Texas House Bill HB120

Texas 2025 - 89th 1st C.S.

• Filed: 7/17/25

Caption

Relating to a temporary reduction in the maximum compressed tax rate of a school district; making an appropriation.

Summary

HB 120 would create a one-year, temporary reduction in Texas school districts’ maximum compressed tax rate for the 2026-2027 school year. It directs the commissioner of education to calculate each district’s maximum compressed tax rate under existing law and then reduce that rate by an equal amount using money appropriated for that purpose. The bill also includes a floor to prevent any district’s reduced rate from falling below 90 percent of another district’s reduced rate, which is intended to limit disparities among districts. The bill ties the reduced tax rate into multiple school finance and property tax provisions so that the lower rate is used for funding calculations and related statutory references during that school year. It also specifies that the temporary reduction will not carry forward into the 2027-2028 calculation of a district’s prior-year maximum compressed tax rate, and the section expires on September 1, 2028. In addition, the bill appropriates federal border-security reimbursement funds received under the One Big Beautiful Bill Act to the Texas Education Agency for the purpose of lowering school district maximum compressed tax rates.

Impact

HB 120 would amend the Education Code by adding a new temporary section governing school district maximum compressed tax rates and by overriding related references in the Education Code and Tax Code for the 2026-2027 school year. It would affect school district property tax rates, state school finance formulas, and the calculation of local tax effort used in funding determinations. The bill also creates a specific appropriation mechanism, directing certain federal funds to TEA for tax-rate reduction rather than general education spending or other uses.

Sentiment

There is no recorded committee testimony or vote history in the provided materials, so no formal support or opposition can be measured from the legislative record here. Based on the bill text, the measure appears designed to provide temporary property tax relief while preserving school finance formulas, which suggests a policy goal that may appeal to taxpayers and districts seeking short-term rate reduction. Because the bill was only filed and no hearings or votes are shown, the overall sentiment in the available record is neutral and undeveloped.

Contention

The main points of potential contention are the use of federal border-security reimbursement money for school tax-rate reduction, the temporary nature of the relief, and the mechanics of equalizing reductions across districts. Some stakeholders may question whether federal funds tied to border security should be redirected to education tax relief, while others may support that use as a way to return money to local taxpayers. Another possible issue is how the 90 percent floor and the exclusion of the temporary reduction from future PYMCR calculations could affect district equity, future tax rates, and state aid formulas.