Preemption Bill Withholds Local Sales Tax During Attorney General Suits

The text as introduced · 1,468 words

By: Bell of Montgomery
H.B. No. 5612

A BILL TO BE ENTITLED

AN ACT

relating to state preemption of certain municipal and county

regulation.

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

SECTION 1. The legislature finds that:

(1) the state has historically been the exclusive regulator

of many aspects of commerce, trade, elections, and criminal justice

in this state;

(2) in recent years, several local jurisdictions have

sought to establish their own regulations that are different than

the state's regulations; and

(3) such local regulations have led to a patchwork of

regulations that apply inconsistently across this state.

SECTION 2. The purpose of this Act is to provide additional

statewide consistency by returning sovereign regulatory powers to

the state where those powers belong in accordance with Section 5,

Article XI, Texas Constitution.

SECTION 3. This Act:

(1) may not be construed to prohibit a municipality or

county from building or maintaining a road, imposing a tax, or

carrying out any authority expressly authorized by statute;

(2) may not be construed to prohibit a home-rule

municipality from providing the same services and imposing the same

regulations that a general-law municipality is authorized to

provide or impose in its corporate limits;

(3) does not affect the authority of a municipality or

county to conduct a public awareness campaign; and

(4) does not affect the authority of a municipality or

county to repeal or amend an existing ordinance, order, or rule that

violates the provisions of this Act for the limited purpose of

bringing that ordinance, order, or rule in compliance with this

Act.

SECTION 4. Title 5, Civil Practice and Remedies Code, is

amended by adding a new Section 120A.0025 to read as follows:

Sec. 102A.0025. LIABILITY FOR CERTAIN REGULATION. Any

person who has sustained an injury in fact, actual or threatened,

from a municipal or county ordinance, order, or rule adopted or

enforced by a municipality or county in violation of Sections

40.001 or 250A.001, Local Government Code, a nonprofit

organization, or a trade association representing the person has

standing to bring and may bring an action against the municipality

or county.

SECTION 5. Chapter 102A, Civil Practice and Remedies Code,

is amended by adding sections 102A.008 through 102A.014 to read as

follows:

Sec. 102A.008. DEFINITIONS. In this chapter:

(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. 102A.009. ATTORNEY GENERAL INVESTIGATION AND ACTION.

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

this chapter by a local government.

(b) If, after conducting an investigation under Subsection

(a), the attorney general determines a local government adopted,

enforced, or maintained an ordinance, order, or rule in violation

of the provisions listed in section 102A.002, the attorney general

may bring an action in the name of the state against a local

government for the violation.

Sec. 102A.010. ENFORCEMENT ACTIONS DURING PENDENCY OF

ACTION. During the pendency of an action brought under Section

102A.009, 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. 102A.011. BURDEN OF PROOF; INITIAL HEARING. (a) A

local government defending an action brought under Section 102A.009

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 Section 102A.009 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. 102A.012. RESOLUTION OF ACTION IN FAVOR OF ATTORNEY

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

under Section 102A.009:

(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 Section 102A.009 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. 102A.013. RESOLUTION OF ACTION IN FAVOR OF LOCAL

GOVERNMENT. If a local government prevails in an action brought

under section 102A.009, 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 6. Title 2, Subtitle C, Local Government Code, is

amended by adding Chapter 40 to read as follows:

CHAPTER 40. PREEMPTION.

Sec. 40.001. PREEMPTION. Unless expressly authorized by

another statute, a municipality may not adopt, enforce, or maintain

an ordinance, order, or rule regulating conduct in a field of

regulation that is occupied by a provision of this subtitle. An

ordinance, order, or rule that violates this section is void,

unenforceable, and inconsistent with this subtitle.

SECTION 7. Title 7, Subtitle C, Local Government Code, is

amended by adding Chapter 250A to read as follows:

CHAPTER 250A. PREEMPTION.

Sec. 250A.001. PREEMPTION. Unless expressly authorized by

another statute, a municipality or county may not adopt, enforce,

or maintain an ordinance, order, or rule regulating conduct in a

field of regulation that is occupied by a provision of this title.

An ordinance, order, or rule that violates this section is void,

unenforceable, and inconsistent with this title.

SECTION 8. Section 102A.0025, Civil Practices and Remedies

Code, as amended by this Act, applies only to a cause of action that

accrues on or after the effective date of this Act. Section

102A.009, Civil Practice and Remedies Code, as added by this Act,

applies only to a cause of action that accrues on or after the

effective date of this Act. Section 102A.014, Civil Practice and

Remedies Code, as added by this Act, and Section 22.220, Government

Code, as amended by this Act, apply only to an appeal initiated on

or after the effective date of this Act.

SECTION 9. Every provision, section, subsection, sentence,

clause, phrase, or word in this Act, and every application of the

provisions in this Act to every person, group of persons, or

circumstances, are severable from each other. If any application

of any provision in this Act to any person, group of persons, or

circumstances is found by a court to be invalid, preempted, or

unconstitutional, for any reason whatsoever, then the remaining

applications of the Act to all other persons and circumstances

shall be severed and preserved and shall remain in effect. All

constitutionally valid applications of the provisions in this Act

shall be severed from any applications that a court finds to be

invalid, preempted, or unconstitutional, because it is the

legislature's intent and priority that every single valid

application of every statutory provision be allowed to stand alone.

The legislature further declares that it would have enacted this

Act, and each provision, section, subsection, sentence, clause,

phrase, or word, and all constitutional applications of the

provisions of this Act, irrespective of the fact that any

provision, section, subsection, sentence, clause, phrase, or word,

or applications of this chapter were to be declared invalid,

preempted, or unconstitutional.

SECTION 10. The Texas Supreme Court has exclusive and

original jurisdiction over a challenge to the constitutionality of

this Act or any part of this Act and may issue injunctive or

declaratory relief in connection with the challenge.

SECTION 11. 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.