools through an education savings account program.
Budget writers agreed to use $6.5 billion for initiatives that Lt. Gov. Dan Patrick said would “continue Texas’ strong presence at the border.” This mirrors border security funding from the 2025-26 budget, which lawmakers passed in 2023.
According to budget documents, border security funding would go to 13 state agencies involved in Operation Lone Star, a 2021 initiative launched by Abbott in an attempt to curb illegal immigration at the Texas-Mexico border.
Proposals show the governor’s office would receive nearly $2.9 billion, the Texas Military Department would receive nearly $2.3 billion, and the Texas Department of Public Safety would receive nearly $1.2 billion.
Separately, the DPS is slated to receive $402 million to hire about 600 new state troopers. DPS troopers are stationed near the border, at the Texas Capitol, around highways and more.
More details
Each chamber set aside over $32 billion to cover property tax cuts passed in 2019 and 2023, including funding existing tax exemptions for homeowners and providing revenue to school districts that reduced their tax rates as a result of state law.
The House budget proposes spending $3 billion to further reduce school tax rates. In a statement, Burrows said the lower chamber would spend an additional $3.5 billion on “new property tax relief,” but did not specify how that money would be spent.
In the Senate, Patrick and Huffman proposed using the $3.5 billion to cut taxes for businesses and increase the homestead exemption, which is the portion of a home’s value that cannot be taxed. Following the 2023 legislative session, most homeowners receive a $100,000 exemption on their primary home, while seniors and people with disabilities have a $110,000 exemption.
SB 1 would raise Texans’ exemptions by $40,000 and offer $500 million in tax relief for business owners, according to a statement.
Also of note
Both budget drafts would raise public education funding by about $4.9 billion, delivering on promises made by Abbott and other state leaders to “fully fund” public schools. Attempts to do so crumbled after four special sessions in 2023, when school funding was tied to an unsuccessful push to create education savings accounts, a voucher-like program.
“Some people... make it sound like you can't have both school choice and robust public schools,” Abbott told reporters Nov. 6. “That's completely false. The reality is we can have the best public schools in America and also have school choice at the very same time.”
This year, state senators want to raise all public school teachers’ salaries by $4,000, according to Patrick’s office. Teachers in rural school districts would receive a $10,000 raise under the plan, which Patrick said would “close the salary gap between our rural and larger school districts.”
However, some education advocates say the proposed raise is not enough. The average Texas teacher made $60,716 during the 2022-23 school year, according to the National Education Association. The national average teacher salary was $69,597 during the same period, the NEA reported.
“That doesn’t come close to covering their pay deficit, which now trails the national average by... $9,000,” Ovidia Molina, president of the Texas State Teachers Association, said in a Jan. 22 statement. “Legislative budget writers need to start over, and they should start by scratching out the money set aside for vouchers and allocating it to public schools.”
The two drafts set aside $1 billion for an education savings account package, which would give families public money to send their children to private schools. The Senate Education Committee advanced its version of the plan, SB 2, on Jan. 28, while the House has not filed ESA legislation.
SB 2, authored by Sen. Brandon Creighton, R-Conroe, would give families $10,000 annually per student to pay for tuition and other educational expenses, such as textbooks or transportation, at an accredited private school. Children with disabilities would receive $11,500 each year for private school, and families who homeschool their children would receive at least $2,000 annually, according to previous reporting.
Both budgets also include $400 million for school safety initiatives, although the House plan does not indicate if the other $4.9 billion would be used for teacher raises or other education policies.
Zooming out
The two chambers agreed to use $2.5 billion to expand Texas’ water supplies and improve related infrastructure, a priority of Sen. Charles Perry, R-Lubbock, who leads the Senate’s Water, Agriculture, and Rural Affairs Committee.
Perry plans to ask his colleagues to create a dedicated funding stream to help local utilities purchase more water and upgrade their infrastructure. He told Community Impact he hopes lawmakers will budget $5 billion this legislative session—twice what is currently allocated—and send $1 billion to the state water fund each year moving forward.
Lawmakers are also aligned on sending $5 billion to the Texas Energy Fund, a program that provides low-interest loans for the construction and maintenance of new power facilities. Texas voters approved a constitutional amendment creating the fund in November 2023.
One more thing
The budget drafts propose spending about $150 billion in general revenue funds, which is under the $158 billion biennial spending limit adopted by the Legislative Budget Board.
To surpass the spending cap, both chambers must vote that emergency appropriations are needed, according to the LBB.
