According to the Legislative Budget Board (LBB), SB 9 is projected to have no significant fiscal implications for the state government. However, it will have meaningful fiscal effects at the local government level due to its change in the calculation of the voter-approval tax rate. Specifically, the bill lowers the growth factor applied to the no-new-revenue maintenance and operations (M&O) tax rate from 3.5% to 2.5% for taxing units other than small municipalities (under 75,000 population) or special taxing units. This lowers the threshold at which local governments must seek voter approval to adopt higher property tax rates.

The key fiscal consequence is a constraint on local governments' ability to raise property tax revenue without an election. This tighter cap could lead to lower adopted tax rates in many jurisdictions. The exact impact is uncertain, as it depends on how many local entities would have otherwise exceeded the revised threshold and whether voters would approve higher rates in subsequent elections. However, modeling by the Comptroller provides illustrative estimates of potential local revenue losses under the assumption that no elections approving higher rates would occur.

According to the Comptroller's estimate, the cumulative impact of this policy change would result in a $208.9 million reduction in local property tax levies in tax year 2026, growing to $424.9 million in 2027, and reaching approximately $1.09 billion by 2030. These projections highlight how the fiscal effect compounds over time as tax base growth is constrained by the lower voter-approval threshold.

The Committee Substitute for SB 9 falls short of delivering the broad-based, structural property tax relief that Texans were promised and that Governor Abbott clearly called for in the proclamation for the 1st Called Session of the 89th Legislature. While the bill makes a technical adjustment to the voter-approval tax rate calculation, lowering the growth multiplier from 3.5% to 2.5%, it does so only for counties and municipalities with populations above 75,000, a sharp deviation from the originally filed bill, which applied this reform to jurisdictions above 30,000. This shift substantially narrows the bill's scope and denies a meaningful number of taxpayers across small and mid-sized jurisdictions the protection of tighter limits on property tax increases. The policy effect is a two-tiered system of tax restraint, one for large jurisdictions and another for everyone else.

This exemption undercuts the principle of tax equity. All Texans, regardless of where they live, deserve the same protections from automatic, compounding increases in property tax burdens. Allowing some jurisdictions to continue operating under a more permissive cap creates geographic disparities in taxpayer treatment and leaves many residents, especially in suburban and growing exurban communities, exposed to unaffordable local levy growth. It contradicts the stated legislative goal of delivering relief to “all Texas taxpayers,” and weakens public trust in the Legislature’s ability to deliver fair and comprehensive reform.

Moreover, the bill fails to address the second component of Governor Abbott’s special session agenda: the imposition of spending limits on local governments. Capping tax rate growth without restricting spending is a partial fix that risks being circumvented through creative budgeting, fee increases, debt issuance, or the use of disaster exemptions. The state has seen how local governments can work around tax rate caps when no corresponding constraints are placed on expenditures. Without enforceable, transparent local spending limits, the growth in government remains unchecked, and the burden ultimately returns to taxpayers through other mechanisms. SB 9 offers no tools to stop this underlying behavior, making it a hollow concession to the broader goal of fiscal restraint.

In light of Governor Abbott’s clear call for both tax rate reduction and spending controls, SB 9 in its current form appears to be a strategic retreat rather than a serious fulfillment of that request. It takes a politically convenient step by applying the cap only to the largest jurisdictions, those that are more likely to resist it, but allows the vast majority of local entities to continue business as usual. This selective approach not only undermines statewide uniformity in tax policy but also delays the more robust and necessary reforms the Governor and Texas taxpayers expect: a real pathway to eliminating the property tax and putting firm limits on government growth.

The bill’s intent, to reduce the pressure on taxpayers, is commendable, but intent alone does not justify passage when the mechanics fall short. By narrowing its applicability and ignoring spending-side reforms, the Committee Substitute for SB 9 does not represent the principled, structural change that property taxpayers need. Texas should not settle for piecemeal reforms when the opportunity for transformational change is at hand.

Therefore, Texas Policy Research recommends that lawmakers vote NO on SB 9. Lawmakers should return with a revised, bolder proposal that applies uniform tax rate restrictions to all taxing entities, imposes real limits on local spending growth, and lays the groundwork for the future elimination of the property tax altogether. Anything less would be a missed opportunity and a failure to meet the mandate set forth by the Governor and demanded by Texans.

• Individual Liberty: The bill partially supports individual liberty by reinforcing voter control over certain property tax increases in larger jurisdictions. By lowering the voter-approval tax rate multiplier from 3.5% to 2.5% for counties and municipalities with populations over 75,000, it increases the likelihood that tax hikes will require public approval—thereby enhancing democratic consent and transparency. However, this protection is not extended to all Texans. Residents in smaller and mid-sized jurisdictions (those under 75,000 population) are excluded from the reduced cap, undermining the principle of equal protection under the law. This selective application of tax restraints means that liberty is more robustly defended in some regions than in others, which weakens the bill’s commitment to universal individual liberty.
• Personal Responsibility: The bill marginally encourages personal responsibility by requiring elected officials in larger jurisdictions to face voters more often when proposing higher tax rates. This raises the political cost of tax increases and encourages more disciplined fiscal decisions. However, the bill fails to include spending limits, which are necessary to instill lasting fiscal responsibility in local governments. Without limits on expenditures, local officials can continue unsustainable budget growth by other means, such as fee increases or debt. The absence of comprehensive reform means the incentive to act responsibly is limited and easily circumvented.
• Free Enterprise: To the extent that the bill restrains automatic tax increases, it benefits business owners in larger jurisdictions by offering a more predictable and voter-accountable tax environment. This is particularly helpful for small businesses that operate on narrow margins and are disproportionately impacted by rising property tax bills passed on through rent or ownership. Yet again, the bill’s limited geographic scope means that businesses in jurisdictions under 75,000 population receive no new protection. In fact, many of these communities are among the fastest-growing and are imposing increasing tax burdens on their commercial tax bases. As such, the bill's contribution to a freer enterprise climate is incomplete and uneven.
• Private Property Rights: By lowering the voter-approval threshold for tax increases, the bill helps protect private property rights, but only for a subset of Texans. Property taxes that grow unchecked can erode property ownership by making it unaffordable over time, functionally reducing ownership to a form of perpetual rent paid to the government. The principle is upheld in high-population jurisdictions, where the new 2.5% cap provides added protection. But for the millions of Texans outside those jurisdictions, property rights remain just as vulnerable as before. A core tenet of liberty, equal protection of property, is therefore inconsistently applied.
• Limited Government: While the bill symbolically supports limited government by reducing the automatic tax growth threshold in larger jurisdictions, it does not constrain the actual size or scope of government. Crucially, it omits any spending limits, which were part of Governor Abbott’s explicit special session call. Without spending discipline, local governments can still expand their budgets rapidly through increased appraisals, new fees, or issuing debt outside of voter approval. This leaves the underlying drivers of government growth untouched and unaccountable. As such, the bill reflects a limited vision of limited government, and it misses a key opportunity to implement comprehensive restraint.

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The Texas Legislature's Broken Promises: Rising Property Taxes Despite "Relief"

Texas Property Tax Levies 1998 - 2023