LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION March 2, 2025 TO: Honorable Morgan Meyer, Chair, House Committee on Ways & Means FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: HB8 by Meyer (Relating to a reduction in the maximum compressed tax rate of a school district.), As Introduced Estimated Two-year Net Impact to General Revenue Related Funds for HB8, As Introduced: a negative impact of ($2,819,777,000) through the biennium ending August 31, 2027. General Revenue-Related Funds, Five- Year Impact: Fiscal Year Probable Net Positive/(Negative) Impact toGeneral Revenue Related Funds2026($1,395,085,000)2027($1,424,692,000)2028($1,465,040,000)2029($1,492,251,000)2030($1,482,947,000)All Funds, Five-Year Impact: Fiscal Year Probable Savings/(Cost) fromFoundation School Fund193 Probable Revenue Gain/(Loss) fromRecapture Payments Atten Crdts8905 Probable Revenue Gain/(Loss) fromSchool Districts2026($1,395,085,000)($398,078,000)($1,418,923,000)2027($1,424,692,000)($489,697,000)($1,437,153,000)2028($1,465,040,000)($479,369,000)($1,474,598,000)2029($1,492,251,000)($550,117,000)($1,506,280,000)2030($1,482,947,000)($444,637,000)($1,483,918,000) Fiscal AnalysisThe bill would reduce the maximum compressed tax rate for a school district, as calculated by the commissioner of education, for the 2025-2026 school year by $0.0331. The bill would make related conforming changes.The bill would provide that, for the purposes of determining a school district's maximum compressed rate for the 2026-2027 school year, the district's PYMCR would be the maximum compressed rate for the district using the amendments made by this bill for the preceding school year.
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION
March 2, 2025
TO: Honorable Morgan Meyer, Chair, House Committee on Ways & Means FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: HB8 by Meyer (Relating to a reduction in the maximum compressed tax rate of a school district.), As Introduced
TO: Honorable Morgan Meyer, Chair, House Committee on Ways & Means
FROM: Jerry McGinty, Director, Legislative Budget Board
IN RE: HB8 by Meyer (Relating to a reduction in the maximum compressed tax rate of a school district.), As Introduced
Honorable Morgan Meyer, Chair, House Committee on Ways & Means
Honorable Morgan Meyer, Chair, House Committee on Ways & Means
Jerry McGinty, Director, Legislative Budget Board
Jerry McGinty, Director, Legislative Budget Board
HB8 by Meyer (Relating to a reduction in the maximum compressed tax rate of a school district.), As Introduced
HB8 by Meyer (Relating to a reduction in the maximum compressed tax rate of a school district.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB8, As Introduced: a negative impact of ($2,819,777,000) through the biennium ending August 31, 2027.
Estimated Two-year Net Impact to General Revenue Related Funds for HB8, As Introduced: a negative impact of ($2,819,777,000) through the biennium ending August 31, 2027.
General Revenue-Related Funds, Five- Year Impact:
2026 ($1,395,085,000)
2027 ($1,424,692,000)
2028 ($1,465,040,000)
2029 ($1,492,251,000)
2030 ($1,482,947,000)
All Funds, Five-Year Impact:
2026 ($1,395,085,000) ($398,078,000) ($1,418,923,000)
2027 ($1,424,692,000) ($489,697,000) ($1,437,153,000)
2028 ($1,465,040,000) ($479,369,000) ($1,474,598,000)
2029 ($1,492,251,000) ($550,117,000) ($1,506,280,000)
2030 ($1,482,947,000) ($444,637,000) ($1,483,918,000)
Fiscal Analysis
The bill would reduce the maximum compressed tax rate for a school district, as calculated by the commissioner of education, for the 2025-2026 school year by $0.0331. The bill would make related conforming changes.The bill would provide that, for the purposes of determining a school district's maximum compressed rate for the 2026-2027 school year, the district's PYMCR would be the maximum compressed rate for the district using the amendments made by this bill for the preceding school year.
Methodology
The bill's provision reducing the maximum compressed tax rates of school districts by $0.0331 would have a cost to the state through operation of the school funding formula. Levy loss from the proposed reduction was estimated using estimated school district taxable values.Under provisions of the Education Code, the school district tax revenue loss is partially transferred to the state. The estimated cost to the Foundation School Program (FSP) is $1.4 billion in fiscal year 2026, $1.4 billion in fiscal year 2027, increasing to $1.5 billion in fiscal year 2030. The cost to the FSP includes estimated decreases in Recapture Payments - Attendance Credits of $0.4 billion in fiscal year 2026, $0.5 billion in fiscal year 2027, decreasing to $0.4 billion in fiscal year 2030 as a result of school district tax revenue loss. The decrease in recapture is reflected as a revenue loss in the table above because recapture is appropriated as a method of finance for the FSP in the General Appropriations Act.Note: Due to interactive effects, the estimated state cost of combining property tax rate compression as proposed by this legislation with policies that would reduce school district taxable property value would be lower than the combined state cost estimates of those policies in isolation.
Note: Due to interactive effects, the estimated state cost of combining property tax rate compression as proposed by this legislation with policies that would reduce school district taxable property value would be lower than the combined state cost estimates of those policies in isolation.
Local Government Impact
The provisions of the bill would only apply to school districts. The fiscal impact to school districts is shown in the table above.
Source Agencies: b > td > 304 Comptroller of Public Accounts
304 Comptroller of Public Accounts
LBB Staff: b > td > JMc, KK, SD, BRI
JMc, KK, SD, BRI