AUSTIN _ A proposed $336.1 billion state spending plan that includes money for teacher pay raises, border security, property tax cuts and beefing up the workforce passed the Texas Senate unanimously on Tuesday.
The budget bill directs how Texas will spend $153.4 billion in state tax dollars and $99.2 in federal money in the 2026-27 budget cycle. A separate bill spending down some of the state’s $23 billion budget surplus is expected to pass later in the session.
“As Texas enters the second half of the 2020s, our state’s fiscal foundation has never been more solid,” Lt. Gov. Dan Patrick said in a statement. “Texas gets stronger and stronger with each passing biennium because our conservative principles guide our approach to budgeting.”
The senators want to strengthen the state’s electrical grid with $5 billion for that in the budget. Community care givers in the Medicaid program would see pay raises with the nearly $2 billion set aside for that.
Texas would have $2.5 billion to address water needs and $3 billion for new property tax relief under the Senate Bill 1 spending proposal. Another major investment would be $3 billion to create the Dementia Prevention and Research Institute.
The proposal includes $1 billion for one year of a school voucherlike program, the creation of which is a priority of Republican state leaders, including Gov. Greg Abbott.
It also proposes adding thousands of new state employees to the foster care and adult protective systems, Medicaid and assistance programs, cyber security offices, driver license offices, the prison and juvenile justice system and the Texas Department of Public Safety, among other agencies.
The budget represents less than 1% growth from the current cycle.
“We were very careful to craft a budget that is fiscally conservative and sustainable in future years,” Senate Finance Chair Joan Huffman said.
The budget still has a long way to go before it reaches the governor’s desk.
The House will debate its spending plan in the coming weeks, and then the two chambers will negotiate over key differences. The final budget bill will be sent to Gov. Greg Abbott for his signature, expected in June.
Some Democrats said they want to adjust the budget as it moves through the process to better help farmers and public education, among other goals.
“We will continue to collaborate to ensure our priorities are reflected in the final conference committee report,” Sen. Judith Zaffirini, D-Laredo, said. “Together, we can craft a final budget that reflects the trends and values and needs of all Texans.”
Passing a balanced spending plan for the 2026-27 cycle, which starts in September, is the only task the Texas Constitution requires lawmakers to do during their regular biennial legislative session.
The proposals come as Texas is flush with cash, after four years of record inflation and growth in tax collections – giving lawmakers the chance to invest historic amounts of cash in state parks, water infrastructure, broadband, energy, endowments and other long-term projects.
Texas Comptroller Glenn Hegar has warned the glut won’t last forever, although he has stopped short at predicting a recession in the near future.
“Our economy is strong and continues to grow. However, revenue collections are projected to return to more normal levels of growth … and this budget reflects that fact,” Huffman, R-Houston, said. “We again have the opportunity to make strategic one-time investments to address the long-standing needs of our growing state, as well as return money back to taxpayers.”
Key takeaways from the Senate plan include:
Property tax relief for homeowners
The bill includes $6.5 billion for property tax relief, including $3 billion to increase the homestead exemption to $140,000, up from $100,000.
Another $3.5 billion would be used to buy down local taxes on the school district level.
Abbott made property tax cuts a cornerstone of his agenda for the last two sessions after Texas reported some of the highest rates in the country.
Behavior health services
Budget writers included $10 billion across 29 state agencies for mental health programs and services, including new or expanded inpatient hospitals and new mobile youth crisis outreach teams.
Public Education
The largest chunk of the budget focuses on public schools. The bill funds the Foundation School Program, which directs funding to schools, at $70 billion. The funding includes $5.1 billion earmarked for teacher pay, including merit-based raises pushed as an Abbott priority, and $500 million for school safety and security.
Abbott has stressed his top priority this session is to pass a voucherlike proposal that would funnel public dollars to private schools.
Officials estimate an education savings account program would cost the state about $1 billion in its first year, the 2026-27 school year. That money is included in the budget bill.
Border Security
Budget writers included $6.5 billion to continue Operation Lone Star, Abbott’s border security mission that has cost the state $11 billion since it was created in 2021.
Most of the funding would be divided between Abbott’s office, the Texas Military Department, which oversees the Texas National Guard, and the Texas Department of PublicSafety, which sends troopers to the border from other parts of the state.
The funding proposal includes the creation of more than 560 new commissioned officers for DPS to help with staffing problems in the agency as a result of Lone Star.
Adult and Juvenile Corrections
More money would flow to the state’s criminal justice efforts, which would help fund pay raises for corrections officers as well as retention and recruiting efforts to address staff shortages
The bill includes $9.8 billion for the Texas Department of Criminal Justice, an increase of 13% over last cycle, and nearly $1 billion to the Texas Juvenile Justice Department.
Career Training
The bill adds $850 million to establish a Texas State Technical College endowment fund to support capital projects.
Abbott has made career and technical training a priority agenda item this session.
Transportation and Motorists
The bill includes $35.8 billion for highway projects, planning, design and construction across the state.
About $100 million would pay for 550 additional employees at state driver license offices. Lawmakers spent the last few years trying to solve the long wait times at the offices, where appointments for licenses and renewals can involve wait times up to weeks or months, depending on the location.
