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HB 166

Relating to the elimination of school district maintenance and operations ad valorem taxes and the creation of a joint interim committee on the elimination of those taxes.

89th Legislature, 2nd Called Session (2025) Introduced by Will Metcalf

Bill eliminates school district property taxes for operations and creates committee to study replacement funding mechanisms for Texas public schools.

Referred to Ways & Means
#education--primary&secondary--finance(i0250) #interimstudies(i0448) #lieutenantgovernor(s0096) #legislature(i0520) #speakerofthehouse(s0306) #taxation--sales(i0800) #taxation--schooldistrict(i0785)
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Bill Summary · HB 166

Legislative bill overview

HB 166 proposes eliminating school district maintenance and operations (M&O) ad valorem taxes—property taxes that fund day-to-day school operations—and establishes a joint interim committee to study how to implement this elimination. The bill does not specify replacement funding mechanisms in its current form, leaving the fiscal structure of school finance as a matter for the interim committee to explore.

Why is this important

School M&O ad valorem taxes currently generate substantial revenue for Texas public schools; eliminating them would represent a significant restructuring of school finance affecting both property taxpayers and school funding levels. The outcome of the interim committee's work could determine whether schools receive alternative state funding, whether overall education spending increases or decreases, and how property tax burdens shift across different communities and income levels.

Potential points of contention

  • Funding replacement uncertainty: The bill doesn't specify how schools would be funded if M&O taxes are eliminated, raising concerns about whether adequate alternative funding would materialize or if schools would face budget cuts.
  • Regional equity concerns: Property-wealth disparities mean elimination could disproportionately affect less affluent school districts that rely heavily on local tax bases, potentially widening achievement gaps.
  • State budget impact: Eliminating local property taxes while maintaining school quality would likely require substantial new state funding, raising questions about overall tax burden shift and state fiscal capacity.

Compiled from official sources — confirm details with the bill’s official record.

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