voters can swap a city venue tax for economic development

The text as introduced · 1,723 words

89R14373 JBD-D

By: Raymond
H.B. No. 5124

A BILL TO BE ENTITLED

AN ACT

relating to the conversion of all or a portion of a municipal sales

and use tax originally adopted for the purpose of sports and

community venues to a municipal sales and use tax for economic

development purposes.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 334.089(a), Local Government Code, is

amended to read as follows:

(a) Except as provided by Section 334.090, a [ A ] sales and

use tax imposed under this subchapter may not be collected after the

last day of the first calendar quarter occurring after notification

to the comptroller by the municipality or county that the

municipality or county has abolished the tax or that all bonds or

other obligations of the municipality or county that are payable in

whole or in part from money in the venue project fund, including any

refunding bonds or other obligations, have been paid in full or the

full amount of money, exclusive of guaranteed interest, necessary

to pay in full the bonds and other obligations has been set aside in

a trust account dedicated to the payment of the bonds and other

obligations.

SECTION 2. Subchapter D, Chapter 334, Local Government

Code, is amended by adding Section 334.090 to read as follows:

Sec. 334.090. CONVERSION OF TAX. (a) A sales and use tax

imposed under this subchapter is abolished or the rate of the tax is

reduced, as applicable, on the date a conversion of all or a portion

of the tax under Section 504.263 or 505.260 takes effect.

(b) A municipality shall notify the comptroller of a

conversion described by Subsection (a) not later than the 60th day

before the date the conversion takes effect.

SECTION 3. Subchapter F, Chapter 504, Local Government

Code, is amended by adding Section 504.263 to read as follows:

Sec. 504.263. ELECTION TO CONVERT CERTAIN SALES AND USE TAX

AUTHORITY. (a) This section applies only to a municipality that:

(1) has adopted a sales and use tax under Subchapter D,

Chapter 334; and

(2) on September 1, 2025, has or will have outstanding

bonded indebtedness for bonds issued under Section 334.043 that are

payable wholly or partly from the sales and use tax.

(b) A municipality may convert all or a portion of a sales

and use tax originally adopted under Subchapter D, Chapter 334, to a

sales and use tax under this subchapter if the conversion is

approved by a majority of the voters of the municipality voting at

an election held for that purpose.

(c) In an election to convert all or a portion of a sales and

use tax as provided by this section, the ballot shall be printed to

provide for voting for or against the proposition: "The conversion

of (insert "the" or "a portion of the," as applicable) sales and use

tax originally adopted for the purpose of financing a sports and

community venue project to a (insert the appropriate tax rate that

is an increment of one-eighth of one percent) sales and use tax for

the promotion and development of new and expanded business

enterprises."

(d) For purposes of Chapter 321, Tax Code, an election under

this section is an election to adopt a sales and use tax under this

subchapter and, as applicable, to abolish or reduce the rate of the

tax under Subchapter D, Chapter 334.

(e) Notwithstanding Section 321.102, Tax Code, a conversion

under this section takes effect on the first day after the date all

bonds described by Subsection (a)(2), including any refunding

bonds, have been paid in full or the full amount of money, exclusive

of guaranteed interest, necessary to pay the bonds in full has been

set aside in a trust account dedicated to the payment of the bonds.

(f) Notwithstanding Section 321.405(a), Tax Code, a

municipality that converts all or a portion of a tax under this

section shall comply with Section 321.405, Tax Code, not later than

the 60th day before the date the conversion takes effect.

(g) The conversion of all or a portion of a sales and use tax

under this section:

(1) abolishes or reduces the rate of a tax adopted

under Subchapter D, Chapter 334, as applicable;

(2) imposes a sales and use tax under this subchapter:

(A) at the same rate as the tax under Subchapter

D, Chapter 334, was imposed, if that tax is abolished; or

(B) at a rate equal to the reduction in the rate

of the tax under Subchapter D, Chapter 334, if that rate is reduced;

and

(3) may not affect the combined rate of all sales and

use taxes imposed by political subdivisions of this state in any

territory in which the tax is imposed.

(h) If a sales and use tax conversion under this section is

not approved, the election does not affect the municipality's

authority to impose the sales and use tax adopted under Chapter 334,

or the rate of that tax, as provided by that chapter.

(i) If conversion of a portion of a sales and use tax is

approved under this section, the municipality may continue to

impose the portion of the tax under Subchapter D, Chapter 334, that

was not converted as provided by that chapter.

(j) For a tax converted under this subchapter, the election

requirement under Subsection (b) is satisfied and another election

is not required if the voters of the authorizing municipality

approved the conversion at an election called or held before the

effective date of the Act enacting this section under an ordinance

calling the election that:

(1) was published in a newspaper of general

circulation in the municipality at least 14 days before the date of

the election; and

(2) expressly stated that the election was being

called or held in anticipation of the enactment of enabling and

implementing legislation without further elections.

SECTION 4. Subchapter F, Chapter 505, Local Government

Code, is amended by adding Section 505.260 to read as follows:

Sec. 505.260. ELECTION TO CONVERT CERTAIN SALES AND USE TAX

AUTHORITY. (a) This section applies only to a municipality that:

(1) has adopted a sales and use tax under Subchapter D,

Chapter 334; and

(2) on September 1, 2025, has or will have outstanding

bonded indebtedness for bonds issued under Section 334.043 that are

payable wholly or partly from the sales and use tax.

(b) A municipality may convert all or a portion of a sales

and use tax originally adopted under Subchapter D, Chapter 334, to a

sales and use tax under this subchapter if the conversion is

approved by a majority of the voters of the municipality voting at

an election held for that purpose.

(c) In an election to convert all or a portion of a sales and

use tax as provided by this section, the ballot shall be printed to

provide for voting for or against the proposition: "The conversion

of (insert "the" or "a portion of the," as applicable) sales and use

tax originally adopted for the purpose of financing a sports and

community venue project to a (insert the appropriate tax rate that

is an increment of one-eighth of one percent) sales and use tax for

economic development projects described by Chapter 505, Local

Government Code."

(d) For purposes of Chapter 321, Tax Code, an election under

this section is an election to adopt a sales and use tax under this

subchapter and, as applicable, to abolish or reduce the rate of the

tax under Subchapter D, Chapter 334.

(e) Notwithstanding Section 321.102, Tax Code, a conversion

under this section takes effect on the first day after the date all

bonds described by Subsection (a)(2), including any refunding

bonds, have been paid in full or the full amount of money, exclusive

of guaranteed interest, necessary to pay the bonds in full has been

set aside in a trust account dedicated to the payment of the bonds.

(f) Notwithstanding Section 321.405(a), Tax Code, a

municipality that converts all or a portion of a tax under this

section shall comply with Section 321.405, Tax Code, not later than

the 60th day before the date the conversion takes effect.

(g) The conversion of all or a portion of a sales and use tax

under this section:

(1) abolishes or reduces the rate of a tax adopted

under Subchapter D, Chapter 334, as applicable;

(2) imposes a sales and use tax under this subchapter:

(A) at the same rate as the tax under Subchapter

D, Chapter 334, was imposed, if that tax is abolished; or

(B) at a rate equal to the reduction in the rate

of the tax under Subchapter D, Chapter 334, if that rate is reduced;

and

(3) may not affect the combined rate of all sales and

use taxes imposed by political subdivisions of this state in any

territory in which the tax is imposed.

(h) If a sales and use tax conversion under this section is

not approved, the election does not affect the municipality's

authority to impose the sales and use tax adopted under Chapter 334,

or the rate of that tax, as provided by that chapter.

(i) If conversion of a portion of a sales and use tax is

approved under this section, the municipality may continue to

impose the portion of the tax under Subchapter D, Chapter 334, that

was not converted as provided by that chapter.

(j) For a tax converted under this subchapter, the election

requirement under Subsection (b) is satisfied and another election

is not required if the voters of the authorizing municipality

approved the conversion at an election called or held before the

effective date of the Act enacting this section under an ordinance

calling the election that:

(1) was published in a newspaper of general

circulation in the municipality at least 14 days before the date of

the election; and

(2) expressly stated that the election was being

called or held in anticipation of the enactment of enabling and

implementing legislation without further elections.

SECTION 5. This Act takes effect immediately if it receives

a vote of two-thirds of all the members elected to each house, as

provided by Section 39, Article III, Texas Constitution. If this

Act does not receive the vote necessary for immediate effect, this

Act takes effect September 1, 2025.