According to the Legislative Budget Board (LBB), SB 10 is not expected to have a significant fiscal impact on the State of Texas. The changes primarily affect the property tax calculation authority of local governments rather than state agencies or state revenues. The bill alters the formula for calculating the voter-approval tax rate, specifically lowering the multiplier used to determine how much revenue a taxing unit may raise without triggering a voter approval election. This multiplier is reduced from 3.5 percent to 2.5 percent for most taxing units—excluding special taxing units and municipalities or counties with populations under 75,000.

While the precise fiscal impact on local governments is difficult to predict due to varying local decisions on tax rates and voter behavior, the LBB notes that reducing the multiplier constrains property tax growth, which may lead to lower tax levies over time unless voters approve higher rates. According to estimates provided by the Comptroller, if jurisdictions do not exceed the new lower voter-approval tax rate, the cumulative effect on property tax revenues could be substantial. The potential revenue loss is estimated at $208.9 million in tax year 2026, growing to $1.09 billion by tax year 2030. These figures assume that jurisdictions uniformly comply with the new limits and that no voter-approved increases occur—thus serving as illustrative maximums rather than precise projections.

In essence, while the bill does not directly affect state finances, it could lead to a meaningful reduction in future property tax revenues for many local governments, depending on how often and by how much they would have otherwise increased tax rates above the new threshold without voter input.

SB 10 proposes a targeted reform to the Texas property tax system by reducing the voter-approval tax rate multiplier from 3.5% to 2.5% for taxing units that are not classified as special taxing units or small municipalities/counties (those with populations under 75,000). The voter-approval tax rate represents the threshold beyond which a taxing unit must seek voter approval to increase its maintenance and operations (M&O) property tax rate. By lowering this multiplier for larger jurisdictions, S.B. 10 strengthens voter control over property tax increases in those areas, increasing democratic accountability and slowing the pace of automatic levy growth.

On its face, the bill reinforces key liberty principles such as individual liberty, limited government, and the protection of private property rights. It empowers taxpayers by requiring more frequent elections when local governments seek to raise taxes beyond a reduced threshold. In doing so, it makes tax increases less automatic and more dependent on direct public consent. It also aims to correct a trend observed since 2019, wherein municipal and county property tax levies continued to rise, often at faster rates than school district taxes, despite state-level school tax relief.

However, the bill’s design reveals critical shortcomings. Most notably, the reduced multiplier only applies to taxing units serving populations over 75,000. This exclusion leaves a large number of Texans in small to mid-sized jurisdictions without the enhanced protection the bill offers. Many of these areas are among the most rapidly growing in the state and are precisely where taxpayers feel the pressure of expanding local budgets. This creates an inequitable system of tax restraint where some residents are safeguarded from tax increases while others are not, simply based on jurisdiction size. It also undermines the principle of equal treatment under the law and weakens the policy’s consistency and long-term credibility.

Further, SB 10, like its predecessor (SB 9 from the prior special session), fails to address one of the most critical components of sustainable fiscal reform: spending restraint. Governor Abbott’s call for a special session included not just property tax rate reform, but also local government spending limits. SB 10 completely omits this second pillar. Without spending controls, taxing entities can still pursue aggressive growth through alternative means such as new fees, creative accounting, and the strategic use of exemptions. The bill restricts one lever of revenue generation without addressing the underlying drivers of government expansion. In this way, the bill risks being circumvented by the very entities it is meant to constrain.

The fiscal implications reinforce the selective nature of the reform. While the state faces no direct budget impact, the bill is projected to reduce property tax revenues for affected local governments by an estimated $208.9 million in tax year 2026, climbing to over $1 billion by 2030. However, these estimates only apply to jurisdictions that fall under the bill’s scope. The rest, primarily smaller counties and municipalities, are unaffected, limiting the scale of relief and again reinforcing the two-tiered system.

In conclusion, while the intent of SB 10 is commendable, slowing the growth of local property taxes and increasing voter oversight, it ultimately falls short of delivering comprehensive, equitable, and structural tax reform. It provides selective relief, maintains exemptions for a wide swath of jurisdictions, and ignores spending growth altogether. For these reasons, the bill should be viewed as an incremental measure rather than a transformational one. In light of these shortcomings, and consistent with the recommendations made for similar legislation in the prior session, Texas Policy Research recommends that lawmakers vote NO on SB 10 and instead encourages them to pursue broader reforms that apply tax limits uniformly across all jurisdictions, impose meaningful spending caps, and lay the groundwork for long-term property tax reduction or elimination. Anything less is insufficient to meet the expectations of Texas taxpayers and the mandate for bold reform.

• Individual Liberty: The bill strengthens individual liberty by making it more likely that voters in larger jurisdictions will be able to approve or reject local property tax increases. By lowering the multiplier used to calculate the voter-approval tax rate from 3.5% to 2.5% for municipalities and counties with populations over 75,000, the bill ensures that more tax hikes require explicit consent from the people. This enhances democratic accountability and aligns with the principle that citizens should have a meaningful voice in decisions that affect their economic freedom. However, this protection is not extended equally to all Texans. Smaller and mid-sized jurisdictions are exempt from the stricter cap, leaving many residents without the same degree of control over their local tax burdens. This selective application weakens the universal defense of liberty.
• Personal Responsibility: The bill encourages a degree of personal responsibility by requiring local elected officials in larger jurisdictions to justify higher tax rates directly to voters. This makes officials more accountable for their budgetary decisions and increases the political cost of excessive taxation. However, without corresponding local spending limits, the incentive for governments to exercise long-term fiscal discipline remains weak. Local governments can continue to expand spending through other channels, such as issuing debt, raising fees, or manipulating appraisals, thereby avoiding the direct responsibility that would come with true structural reform.
• Free Enterprise: The bill moderately supports the principle of free enterprise by reducing the likelihood of unpredictable or unaffordable tax increases in large jurisdictions. Property tax increases can stifle investment, especially for small businesses that rent or own commercial space subject to local tax levies. Requiring voter approval for more significant increases provides stability and predictability, which are essential to economic freedom. However, the bill’s limited scope means that many small to mid-sized communities, often hubs of new commercial development, are excluded. These areas may continue to impose rising tax burdens on businesses without the enhanced voter oversight the bill mandates elsewhere, creating an uneven playing field for enterprise across the state.
• Private Property Rights: Unchecked property tax increases pose a threat to private property rights by eroding the affordability of ownership over time. By lowering the threshold at which voters must approve tax rate hikes, the bill helps protect property owners, at least in larger jurisdictions, from this dynamic. It reaffirms the principle that government should not be able to increase the cost of property ownership without public consent. Still, for property owners in smaller jurisdictions, no new protections are provided. The bill continues to allow these governments to increase levies at the higher 3.5% threshold, leaving the property rights of millions of Texans comparatively vulnerable.
• Limited Government: The bill is framed as a limited-government reform and symbolically affirms that principle by reducing the multiplier used to calculate tax increases without voter consent. However, the bill does not actually limit the size or scope of government. In the absence of statutory caps on local government spending, an explicit component of Governor Abbott’s special session agenda, local jurisdictions retain the ability to grow budgets rapidly by other means. Thus, while the bill adds a layer of procedural constraint, it fails to enact substantive limits on government expansion. Without durable checks on spending, taxation restraint alone is an incomplete tool for protecting liberty.

• HB 9 (Same As)