Overall Vote Recommendation

Vote No; Amend

Principle Criteria

Free Enterprise

Property Rights

Personal Responsibility

Limited Government

Individual Liberty

Digest

SB 1 is the General Appropriations Act for the State of Texas for the 2026-2027 biennium. The bill serves as the state’s primary financial plan, detailing the allocation of funds across various government functions, agencies, and services. It provides the legal authority for state spending and outlines revenue projections and restrictions for the upcoming biennium.

Total Appropriations:

The total budget for the 2026-2027 biennium is $336.1 billion, representing a 4.4% increase in all funds or an 8.2% increase in state funds (a total 0.9% increase from the previous biennium). The budget represents a 42.7% increase in state funds or a 26.8% increase in all funds since the 2022-23 budget. This budget consists of General Revenue Funds, General Revenue-Dedicated Funds, Federal Funds, and Other Funds, with $153.5 billion appropriated from General Revenue.

Major Funding Allocations by Article:

General Government (Article I): This section covers state administrative agencies, including the Governor’s Office, the Comptroller of Public Accounts, and the Texas Facilities Commission. It also includes funding for agencies that oversee ethics, veterans' affairs, and emergency communications.
- Total Appropriated: $16.5 billion (4.9% of budget)
  - Texas Facilities Commission: $397.1 million
  - Office of the Attorney General: $1.5 billion
  - Decrease of $5.2 billion due to expiration of pandemic-related federal funds
Health and Human Services (Article II): As one of the largest portions of the budget, this section provides funding for Medicaid, the Children's Health Insurance Program (CHIP), mental health services, and other public health initiatives. The Health and Human Services Commission (HHSC) and the Department of State Health Services (DSHS) are the primary recipients of funds.
- Total Appropriated: $103.6 billion (30.8% of budget)
  - Medicaid program: $80.8 billion (largest allocation in this article)
  - Behavioral health services: $10 billion
  - Child Protective Services: $4.2 billion
  - Decrease of $2.5 billion in mental health funding due to completion of one-time capital projects
Education (Article III): This article includes appropriations for K-12 public education through the Texas Education Agency (TEA), as well as funding for the Higher Education Coordinating Board, community colleges, and public universities. The budget also covers teacher retirement benefits and school safety initiatives.
- Total Appropriated: $129.7 billion (38.6% of budget)
  - Public education funding: $97.1 billion
  - Higher education funding: $32.6 billion
  - $70.9 billion allocated for the Foundation School Program (an increase of $11.3 billion from the prior biennium)
  - $4.3 billion allocated for teacher salary increases (contingent on legislative action)
The Judiciary (Article IV): This article funds Texas courts, judicial agencies, and the Office of Court Administration. It includes appropriations for the Supreme Court of Texas, the Court of Criminal Appeals, and district courts.
- Total Appropriated: $1.2 billion (0.4% of budget)
  - A decrease of 1.3% due to efficiency measures
Public Safety and Criminal Justice (Article V): This section provides funding for law enforcement and correctional institutions, including the Texas Department of Public Safety (DPS), the Texas Department of Criminal Justice (TDCJ), and the Texas Military Department. It also includes funding for juvenile justice programs.
- Total Appropriated: $20.6 billion (6.1% of budget)
  - Texas Department of Criminal Justice: $9.8 billion (13.1% increase)
  - Border security initiatives: $6.5 billion across multiple agencies
  - Increased funding for correctional officer salaries and pretrial diversion programs
Natural Resources (Article VI): Funding is allocated to environmental and conservation-related agencies, including the Texas Commission on Environmental Quality (TCEQ), the Texas Parks and Wildlife Department, and the Texas Water Development Board.
- Total Appropriated: $7.96 billion (2.4% of budget)
Business and Economic Development (Article VII): This article funds the Texas Department of Transportation (TxDOT), the Texas Workforce Commission, and the Texas Department of Housing and Community Affairs. It includes appropriations for highway construction, job training programs, and economic development incentives.
- Total Appropriated: $49.2 billion (14.6% of budget)
  - Texas Department of Transportation (TxDOT): $39.9 billion
  - $26.7 billion from the State Highway Fund, including Proposition 1 and Proposition 7 revenues
  - $35.8 billion for highway planning, construction, and maintenance
Regulatory (Article VIII): This section funds agencies that oversee professional licensing, insurance regulation, and utility oversight. Agencies funded include the Texas Department of Licensing and Regulation (TDLR), the Public Utility Commission (PUC), and the Texas Department of Insurance.
- Total Appropriated: $6.03 billion (1.8% of budget)
  - Increased funding for insurance and utility oversight
General Provisions (Article IX): This section includes various spending policies, salary classifications, and reporting requirements. It also outlines limits on state agency expenditures and directives for budget transparency.
The Legislature (Article X): This section governs the Legislature and its operations.
- Total Appropriations: $540.3 million (0.2% of budget)

Also worth noting is the Debt Service and State Employee Benefits allocated across Articles of SB 1:

State employee retirement system: $1.9 billion
Teacher retirement benefits: $6.4 billion
Debt service payments: $4.6 billion, a decrease of $131.1 million

Key Budget Considerations:

The public education budget remains a top priority, with significant allocations to school finance and teacher pay adjustments.
Medicaid funding continues to be a major cost driver, with efforts to manage rising healthcare costs while maintaining essential services.
Infrastructure and transportation funding includes continued investment in road maintenance, highway expansion, and rural connectivity projects.
Public safety funding increases support for law enforcement agencies and correctional facilities.
Economic development initiatives are funded to encourage business growth, workforce development, and housing affordability programs.

Author

Joan Huffman

Contact the Author

Sen. Joan Huffman

Capitol Phone:

(512) 463-0117

Capitol Office:

EXT E.14

E-Mail:

[email protected]

Visit Official Website

Fiscal Notes

SB 1 outlines a $336.1 billion biennial budget for Texas, reflecting a 0.9% increase from the previous biennium. The budget prioritizes education, healthcare, and public safety while adhering to constitutional spending limits. The General Revenue portion of the budget is $153.5 billion, a 7.6% increase, reflecting Texas’ strong revenue collections but also growing demands on state resources.

One of the largest fiscal implications comes from education funding, where $129.7 billion is allocated, an increase of $8 billion over the previous biennium. The Foundation School Program (FSP) receives $70.9 billion, supporting property tax relief and teacher salary increases. A significant portion of the budget is also dedicated to Medicaid and Health and Human Services, totaling $103.6 billion, reflecting the rising costs of healthcare and a shift in funding responsibility due to a decline in federal matching funds. Additionally, public safety and criminal justice spending rises to $20.6 billion, with $6.5 billion set aside for border security efforts.

The budget also includes $4.6 billion in debt service, a slight decrease of $131.1 million, reflecting efforts to manage state liabilities responsibly. State employee and teacher retirement benefits receive $8.3 billion, including contributions to the Employees Retirement System (ERS) and the Teacher Retirement System (TRS). Additionally, transportation funding of $39.9 billion primarily relies on dedicated revenues from Proposition 1 (oil and gas tax revenue) and Proposition 7 (sales tax transfers) to the State Highway Fund.

While the budget stays $10.3 billion under the state’s constitutional “pay-as-you-go” limit, fiscal pressures remain. Federal COVID-19 relief funds have been exhausted, requiring the state to backfill previous expenditures, particularly in corrections and healthcare. Additionally, growing demands for education funding, public safety, and infrastructure improvements may require future adjustments. The budget also allocates $51 billion for property tax relief (includes previous legislative efforts and is not entirely reflective of new tax relief efforts which only totals $6 billion for the biennium).

Vote Recommendation Notes

SB 1 proposes $336.1 billion in total state spending for the 2026-2027 biennium, marking the largest budget in Texas history. This represents a more than 40% increase over just two budget cycles, far exceeding the combined growth of population and inflation. While lawmakers should ensure core government services are funded responsibly, the continued assumption that the previous budget’s spending levels were conservative leads to unchecked growth in government.

Texas has $194.6 billion available for general spending in 2025-2027, including a $24 billion surplus from the previous biennium, which represents a massive overcollection of taxpayer money. Instead of returning these excess funds to taxpayers, the Legislature is increasing spending across nearly every category. Despite this historic surplus, only $6 billion is being allocated to new tax relief efforts, a fraction of what should be returned to the people of Texas.

Why This Budget is Unsustainable

Expanding Government Beyond Taxpayer Means: SB 1 sets an unsustainable precedent by treating previous spending as a baseline and increasing it, rather than defaulting to cuts.
Corporate Welfare & Unnecessary Spending: The budget continues to fund corporate welfare programs, including economic development incentives and subsidies for politically favored industries, rather than prioritizing tax relief or essential services.
Expanded Medicaid & Public Education Spending Increases: Medicaid spending is projected at $80.8 billion, fueled by rising healthcare costs and a shifting burden from federal to state dollars. Public education funding rises to $129.7 billion, despite a lack of meaningful reforms in efficiency or school choice.
Rainy Day Fund at Capacity, Yet No Meaningful Taxpayer Relief: Texas’ Economic Stabilization Fund (Rainy Day Fund) will reach its $28.5 billion cap, meaning excess revenue should be returned to taxpayers instead of being spent on government expansion.

Recommendation for Lawmakers: Default to Cutting, Not Expanding

Lawmakers should not treat the previous biennium’s budget as a starting point but instead adopt a zero-based budgeting mentality, questioning every dollar spent. The focus should be on:

Cutting corporate welfare and economic development handouts.
Reforming Medicaid spending to reduce long-term liabilities.
Curbing runaway public education spending and prioritizing school choice.
Returning more of the $24 billion surplus to taxpayers rather than expanding government.
Resisting new government programs and maintaining strict constitutional spending limits.

Conclusion: A Vote for SB 1 is a Vote for Bigger Government

Rather than prioritizing true fiscal responsibility and taxpayer relief, SB 1 grows government well beyond sustainable levels. Texas must not continue down this path of unchecked spending under the assumption that more government is the default. As such, Texas Policy Research recommends that lawmakers vote NO on SB 1 and instead work toward a budget that reduces spending, returns excess revenue to taxpayers, and shrinks government to a sustainable size.

References

State Budget by Biennium (1996 - 2025)

State Budget by Article/Biennium (1996 - 2025)

Texas Lawmakers Unveil $332.9B Budget Proposal for 2026-27

Texas Comptroller Gives Biennial Revenue Estimate

View Bill Text and Status