By OBBM Network Editorial Staff

Derived from an episode of Politics with the Big Dogs.

Imagine checking your mailbox after a weekend of yard work, only to see a property‑tax notice that looks more like a small mortgage statement. That’s the reality for many Texas homeowners as the state’s legislature wrestles with two competing solutions to soaring school‑funding costs.

The History of Homestead Exemptions in Texas

Since the mid‑1990s, Texas has used a mandatory homestead exemption to ease the tax burden on homeowners. In 1996 the exemption was set at $5,000; three years later it rose to $15,000. Lieutenant Governor Dan Patrick has made expanding that exemption a cornerstone of his agenda. In 2015, Senate Bill 1 lifted the mandatory exemption from $15,000 to $25,000, and a later bill pushed it to $40,000. Most recently, the Senate advanced a measure that would exempt the first $140,000 of a home’s valuation from property tax.

Patrick argues that these increases directly protect seniors, veterans and low‑income families. He points out that a homeowner with a $150,000 house would pay tax on only $10,000 of value under the $140,000 exemption, dramatically reducing the annual bill.

Governor Abbott’s Push to End M&O Funding

Governor Greg Abbott takes a different approach. He targets the Maintenance & Operations (M&O) component of school financing, which the administration estimates adds roughly $30 billion to the state budget each year. Abbott contends that eliminating or sharply cutting M&O would halve property‑tax bills because the current system forces taxpayers to cover $19,000 per student while the state spends only $13,000.

“We’re paying about $19,000 per child, and that’s a 50 percent premium over what the state actually spends,” Abbott said in a recent press briefing. “If we cut M&O, homeowners will see their bills cut in half.”

The Numbers Behind the Debate

Texas operates on a two‑year budget of roughly $338 billion, which translates to about $170 billion per year. Approximately $30 billion of that goes to public‑school M&O costs. The state’s per‑student expenditure is $13,000, but the combined local and state contribution reaches $19,000, leaving a $6,000 gap that is largely covered by property taxes.

Critics of the exemption strategy note that in affluent suburbs, where home values exceed $1 million, the $140,000 exemption still leaves a sizable taxable base. Those districts generate enough revenue to fund schools without state aid, but the exemption would shift the tax burden to less‑wealthy areas that rely on local property taxes to meet the funding gap.

Legislative Dynamics: Who Holds the Leverage?

The Texas House Ways and Means Committee has begun reviewing the data, but no clear consensus has emerged. Historically, bills with low numbers—like House Bill 1 or Senate Bill 1—receive priority from the speaker or lieutenant governor, giving Patrick significant influence. Meanwhile, Abbott’s agenda depends on negotiating trade‑offs with House leadership, who may withhold support for his M&O reforms in exchange for other priorities.

“The governor, the lieutenant governor, and the speaker are all holding each other’s bills hostage to get what they need,” Holm observed during the discussion. “That’s how the Texas legislature often works—through a series of strategic trades.”

What This Means for Texas Families

For the average homeowner, the choice is stark. A larger exemption reduces the taxable portion of a modest‑value home, but it can also erode the tax base that funds local schools. Conversely, cutting M&O could lower overall tax rates but would likely require the state to find new revenue sources or reduce school services.

As Holm summed up, “The real fight is over how we pay for our children’s education without drowning homeowners in taxes.” The outcome will shape Texas’ fiscal landscape for years to come, influencing everything from high‑school football stadium projects to the state’s ability to respond to health crises.

The full episode of Politics with the Big Dogs is available on OBBM Network TV.