bill narrowing the debt part of local property tax rates

The text as introduced · 1,974 words

89R10390 TJB-D

By: Bettencourt
S.B. No. 1453

A BILL TO BE ENTITLED

AN ACT

relating to the current debt rate and tax rate of a taxing unit for

ad valorem tax purposes.

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

SECTION 1. Section 44.004(c), Education Code, is amended to

read as follows:

(c) The notice of public meeting to discuss and adopt the

budget and the proposed tax rate may not be smaller than one-quarter

page of a standard-size or a tabloid-size newspaper, and the

headline on the notice must be in 18-point or larger type. Subject

to Subsection (d), the notice must:

(1) contain a statement in the following form:

"NOTICE OF PUBLIC MEETING TO DISCUSS BUDGET AND PROPOSED TAX RATE

"The (name of school district) will hold a public meeting at

(time, date, year) in (name of room, building, physical location,

city, state). The purpose of this meeting is to discuss the school

district's budget that will determine the tax rate that will be

adopted. Public participation in the discussion is invited." The

statement of the purpose of the meeting must be in bold type. In

reduced type, the notice must state: "The tax rate that is

ultimately adopted at this meeting or at a separate meeting at a

later date may not exceed the proposed rate shown below unless the

district publishes a revised notice containing the same information

and comparisons set out below and holds another public meeting to

discuss the revised notice." In addition, in reduced type, the

notice must state: "Visit Texas.gov/PropertyTaxes to find a link to

your local property tax database on which you can easily access

information regarding your property taxes, including information

about proposed tax rates and scheduled public hearings of each

entity that taxes your property.";

(2) contain a section entitled "Comparison of Proposed

Budget with Last Year's Budget," which must show the difference,

expressed as a percent increase or decrease, as applicable, in the

amounts budgeted for the preceding fiscal year and the amount

budgeted for the fiscal year that begins in the current tax year for

each of the following:

(A) maintenance and operations;

(B) debt service; and

(C) total expenditures;

(3) contain a section entitled "Total Appraised Value

and Total Taxable Value," which must show the total appraised value

and the total taxable value of all property and the total appraised

value and the total taxable value of new property taxable by the

district in the preceding tax year and the current tax year as

calculated under Section 26.04, Tax Code;

(4) contain a statement of the total amount of the

outstanding and unpaid bonded indebtedness of the school district;

(5) contain a section entitled "Comparison of Proposed

Rates with Last Year's Rates," which must:

(A) show in rows the tax rates described by

Subparagraphs (i)-(iii), expressed as amounts per $100 valuation of

property, for columns entitled "Maintenance & Operations,"

"Interest & Sinking Fund," and "Total," which is the sum of

"Maintenance & Operations" and "Interest & Sinking Fund":

(i) the school district's "Last Year's

Rate";

(ii) the "Rate to Maintain Same Level of

Maintenance & Operations Revenue & Pay Debt Service," which:

(a) in the case of "Maintenance &

Operations," is the tax rate that, when applied to the current

taxable value for the district, as certified by the chief appraiser

under Section 26.01, Tax Code, and as adjusted to reflect changes

made by the chief appraiser as of the time the notice is prepared,

would impose taxes in an amount that, when added to state funds to

be distributed to the district under Chapter 48, would provide the

same amount of maintenance and operations taxes and state funds

distributed under Chapter 48 per student in average daily

attendance for the applicable school year that was available to the

district in the preceding school year; and

(b) in the case of "Interest & Sinking

Fund," is the tax rate that, when applied to the current taxable

value for the district, as certified by the chief appraiser under

Section 26.01, Tax Code, and as adjusted to reflect changes made by

the chief appraiser as of the time the notice is prepared, and when

multiplied by the district's anticipated collection rate, would

impose taxes in an amount that, when added to state funds to be

distributed to the district under Chapter 46 and any excess taxes

collected to service the district's debt during the preceding tax

year but not used for that purpose during that year, would provide

the minimum dollar amount required to be paid to service the

district's debt; and

(iii) the "Proposed Rate";

(B) contain fourth and fifth columns aligned with

the columns required by Paragraph (A) that show, for each row

required by Paragraph (A):

(i) the "Local Revenue per Student," which

is computed by multiplying the district's total taxable value of

property, as certified by the chief appraiser for the applicable

school year under Section 26.01, Tax Code, and as adjusted to

reflect changes made by the chief appraiser as of the time the

notice is prepared, by the total tax rate, and dividing the product

by the number of students in average daily attendance in the

district for the applicable school year; and

(ii) the "State Revenue per Student," which

is computed by determining the amount of state aid received or to be

received by the district under Chapters 43, 46, and 48 and dividing

that amount by the number of students in average daily attendance in

the district for the applicable school year; and

(C) contain an asterisk after each calculation

for "Interest & Sinking Fund" and a footnote to the section that, in

reduced type, states "The Interest & Sinking Fund tax revenue is

used to pay for bonded indebtedness on construction, equipment, or

both. The bonds, and the tax rate necessary to pay those bonds, were

approved by the voters of this district.";

(6) contain a section entitled "Comparison of Proposed

Levy with Last Year's Levy on Average Residence," which must:

(A) show in rows the information described by

Subparagraphs (i)-(iv), rounded to the nearest dollar, for columns

entitled "Last Year" and "This Year":

(i) "Average Market Value of Residences,"

determined using the same group of residences for each year;

(ii) "Average Taxable Value of Residences,"

determined after taking into account the limitation on the

appraised value of residences under Section 23.23, Tax Code, and

after subtracting all homestead exemptions applicable in each year,

other than exemptions available only to disabled persons or persons

65 years of age or older or their surviving spouses, and using the

same group of residences for each year;

(iii) "Last Year's Rate Versus Proposed

Rate per $100 Value"; and

(iv) "Taxes Due on Average Residence,"

determined using the same group of residences for each year; and

(B) contain the following information: "Increase

(Decrease) in Taxes" expressed in dollars and cents, which is

computed by subtracting the "Taxes Due on Average Residence" for

the preceding tax year from the "Taxes Due on Average Residence" for

the current tax year;

(7) contain the following statement in bold print:

"Under state law, the dollar amount of school taxes imposed on the

residence of a person 65 years of age or older or of the surviving

spouse of such a person, if the surviving spouse was 55 years of age

or older when the person died, may not be increased above the amount

paid in the first year after the person turned 65, regardless of

changes in tax rate or property value.";

(8) contain the following statement in bold print:

"Notice of Voter-Approval Rate: The highest tax rate the district

can adopt before requiring voter approval at an election is (the

school district voter-approval rate determined under Section

26.08, Tax Code). This election will be automatically held if the

district adopts a rate in excess of the voter-approval rate of (the

school district voter-approval rate)."; and

(9) contain a section entitled "Fund Balances," which

must include the estimated amount of interest and sinking fund

balances and the estimated amount of maintenance and operation or

general fund balances remaining at the end of the current fiscal

year that are not encumbered with or by corresponding debt

obligation, less estimated funds necessary for the operation of the

district before the receipt of the first payment under Chapter 48 in

the succeeding school year.

SECTION 2. Section 26.012(3), Tax Code, is amended to read

as follows:

(3) "Current debt service " means the minimum dollar

amount required to be expended for debt service for the current

year.

SECTION 3. Section 26.04(e), Tax Code, is amended to read as

follows:

(e) By August 7 or as soon thereafter as practicable, the

designated officer or employee shall submit the rates to the

governing body. The designated officer or employee shall post

prominently on the home page of the taxing unit's Internet website

in the form prescribed by the comptroller:

(1) the no-new-revenue tax rate, the voter-approval

tax rate, and an explanation of how they were calculated;

(2) the estimated amount of interest and sinking fund

balances and the estimated amount of maintenance and operation or

general fund balances remaining at the end of the current fiscal

year that are not encumbered with or by corresponding existing debt

obligation; and

(3) a schedule of the taxing unit's debt obligations

showing:

(A) the minimum dollar amount of principal and

interest required to [ that will ] be paid to service the taxing

unit's debts in the next year from property tax revenue, including

payments of lawfully incurred contractual obligations providing

security for the payment of the principal of and interest on bonds

and other evidences of indebtedness issued on behalf of the taxing

unit by another political subdivision and, if the taxing unit is

created under Section 52, Article III, or Section 59, Article XVI,

Texas Constitution, payments on debts that the taxing unit

anticipates to incur in the next calendar year;

(B) the amount by which taxes imposed for debt

are to be increased because of the taxing unit's anticipated

collection rate; and

(C) the total of the amounts listed in Paragraphs

(A)-(B), less any amount collected in excess of the previous year's

anticipated collections certified as provided in Subsection (b).

SECTION 4. Section 26.05, Tax Code, is amended by adding

Subsections (a-1) and (a-2) to read as follows:

(a-1) The governing body of a taxing unit may approve a rate

described by Subsection (a)(1) that exceeds the rate for the taxing

unit as determined under that subsection only if:

(1) the rate is proposed to be approved by a motion

that:

(A) states the rate determined under Subsection

(a)(1);

(B) states the proposed rate;

(C) states the difference between the proposed

rate and the rate determined under Subsection (a)(1); and

(D) describes the purpose for which the excess

revenue collected from the proposed rate will be used; and

(2) the motion is approved by at least 60 percent of

the members of the governing body.

(a-2) If the governing body of a taxing unit approves a rate

described by Subsection (a)(1) under Subsection (a-1) for a tax

year, the rate approved under Subsection (a-1) is considered to be

the current debt rate of the taxing unit for that tax year. The

officer or employee designated by the governing body to calculate

the voter-approval tax rate of the taxing unit under this chapter

shall recalculate that rate to account for the new current debt

rate, and that recalculated voter-approval tax rate is considered

to be the voter-approval tax rate of the taxing unit for that tax

year.

SECTION 5. This Act applies only to ad valorem taxes imposed

for an ad valorem tax year that begins on or after the effective

date of this Act.

SECTION 6. This Act takes effect January 1, 2026.