HB 222 would direct surplus state general revenue into the Property Tax Relief Fund and use those dollars to further reduce the state compression percentage used in Texas school finance. The bill amends the Education Code so the commissioner of education must lower the compression percentage as much as possible based on money deposited into the fund and any additional appropriations. If the compression percentage is reduced to zero in a school year, school districts would be prohibited from imposing a tier one maintenance and operations tax for that year and any later year, while still receiving state funding as though they had a compressed tax rate and no local share.
The bill also amends the Government Code to require the comptroller to transfer 90 percent of the amount by which general revenue for a biennium exceeds 104 percent of the prior biennium’s general revenue into the Property Tax Relief Fund. Those deposits could then be appropriated only to the Texas Education Agency for property tax relief through compression of school district tax rates. The bill applies beginning with the state fiscal biennium starting September 1, 2025, and would take effect on the 91st day after the legislative session ends.
Impact
HB 222 would change state budget and school finance law by creating a formula-driven mechanism to divert a large share of excess general revenue into a dedicated property tax relief fund. It would amend Education Code Section 48.255 and Government Code Section 403.109, affecting the calculation of school district tax compression, the use of state revenue, and the distribution of state aid to school districts. School districts, the Texas Education Agency, and the comptroller would all be affected, with the bill potentially reducing or eliminating local maintenance and operations tax authority over time.
Sentiment
Based on the bill text alone and the absence of committee testimony or recorded votes, the measure appears designed to provide broad property tax relief through school finance compression. The structure suggests a pro-tax-relief, pro-school-funding approach that would likely appeal to taxpayers and supporters of reducing local school property taxes. No formal discussion or vote history is available here to indicate opposition or amendment activity.
Contention
The main policy tension in HB 222 is between using surplus state revenue for property tax relief versus preserving state budget flexibility and local school district taxing authority. A key point of contention would likely be the automatic diversion of 90 percent of revenue above a set growth threshold into a dedicated fund, which limits legislative discretion over future appropriations. Another likely issue is the bill’s extreme endpoint: if compression reaches zero, districts could no longer impose tier one maintenance and operations taxes, raising concerns about long-term school finance stability and the adequacy of state funding.
Relating to an increase in the amount of the exemption of residence homesteads from ad valorem taxation by a school district and the protection of school districts against certain losses in local revenue.
Relating to reducing school district maintenance and operations ad valorem taxes through the use of certain state revenue and the allocation of certain constitutional transfers of money to the economic stabilization fund, the property tax reduction fund, and the state highway fund.
Relating to an increase in the amount of the exemption from ad valorem taxation by a school district of the appraised value of the residence homestead of a person who is elderly or disabled and the protection of school districts against certain losses in local revenue.