AUSTIN — Property tax relief for homeowners, pay raises for teachers and cash for private school tuition are among state leaders’ priorities packed into a $338 billion spending bill that won final passage Saturday in the Texas Legislature.
“This is a very responsible budget that meets the needs of our rapidly growing state,” said House Appropriations Chair Greg Bonnen, R-Friendswood. “It prioritizes public education, tax relief, public safety and infrastructure, and improving taxpayer services for individuals and businesses. It also makes key investments to maintain Texas’ economic competitiveness.”
The budget for the next spending cycle — which lasts from Sept. 1, 2025, through Aug. 31, 2027 — includes $150 billion in state tax spending and $100 billion in federal funds.
The Senate passed the final bill on a vote of 31-0. The House passed it 107-21.
The budget now heads to the Texas Comptroller of Public Accounts, who must be able to certify that it doesn’t spend more tax money than it brings in before the legislation can go to Gov. Greg Abbott for his review.
Abbott has until June 22 to veto individual items in the budget. It is the only legislation for which the Republican governor has line-item veto powers.
The new budget comes after a year of planning and hundreds of hours of testimony over several months from state agencies, their employees and the people they serve. It culminates in a 1,054-page tome outlining how the state will fund the business of governing 30 million Texans over the next two years.
It anticipates $155 billion in state tax collections over the next two years, maintains a full rainy day account and highway fund, adds billions to the state’s property tax fund, and stays below the constitutional spending limit that restricts how much the budget can grow between sessions.
Senate Bill 1, now known as the General Appropriations Act 2026-27, is the only task the Texas Constitution requires lawmakers to complete before they end their biennial 140-day legislation session on Monday.
“The Texas economy is the envy of the nation, and the budget will secure our state’s prosperity for generations to come,” said Senate Finance Chair Joan Huffman, R-Houston. “We have leveraged our state surplus over several sessions to make targeted, one-time investments without burdening future budgets.”
Paying for priorities
Many of the larger funding items, such as $10 billion in new property tax cuts, depend on passage by voters, and millions more are still at stake in legislation that has yet to pass. The session ends on Monday.
The budget includes $51 billion to lower property taxes, $3.6 billion to address border security through more than a dozen state agencies, and $10.5 billion in investments in health care services and research at universities, including research on dementia, experimental treatments for addiction and post-traumatic stress disorder.
Lawmakers approved $8.5 billion in new funding for public schools, including experience-based pay raises for public school teachers, which include up to $8,000 salary increases for rural teachers with more years as educators. They also approved funding a comprehensive early literacy program and invested in special education reforms and school safety initiatives.
The bill also includes $1 billion to pay for a voucher-like program to help parents pay for the tuition and costs of a private school education, a priority for Abbott and the main reason he helped eject some of the program’s opponents from office during last year’s primary elections.
The budget raises pay for corrections, juvenile and probation staff in the criminal justice system. It pays for nearly 500 new state troopers for the Texas Department of Public Safety and bumps funding for driver’s license offices to ease wait times for Texas motorists. It also bolsters law enforcement and criminal justice efforts in rural Texas and funds anti-gang initiatives.
Lawmakers put tens of millions into a new residential facility for the state’s most medically complex and needy foster kids to get them out of hotels and unregulated group homes while they wait for permanent placements. Lawmakers also doubled the number of mobile youth crisis teams and funded new inpatient mental health facilities.
The budget funds a grant program to help rural hospitals, which have been struggling in the face of shrinking populations and increasing health costs. The budget also boosts pay for community-based personal care attendants for people with disabilities and increases reimbursements to nursing homes.
The budget also includes more money for child care subsidies to shorten waiting lists for families who need help, tens of millions for farmers and funding increases for housing for military veterans.
Lawmakers also made long-term investments in state infrastructure with multibillion-dollar investments in the Texas Energy Fund to maintain reliability and resilience of the state’s electric grid. They also approved funding for flood, wastewater and similar projects, along with billions toward highway projects and maintenance.
“I would suggest this is not a liberal budget,” said Rep. Donna Howard, D-Austin, one of the lead House budget writers. “It’s not even a conservative budget, necessarily. What it is is a responsible budget. … We didn’t all get what we wanted, but it addresses some of the critical needs of the state.”