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Texas State budget: What business leaders need to know

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By Travis Reynolds, Vice President, Public Policy 

The Texas Senate has passed its version of the state budget, Senate Bill 1, launching the most critical negotiation of this legislative session and a step forward for the only bill the Legislature must pass before adjournment.  

Budget process snapshot

The Texas State Capitol Building

Texas operates on a two-year budget cycle. Each legislative session: 

      1. State agencies submit funding requests 
      2. The House and Senate each develop and pass budget revisions 
      3. A Conference Committee reconciles differences 
      4. Both chambers approve the final budget 
      5. The Governor signs it into law 

What’s happening now 

For the 2026-2027 biennium, Texas Comptroller Glenn Hegar projects $194.6 billion available for general spending, including a $24 billion surplus. While smaller than last session’s historic $32 billion surplus, this represents significant investment potential for the future of our state. 

Key DRC priorities in Senate Bill 1 

The Legislature has an opportunity to invest in areas and opportunities important to the future of our state and the Dallas Region. Here are a few of the items related to our legislative agenda the DRC is watching as SB 1 moves through the budget process. 

    • Infrastructure: The Senate has allocated substantial funding to invest in Texas’ infrastructure needs, including: 
      • $36+ billion for transportation planning, design, construction, and maintenance  
    • Education and Workforce: Funding for PK-12 and higher education makes up the single largest segment of funding in the budget, with more than $73 billion of general revenue allocated to education spending, comprised of: 
      • $4.3 billion for teacher pay raises 
      • $500 million for school safety 
      • $850 million endowment for Texas State Technical College System capital needs 
      • $410 million for the Texas Research Incentive Program, including $150 million for Dallas Region universities 
    • Property tax relief: Gov. Greg Abbott tagged property tax relief as a top priority for this legislative session, and the Senate provided $51 billion for new and continuing tax relief in its version of the budget. Gov. Abbott and our lawmakers have deliberated and addressed this topic in recent legislative sessions, but here’s what’s new for this session: 
      • $3.5 billion to increase homestead exemption from $100,000 to $140,000 
      • $3 billion for school district compression to lower property tax burden for homeowners and businesses 

What comes next 

The House Appropriations Committee will continue meeting, with a House version of SB1 expected by late April. This leaves the remainder of the session for House-Senate negotiations. The current Senate budget stands at approximately $163 billion, under the state’s constitutional spending limit. 

As business leaders, staying informed throughout this process is crucial. The Dallas Regional Chamber’s Public Policy team will continue to provide timely updates. 

Are there items in the state budget important to your company? Let us know.