Texas Lawmakers File Over 1,050 Bills, Target Data Center Tax Breaks

More than 1,050 bills hit the Texas Legislature's desk by 12:30 p.m. Monday, and buried in that pile is a bipartisan push that could cost data centers more than $1 billion a year in tax relief.

By noon, Democratic and Republican lawmakers had filed three separate bills to repeal the state's sales and use tax exemption for data centers. The Texas Tribune reported in April that the exemption has ballooned to more than $1 billion in annual revenue the state gives up. For an industry that has bet heavily on Texas cheap power and cheap land, that's the opening shot in a session where both parties want tighter rules.

The 90th legislative session convenes Jan. 12, with bill filing open through March 12. Democrats now hold the House and the governor's office after last week's midterms swept Gina Hinojosa into the top job. Republicans kept their Senate majority. Most bills will die before reaching the governor's desk, but Monday's filings map the battlefield.

What does this change for data center operators?

Plenty, potentially. Beyond the tax break repeal, legislators filed proposals to:

• Require data centers to report water usage to the state water development board — a bill from state Sen. Judith Zaffirini, D-Laredo, targets large facilities specifically.
• Bar data centers from local tax incentives under Chapter 380, 381 and 312 agreements, and block cities and counties from renewing deals already in place — that's Zaffirini's second bill.
• Give local governments more direct regulatory authority over data center development.

The friction is real: residents in affected communities worry the facilities will drain water supplies and push electricity rates higher, and state efforts to survey water use have seen low participation rates. Regulating data centers was a dominant campaign-trail issue, and both parties filed accordingly.

Medicaid expansion leads the Democratic agenda

The first bills out of the gate Monday were House and Senate proposals to expand Medicaid — long blocked by Republicans who call it wasteful. Expansion under the Affordable Care Act would send Texas up to $10 billion a year in federal money and cover an additional 1 million Texans. Texas remains the most populous state refusing expansion.

State Rep. John Bucy, D-Austin, filed a bill directing the Texas Health and Human Services Commission to expand Medicaid and file a plan with Washington. Zaffirini filed the Senate companion. Bucy conceded the Senate remains the obstacle.

"We do think there's going to be a lot of room to find compromise," he said. "The House and the Senate need to find compromise to get things done for the people of Texas."

Current Medicaid coverage in Texas is limited mostly to low-income children, new mothers and older adults — not working-age adults who earn too little to buy insurance or whose employers don't offer it.

Wage floors, immigration, cameras and rail

Democrats filed bills to raise the state minimum wage from the federally set $7.25 an hour. Reps. Ana-María Rodríguez Ramos of Richardson and Armando Walle of Houston proposed $15; Rep. Trey Martinez Fischer, D-San Antonio, proposed $17.

On immigration, Martinez Fischer filed a bill to repeal a 2025 law requiring sheriffs to participate in 287(g) partnerships, which deputize local officers with immigration enforcement authority. ICE data shows 565 such partnerships in Texas as of Nov. 4, with nearly two-thirds under the most aggressive task force model. Sen. José Menéndez filed the Senate version. Rep. Eddie Morales Jr. of Eagle Pass wants to bar border wall construction on state park land.

At least three bills take aim at automated license plate readers like Flock cameras. Bucy's would ban them outright; Rep. Brian Harrison, R-Midlothian, filed a bill limiting police use. Hinojosa told The Texas Tribune in September she supports a ban.

On education, Democrats filed multiple repeal bills for the state's year-old voucher program, passed in 2025, and Rep. Donna Howard, D-Austin, proposed raising the basic allotment for per-student funding while tying future increases to inflation. Rep. Joe Moody of El Paso filed a bill raising the minimum age to buy certain semi-automatic rifles to 21, and Bucy filed both an online voter registration bill — Texas is one of eight states without it, per the National Conference on State Legislatures — and a bill directing TxDOT to build a high-speed rail line linking Dallas, Waco, Austin and San Antonio along Interstate 35, at speeds of at least 110 mph.

Republicans press property taxes and gambling

GOP lawmakers, plus some Democrats, pushed property tax relief. Harrison filed a longshot bill to abolish property taxes outright, with constitutional amendments from Harrison and Rep. Brent Money, R-Greenville. Rep. Jared Patterson, R-Frisco, wants the appraisal cap — now 10% — cut to 3%, though tax experts on both sides warn tighter caps won't lower bills and carry nasty side effects. Rep. Mike Olcott, R-Fort Worth, revived the push to bar local governments from hiring lobbyists.

Rep. Charlie Geren, R-Fort Worth, filed a resolution letting voters legalize casino gaming and sports wagering. A similar measure passed the House in 2023 but died in the Senate under Lt. Gov. Dan Patrick. Incoming Lt. Gov. Vikki Goodwin voted for that 2023 measure as a representative — a signal worth watching.

Who runs the House

Democrats will elect a new speaker on day one, replacing Speaker Dustin Burrows, R-Lubbock. Rep. Senfronia Thompson — the longest-serving woman and longest-serving Black legislator in any state — announced Friday she has the votes.

Hinojosa, who campaigned on reversing GOP education policy and tightening data center rules, named a bipartisan transition team Thursday and struck a conciliatory tone.

"I would hope that elected leaders from both parties don't get in the way of the progress we can make together to deliver for working people," she said. "That is our obligation as leaders in this state, and I look forward to working with Republican leaders in the Legislature."

The practical question for operators, landlords and taxpayers: whether a Democratic House and governor can peel off enough Senate Republicans on data center taxes and Medicaid — or whether the $1 billion exemption survives another session intact.