Bell Bill Lets Attorney General Freeze A City’s Sales Tax

The text as introduced · 712 words

89R13976 CJC/SCL-D

By: Bell of Montgomery
H.B. No. 5266

A BILL TO BE ENTITLED

AN ACT

relating to the authority of the attorney general to investigate

violations of law by certain local governments and to take action

against those local governments to enforce the law.

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

SECTION 1. Chapter 402, Government Code, is amended by

adding Subchapter D to read as follows:

SUBCHAPTER D. VIOLATIONS OF LAW BY LOCAL GOVERNMENT

Sec. 402.101. DEFINITIONS. In this subchapter:

(1) "Local government" means a municipality or county.

(2) "No-new-revenue tax rate" means the

no-new-revenue tax rate calculated under Chapter 26, Tax Code.

Sec. 402.102. ATTORNEY GENERAL INVESTIGATION AND ACTION.

(a) The attorney general may investigate an alleged violation of

law by a local government.

(b) The attorney general may bring an action in the name of

the state against a local government if the attorney general

determines after conducting an investigation under Subsection (a)

that the local government violated a law.

Sec. 402.103. ENFORCEMENT ACTIONS DURING PENDENCY OF

ACTION. During the pendency of an action brought under this

subchapter, with respect to a local government defending the

action:

(1) the comptroller shall withhold payment of any

money due to the local government under Section 321.502 or 323.502,

Tax Code, as applicable;

(2) the local government may not adopt an ad valorem

tax rate that exceeds the local government's no-new-revenue tax

rate; and

(3) the local government may not receive state grant

funds and any pending application for such funds shall be denied.

Sec. 402.104. BURDEN OF PROOF; INITIAL HEARING. (a) A local

government defending an action brought under this subchapter has

the burden of proof to establish by a preponderance of the evidence

that the local government complied with the law the alleged

violation of which is the subject of the action.

(b) The court of original jurisdiction shall set an action

brought under this subchapter for an initial hearing not later than

the 30th day after the date the local government defending the

action was served with process for the action.

Sec. 402.105. JURISDICTION; APPEAL. (a) The First Business

Court Division has exclusive original jurisdiction of an action

brought under this subchapter.

(b) The Fifteenth Court of Appeals has exclusive appellate

jurisdiction of an action brought under this subchapter. A party

must appeal the action not later than the 30th day after the date

the judgment is signed.

Sec. 402.106. RESOLUTION OF ACTION IN FAVOR OF ATTORNEY

GENERAL. (a) If the attorney general prevails in an action brought

under this chapter:

(1) the local government defending the action may not,

during the five state fiscal years following the year in which the

judgment becomes final:

(A) adopt an ad valorem tax rate that exceeds the

local government's no-new-revenue tax rate; or

(B) receive state grant funds; and

(2) the court issuing the final judgment resolving the

action shall provide in the judgment that the state is entitled to

recover from the local government defending the action a penalty

equal to the balance of the suspense account maintained for the

local government under Section 321.501 or 323.501, Tax Code, as

applicable, that exists on the date the judgment is signed.

(b) The comptroller shall, on receipt of a copy of the final

judgment in an action brought under this subchapter that includes a

provision described by Subsection (a)(2), deposit the balance of

the suspense account maintained for the local government defending

the action under Section 321.501 or 323.501, Tax Code, as

applicable, as of the date the judgment is signed to the credit of

the general revenue fund.

Sec. 402.107. RESOLUTION OF ACTION IN FAVOR OF LOCAL

GOVERNMENT. If a local government prevails in an action brought

under this subchapter, the comptroller shall, notwithstanding any

other law, immediately send to the local government the balance of

the suspense account maintained for the local government under

Section 321.501 or 323.501, Tax Code, as applicable, as of the date

the judgment resolving the action is signed.

SECTION 2. Subchapter D, Chapter 402, Government Code, as

added by this Act, applies only to an alleged violation of law that

occurs on or after the effective date of this Act.

SECTION 3. This Act takes effect September 1, 2025.