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.
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.