The Senate Committee on Finance has released its interim report to the 89th Legislature. The report covers property taxes, school enrollment trends, film incentives, and other topics like monitoring legislation from the 88th Legislature. A spotlight on recommendations from the report can be found below:
Continue Cutting Property Taxes: Identify the best combination to further increase the amount of homestead exemption and compression to continue cutting Texans’ property taxes. Additionally, establish and report on the cost of eliminating: school maintenance and operation property taxes; all school property taxes; and all property taxes.
Monitor Property Tax Relief: Monitor the appropriations supporting, and implementation of, the following legislation passed during the 88th Legislature, Regular or Special Sessions, and approved by voters, amending the Texas Constitution: Property Tax Relief: Senate Bill 2 and House Joint Resolution 2, 88th Legislature, Second Called Special Session
- For years, rising property taxes have been a growing concern for many Texans as the state’s population and property values increase annually. The tax rate and the property’s taxable value are determined annually, making it routinely visible to taxpayers. In response, the Texas Legislature has enacted several measures over recent sessions to provide property tax relief, even though the state does not control the rates set by local taxing jurisdictions or the appraised values. The most recent tax relief package, SB 2 and HJR 2, passed by the 88th Legislature and approved by voters on November 7, 2023, delivered significant school district property tax relief to homeowners. While balancing all of the state’s needs, the Legislature should continue to use surplus funds to provide additional property tax relief and prioritize measures that will preserve the affordability of living and doing business in Texas.
Mental Health Services and Inpatient Facilities: Monitor the implementation of Senate Bill 30, 88th Legislature, Regular Session, with regard to appropriations made for expanding mental health services and inpatient facilities across the state. Report on the progress of inpatient facility construction projects. Assess and report on the effectiveness of spending on mental health services.
- The 88th Legislature, through SB 30, made a historic funding commitment to improve and expand inpatient psychiatric bed capacity in targeted regions throughout the State. Several of these funded projects are well underway and will have a positive impact on the entire state’s mental health system. HHSC’s ability to hire and retain State Hospital employees will play a critical role in the State’s ability to preserve sufficient inpatient psychiatric capacity and reduce waitlists. As part of the appropriations process moving forward, the Legislature should continue to monitor implementation of SB 30 projects and plan for future operational costs that the state will face when construction projects are complete and new inpatient beds come online.
School Enrollment Trends: Study post-pandemic student enrollment trends, and examine the possible causes behind the shift in student enrollment, including the rise in homeschooling, microschools, and other parental choice options. Make recommendations to ensure parents and educators have the tools and resources needed to respond to the projected enrollment changes and ensure that every child has the best educational options available to learn.
- Enrollment for public education is expected to decline over the next several years due to birth trends, which will inherently impact total appropriations for the Foundation School Program. However, due to lag between entitlement calculation and periodic data updates, and the settle-up process based on actual attendance, districts will still have predictability in managing their own budgets and will not face sudden or unforeseen fiscal cliffs.
- In addition to demographic changes that the state is experiencing, private school providers and homeschool associations report that families are increasingly leveraging alternative models for education, which may also contribute to the slowing of public school enrollment. Because TEA does not collect or track data for private and homeschool providers, the Legislature is unable to fully analyze enrollment trends across different educational settings. However, it remains clear that Texas needs to continue to offer students and families a variety of educational setting options so that every child has the best opportunity to learn and succeed.
Texas Moving Image Industry Incentive Program: Review the expenditure of funds appropriated to the Texas Film Commission for the Texas Moving Image Industry Incentive Program (TMIIIP) by the 88th Legislature and assess the effectiveness of the program in promoting media production and stimulating local economies through job creation and business growth. Analyze application trends before and after the appropriation, with attention to high-profile or large-budget productions. Additionally, review other states and international incentive programs and evaluate Texas’s workforce and educational needs in media production. Provide recommendations to improve the TMIIIP’s transparency and enhance Texas’s competitive position.
- Texas has created a strong infrastructure to incentivize moving image production in our State. The OOG has carefully promulgated rules for the TMIIIP which have created new economic and job opportunities for Texas residents and businesses, and at the same time, safeguarded Texas taxpayer dollars. While the Program has been successful and the OOG has diligently awarded grant dollars to meritorious applicants, the Legislature could examine different or additional funding mechanisms to provide more consistency and predictability for future applicants. Regardless of how financial incentives are granted in the future, it is imperative that the Program incentivizes in-state spending and spurs job growth for Texans to ensure Texas is receiving a positive return on investment. Any changes to the Program must be designed with the goal of producing more economic opportunities for the state and additional content that showcases the values of Texas and Texans.
Monitor Texas Energy Fund: Senate Bill 2627 and Senate Joint Resolution 93, 88th Legislature, Regular Session.
- Ensuring that electricity infrastructure in Texas is reliable and resilient is paramount in upholding the state’s economic dominance and reputation as the best place to raise a family. The Legislature took swift and decisive action through the passage of SB 2627 and by allocating $5 billion to capitalize the TEF. As Texas’ energy demands increase due to population growth, weather events, use of Artificial Intelligence, cryptocurrency mining, and the proliferation of data center facilities, the Legislature should consider making additional appropriations to the TEF to help meet demand forecasts.
Monitor Texas Water Fund: Senate Bill 28 and Senate Joint Resolution 75, 88th Legislature, Regular Session.
- Water supply development is expensive, requires long-term planning, and often not realized due to water still available to the end user. Passage of SB 28 and approval of the Texas Water Fund by voters represent a huge step forward in securing the state’s water future – both in addressing infrastructure and growing supply needs. In order to support the continued administration of the TWF, the Legislature should ensure that the TWDB is adequately staffed and resourced to administer TWF dollars and monitor all the financial commitments issued under its programs. In order to continue to address the increasing pressures on our water systems and enable continued development of new water supply, the Legislature should also evaluate the benefit of further appropriations for these purposes. Finally, in order to assess the long-term impacts of these investments, the TWDB should provide frequent updates regarding the impacts of the TWF and the New Water Supply for Texas Fund.
Monitor Centennial Parks Conservation Fund: Senate Bill 1648 and Senate Joint Resolution 74, 88th Legislature, Regular Session.
- Voter approval of the Centennial Parks Conservation Fund offers a critical opportunity to develop a long-term strategy for acquiring and developing recreational spaces in Texas. Capitalized with a significant appropriation, and under thoughtful stewardship of the TPWD and the Texas Treasury Safekeeping Trust Company, the CPCF will provide a resource that can be leveraged for decades to enable the creation of new state parks across Texas. In order to ensure the CPCF’s longevity, the Legislature must carefully review any requests for disbursements from the Trust Fund, and ensure that any proposed acquisitions adhere to the highest standard. Also, in addition to reporting currently required on completed acquisitions, the Legislature may consider requesting an annual or biennial report from TPWD outlining its broader strategy and mission for land acquisition and park development planning to ensure those objectives are aligned with legislative intent and achievable based upon the CPCF’s balance and growth. These actions will ensure that Texans and visitors can continue to enjoy the beauty of Texas’ parks for generations to come.
Monitor Broadband Infrastructure Fund: House Bill 9 and House Joint Resolution 125, 88th Legislature, Regular Session.
Texas and the federal government have both invested heavily to close the digital divide in the State through robust broadband expansion. However, many of the resulting programs significantly overlap and are running concurrently. It is critical that state and federal agencies responsible for awarding grant funds communicate and cooperate with each other to ensure that funds are distributed in an efficient and fair manner. The Legislature should ensure that the Broadband Development Office has the necessary staffing and resources to manage the administration of the various broadband grant programs. Furthermore, the Legislature should closely monitor the expenditure of state BIF funds, ensuring state dollars are available after CPF and IIJA funds have been expended to connect the locations that may have been missed.
