Three Texas House members prefiled bills Nov. 9 that would set aside part of the state’s surplus revenue every two years to cut school district property taxes, and would bar districts from ever again levying their main operating tax once the state had bought it down to zero. A fourth measure, a proposed constitutional amendment, would send money that now spills over the cap on the state’s Rainy Day Fund to the same purpose.
The measures, filed for the 90th Legislature, target the school maintenance and operations tax, which pays for salaries and day-to-day costs and is the largest piece of most school tax bills. The Legislature already spends state money each session on rate compression, in which the state lowers the maximum rate districts may levy and replaces the lost revenue with state revenues. These bills would make that buy-down automatic and tie its size to how much money the state takes in.
House Bill 872 (90th Legislature), by Rep. Helen Kerwin, directs the comptroller to deposit 50% of general revenue that exceeds the constitutional limit on state spending growth into the state’s property tax relief fund, according to the bill text. The education commissioner would then have to reduce the state compression percentage “to the lowest percentage possible” with that money. If compression reaches zero, “a school district may not impose a tier one maintenance and operations tax for that school year or for any subsequent school year,” the bill says, and the state would fund each district as if it still collected that tax. The bill would take effect Sept. 1, 2027, and apply beginning with the two-year budget period that starts Sept. 1, 2029.
House Bill 1065, by Rep. Wes Virdell, uses the same structure but dedicates 90% of revenue above the spending limit, its text shows. House Bill 1040, by Rep. Matt Shaheen, sets a different trigger: 90% of the general revenue a two-year budget period brings in above 104% of the previous period’s, according to the bill.
Kerwin also filed House Joint Resolution 60, which would amend the Rainy Day Fund section of the Texas Constitution. When the comptroller reduces a transfer into the Economic Stabilization Fund, as the Rainy Day Fund is formally known, to keep it under its cap, an equal amount of general revenue would go to the state’s tax reduction and excellence in education fund. That money “may be appropriated only for the purpose of reducing school district maintenance and operations ad valorem taxes,” the resolution says. It needs a two-thirds vote in each chamber, and voters would decide it Nov. 2, 2027.
The measures matter because they would move the size of future school tax cuts out of each session’s budget negotiations and set it by formula. They protect districts by funding them as if an eliminated tax were still collected, which makes that cost a permanent claim on the state budget. Whether a formula yields anything depends on revenue: in a two-year period when general revenue does not exceed the trigger, the bills deposit nothing.
The cost of the end point is large. The Dispatch reported Nov. 10 on what ending school taxes on homesteads would cost and how far three big business tax breaks would go toward covering it. The House Ways and Means Committee heard testimony on the state’s school property tax spending in September.
Other filings take other routes. In the Senate, measures filed by Sen. Pete Flores would instead lower the 10% annual cap on increases in a homestead’s taxable value to 3%, according to Senate Joint Resolution 14 and its enabling Senate Bill 298.
None of the bills can be referred to a committee until the Legislature convenes in January. The comptroller’s revenue estimate for the 2028-29 budget, due before the session, will show how much surplus, if any, the formulas would capture.
Key facts
- HB 872 (Kerwin), HB 1040 (Shaheen) and HB 1065 (Virdell) were filed Nov. 9, 2026, for the 90th Legislature (Texas Legislature Online).
- HB 872 dedicates 50% of general revenue above the constitutional spending limit to school property tax cuts; HB 1065 dedicates 90%; HB 1040 dedicates 90% of revenue above 104% of the prior two-year period (bill texts).
- HB 872 would bar districts from levying their tier one operating tax once state compression reaches zero (bill text).
- HJR 60 (Kerwin) would send general revenue kept out of the capped Rainy Day Fund to school property tax cuts; voters would decide Nov. 2, 2027 (resolution text).
- SJR 14 and SB 298 (Flores) would lower the homestead appraisal cap from 10% to 3% (bill texts).