Navigating the New Texas Political Landscape: Insights from the 89th Legislative Session
Legislative Series | Event Date: June 6, 2025
Dallas businesses face a fundamentally different political landscape following the 89th Texas Legislative Session. This new environment will affect everything from property taxes to workforce development for years to come.
Dr. Mark P. Jones, a leading Texas political analyst at Rice University's Baker Institute, provided Dallas business leaders with essential insights into how these changes will impact our economy. This session reshaped Texas politics through Speaker Dustin Burrows' consolidation of power and Lieutenant Governor Dan Patrick's legislative dominance. These changes will influence business decisions, policy outcomes, and electoral dynamics through 2027.
Understanding the New Legislative Dynamics
The 89th Session fundamentally altered the balance of power in Austin. Speaker Burrows, initially elected with minority Republican support and heavy Democratic backing, skillfully transformed potential weakness into consolidated strength by passing Lieutenant Governor Patrick's conservative agenda more comprehensively than any recent session.
"This session was different," Dr. Jones explained. "Traditionally, we have this dynamic where Dan Patrick pushes out a lot of really conservative bills in the Senate, and then they go to the House and they die. But this session, Burrows went to the other extreme and passed more of Dan Patrick's conservative bills than we've seen in modern times."
Unlike previous sessions where the House moderated Senate priorities, the new dynamic suggests more predictable conservative policy outcomes. This provides greater certainty for long-term planning, though it may limit business-friendly compromises.
Key Takeaways
Immediate Business Impact:
Property tax relief prioritized homeowners over businesses The $18 billion relief package focused heavily on homestead exemptions rather than compression that would have benefited commercial properties
Conservative legislation passed at historic levels Fundamentally changing the House's traditional role as a moderating force
Future Business Environment:
School choice launches with expansion potential Governor Abbott's ESA program starts with $1 billion, impacting 50,000-70,000 students initially
Budget surplus may not last through 2027 The current surplus could disappear, creating fiscal constraints
2026 U.S. Senate race could reshape Texas politics Attorney General Ken Paxton holds a 9-point lead over Senator Cornyn in early polling
Property Tax Relief: Winners and Strategic Implications
This shift in legislative dynamics directly influenced property tax relief, with Senate priorities prevailing over traditional House-Senate compromises. "The distribution leaned more towards what the Senate wanted rather than what the House wanted," Dr. Jones noted. "It focused far more on expanding the homestead exemption, which is the Senate's preference over the House, which had favored more of the compression route that would have benefited both homeowners but also businesses."
The compromise included meaningful relief for small businesses through HB 9, raising the inventory tax exemption from $2,500 to $125,000. This particularly benefits retailers, wholesalers, and manufacturers maintaining significant inventory levels. However, larger commercial property owners seeking broader tax rate compression must continue advocating for different approaches in future sessions.
School Choice: Limited Start with Expansion Potential
Governor Abbott's $1 billion Education Savings Account program serves an estimated 50,000-70,000 students initially. This represents roughly 1.3% of Texas's school-age population. If public demand for the voucher program exceeds the funding available, it will prioritize applicants in this order:
Students with disabilities from families with an annual income at or below 500% of the federal poverty level, which includes any four-person household earning less than roughly $160,000
Families at or below 200% of the poverty level, which includes any four-person household earning less than roughly $64,300
Families between 200% and 500% of the poverty level
Families at or above 500% of the poverty level (limited to 20% of the program’s budget)
"The key for the governor is that he started the ball rolling," Dr. Jones explained. "He's created the legislation such that when we go to the next session, they'll be able to expand it, and then keep expanding it, assuming that they don't face some really severe budgetary headwinds in 2027."
The 2026 Senate Race: Reshaping Texas Politics
Early polling shows Attorney General Ken Paxton leading Senator John Cornyn by nine points in the Republican primary. This could fundamentally alter Texas's political landscape with far-reaching business implications.
"Republican primary voters already had a very well-funded campaign making the case about issues of abuse of office, federal investigations, marital infidelity, and Republican primary voters said, 'We don't care,'" Dr. Jones observed. "That was before Paxton was acquitted in the Senate trial."
The concern among Republican strategists: Paxton could lose to a well-funded Democrat like Congressman Colin Allred. A competitive Senate race would bring $50-75 million in national Democratic investment. This could potentially produce Texas's first Democratic statewide victory since 1994.
Looking Ahead: Budget Challenges and the 90th Session
The current budget surplus may not persist. Three specific factors drive this concern: property tax compression requires annual funding, legislators must find additional billions to expand ESAs, and federal policy changes could affect state revenues.
"If we are facing a deficit in 2027, that would be a very different session," Dr. Jones explained. "For most of the members of the House and a significant number of the Senate, it would be their first time dealing with a session where you were cutting rather than expanding."
Looking Forward
The 89th Legislative Session marks a turning point for Texas business advocacy. Understanding these political realities (from consolidated conservative power to potential federal race implications) will be essential for Dallas business leaders navigating the changing landscape ahead.
Speaker Information & Links
Dr. Mark P. Jones is the James A. Baker III Institute Fellow at Rice University and co-director of the Presidential Elections Program. His annual partisan voting analysis provides the definitive assessment of legislative behavior in Texas. Dr. Mark P. Jones
Event Sponsors
Gold Sponsors: Dallas College | Oncor | HNTB | Spectrum
Silver Sponsors: UT Dallas | Polsinelli | Children's Health