America's Property Tax Advisor

Texas Passes Property Tax Reform


The 86th Texas Legislature adjourned after unanimously approving policy overhauls of property taxes and public school finance. Governor Greg Abbot signed Senate Bill 2 and House Bill 3 into law.


Senate Bill 2


SB 2, titled the Texas Property Tax Reform and Transparency Act, requires cities, counties, and emergency service districts to receive voter approval before raising 3.5% more property tax revenue than the previous year. Community colleges and hospital districts must hold an election before surpassing 8% property tax revenue growth.


Tax jurisdictions will be able to bank unused revenue growth for three years, allowing them to occasionally exceed the 3.5% threshold. Jurisdictions can raise $500,000 without having to hold an election, as long as the increase does not exceed 8% revenue growth.


House Bill 3


HB 3 earmarks $11.6 billion for the Texas public education system and $5 billion to pay down local school property taxes, guaranteeing a greater share of school funding from the state in the future. In addition, $6 billion will be spent to increase teacher pay, fund full-day Pre-kindergarten for low-income students, and to help districts launch innovative programs.


The bill adjusts the current “Robin Hood” system of funding school finance by reducing recapture payments 47% over the next two years. Robin Hood forces school districts in property-wealthy areas to share some local tax revenue with districts in other parts of the state that don’t have access to needed property tax dollars.