bill dropping the 3.5 and 8 percent tax growth allowances

The text as introduced · 2,053 words

89R13978 RDS-D

By: Hinojosa of Nueces
S.B. No. 2775

A BILL TO BE ENTITLED

AN ACT

relating to the calculation of certain ad valorem tax rates of a

taxing unit and the manner in which a proposed ad valorem tax rate

that exceeds the voter-approval tax rate is approved; making

conforming changes.

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

SECTION 1. Section 48.202(f), Education Code, is amended to

read as follows:

(f) For a school year in which the dollar amount guaranteed

level of state and local funds per weighted student per cent of tax

effort ("GL") under Subsection (a-1)(2) exceeds the dollar amount

guaranteed level of state and local funds per weighted student per

cent of tax effort ("GL") under Subsection (a-1)(2) for the

preceding school year, a school district shall reduce the

district's tax rate under Section 45.0032(b)(2) for the tax year

that corresponds to that school year to a rate that results in the

amount of state and local funds per weighted student per cent of tax

effort available to the district at the dollar amount guaranteed

level for the preceding school year. A school district is not

entitled to the amount equal to the increase of revenue described by

this subsection for the school year for which the district must

reduce the district's tax rate. For [ Unless Section 26.042(e), Tax

Code, applies to the district, for ] a tax year in which a district

must reduce the district's tax rate under this subsection, the

district may not increase the district's maintenance and operations

tax rate to a rate that exceeds the maximum maintenance and

operations tax rate permitted under Section 45.003(d) or (f), as

applicable, minus the reduction of tax effort required under this

subsection. This subsection does not apply if the amount of state

funds appropriated for a school year specifically excludes the

amount necessary to provide the dollar amount guaranteed level of

state and local funds per weighted student per cent of tax effort

under Subsection (a-1)(2).

SECTION 2. Section 3828.157, Special District Local Laws

Code, is amended to read as follows:

Sec. 3828.157. INAPPLICABILITY OF CERTAIN TAX CODE

PROVISIONS. Sections 26.04, [ 26.042, ] 26.05, 26.07, and 26.075,

Tax Code, do not apply to a tax imposed under Section 3828.153 or

3828.156.

SECTION 3. Section 8876.152(a), Special District Local Laws

Code, is amended to read as follows:

(a) Sections 26.04, [ 26.042, ] 26.05, 26.06, 26.061, 26.07,

and 26.075, Tax Code, do not apply to a tax imposed by the district.

SECTION 4. Section 26.04(c), Tax Code, is amended to read as

follows:

(c) After the assessor for the taxing unit submits the

appraisal roll for the taxing unit to the governing body of the

taxing unit as required by Subsection (b), an officer or employee

designated by the governing body shall calculate the no-new-revenue

tax rate and the voter-approval tax rate for the taxing unit, where:

(1) "No-new-revenue tax rate" means a rate expressed

in dollars per $100 of taxable value calculated according to the

following formula:

NO-NEW-REVENUE TAX RATE = (LAST YEAR'S LEVY - LOST PROPERTY

LEVY) / (CURRENT TOTAL VALUE - NEW PROPERTY VALUE)

; and

(2) "Voter-approval tax rate" means a rate expressed

in dollars per $100 of taxable value calculated according to the

following [ applicable ] formula:

[ (A) for a special taxing unit: ]

VOTER-APPROVAL TAX RATE = [ ( ]NO-NEW-REVENUE MAINTENANCE AND

OPERATIONS RATE [ x 1.08) ] + CURRENT DEBT RATE

[ ; or

[ (B) for a taxing unit other than a special taxing

unit:

[ VOTER-APPROVAL TAX RATE = (NO-NEW-REVENUE MAINTENANCE AND

OPERATIONS RATE x 1.035) + (CURRENT DEBT RATE + UNUSED INCREMENT

RATE) ]

SECTION 5. Sections 26.041(a), (b), and (c), Tax Code, are

amended to read as follows:

(a) In the first year in which an additional sales and use

tax is required to be collected, the no-new-revenue tax rate and

voter-approval tax rate for the taxing unit are calculated

according to the following formulas:

NO-NEW-REVENUE TAX RATE = [(LAST YEAR'S LEVY -

LOST PROPERTY LEVY) / (CURRENT TOTAL VALUE - NEW

PROPERTY VALUE)] - SALES TAX GAIN RATE

and

VOTER-APPROVAL TAX RATE [ FOR SPECIAL TAXING UNIT ]

= [ ( ]NO-NEW-REVENUE MAINTENANCE AND OPERATIONS RATE [ x

1.08) ] + [ ( ]CURRENT DEBT RATE - SALES TAX GAIN RATE[ )

[ or

[ VOTER-APPROVAL TAX RATE FOR TAXING UNIT OTHER

THAN SPECIAL TAXING UNIT = (NO-NEW-REVENUE MAINTENANCE

AND OPERATIONS RATE x 1.035) + (CURRENT DEBT RATE +

UNUSED INCREMENT RATE - SALES TAX GAIN RATE) ]

where "sales tax gain rate" means a number expressed in dollars per

$100 of taxable value, calculated by dividing the revenue that will

be generated by the additional sales and use tax in the following

year as calculated under Subsection (d) by the current total value.

(b) Except as provided by Subsections (a) and (c), in a year

in which a taxing unit imposes an additional sales and use tax, the

voter-approval tax rate for the taxing unit is calculated according

to the following formula, regardless of whether the taxing unit

levied a property tax in the preceding year:

VOTER-APPROVAL TAX RATE [ FOR SPECIAL TAXING UNIT ]

= [[ ( ]LAST YEAR'S MAINTENANCE AND OPERATIONS EXPENSE

[ x 1.08) ] / (CURRENT TOTAL VALUE - NEW PROPERTY VALUE)]

+ (CURRENT DEBT RATE - SALES TAX REVENUE RATE)

[ or

[ VOTER-APPROVAL TAX RATE FOR TAXING UNIT OTHER

THAN SPECIAL TAXING UNIT = [(LAST YEAR'S MAINTENANCE

AND OPERATIONS EXPENSE x 1.035) / (CURRENT TOTAL VALUE

- NEW PROPERTY VALUE)] + (CURRENT DEBT RATE + UNUSED

INCREMENT RATE - SALES TAX REVENUE RATE) ]

where "last year's maintenance and operations expense" means the

amount spent for maintenance and operations from property tax and

additional sales and use tax revenues in the preceding year, and

"sales tax revenue rate" means a number expressed in dollars per

$100 of taxable value, calculated by dividing the revenue that will

be generated by the additional sales and use tax in the current year

as calculated under Subsection (d) by the current total value.

(c) In a year in which a taxing unit that has been imposing

an additional sales and use tax ceases to impose an additional sales

and use tax, the no-new-revenue tax rate and voter-approval tax

rate for the taxing unit are calculated according to the following

formulas:

NO-NEW-REVENUE TAX RATE = [(LAST YEAR'S LEVY -

LOST PROPERTY LEVY) / (CURRENT TOTAL VALUE - NEW

PROPERTY VALUE)] + SALES TAX LOSS RATE

and

VOTER-APPROVAL TAX RATE [ FOR SPECIAL TAXING UNIT ]

= [[ ( ]LAST YEAR'S MAINTENANCE AND OPERATIONS EXPENSE

[ x 1.08) ] / (CURRENT TOTAL VALUE - NEW PROPERTY VALUE)]

+ CURRENT DEBT RATE

[ or

[ VOTER-APPROVAL TAX RATE FOR TAXING UNIT OTHER

THAN SPECIAL TAXING UNIT = [(LAST YEAR'S MAINTENANCE

AND OPERATIONS EXPENSE x 1.035) / (CURRENT TOTAL VALUE

- NEW PROPERTY VALUE)] + (CURRENT DEBT RATE + UNUSED

INCREMENT RATE) ]

where "sales tax loss rate" means a number expressed in dollars per

$100 of taxable value, calculated by dividing the amount of sales

and use tax revenue generated in the last four quarters for which

the information is available by the current total value and "last

year's maintenance and operations expense" means the amount spent

for maintenance and operations from property tax and additional

sales and use tax revenues in the preceding year.

SECTION 6. Section 26.063(a), Tax Code, is amended to read

as follows:

(a) This section applies only to a taxing unit:

(1) other than [ that is:

[ (A) a taxing unit other than a special taxing

unit; or

[ (B) ] a municipality with a population of [ less

than ] 30,000 or more [ , regardless of whether it is a special taxing

unit ];

(2) that is required to provide notice under Section

26.06(b-1) or (b-3); and

(3) for which the de minimis rate exceeds the

voter-approval tax rate.

SECTION 7. Section 26.07(b), Tax Code, is amended to read as

follows:

(b) If the governing body of a [ special taxing unit or a ]

municipality with a population of 30,000 or more adopts a tax rate

that exceeds the taxing unit's voter-approval tax rate, or the

governing body of a taxing unit other than a [ special taxing unit or

a ] municipality with a population of [ less than ] 30,000 or more

[ regardless of whether it is a special taxing unit ] adopts a tax

rate that exceeds the greater of the taxing unit's voter-approval

tax rate or de minimis rate, the registered voters of the taxing

unit at an election held for that purpose must determine whether to

approve the adopted tax rate.

SECTION 8. Sections 26.075(a) and (b), Tax Code, are

amended to read as follows:

(a) This section applies only to a taxing unit other than:

(1) [ a special taxing unit;

[ (2) ] a school district; or

(2) [ (3) ] a municipality with a population of 30,000

or more.

(b) This section applies to a taxing unit only in a tax year

in which the taxing unit's:

(1) de minimis rate exceeds the taxing unit's

voter-approval tax rate; and

(2) adopted tax rate is:

(A) equal to or lower than the taxing unit's de

minimis rate; and

(B) greater than the [ greater of the ] taxing

unit's[ :

[ (i) ] voter-approval tax rate [ calculated

as if the taxing unit were a special taxing unit; or

[ (ii) voter-approval tax rate ].

SECTION 9. Section 49.107(g), Water Code, is amended to

read as follows:

(g) Sections 26.04, [ 26.042, ] 26.05, 26.061, 26.07, and

26.075, Tax Code, do not apply to a tax levied and collected under

this section or an ad valorem tax levied and collected for the

payment of the interest on and principal of bonds issued by a

district.

SECTION 10. Section 49.108(f), Water Code, is amended to

read as follows:

(f) Sections 26.04, [ 26.042, ] 26.05, 26.061, 26.07, and

26.075, Tax Code, do not apply to a tax levied and collected for

payments made under a contract approved in accordance with this

section.

SECTION 11. Section 49.23602(a)(3), Water Code, is amended

to read as follows:

(3) "Unused increment rate" has the meaning assigned

by Section 49.23604 [ 26.013, Tax Code ].

SECTION 12. Subchapter H, Chapter 49, Water Code, is

amended by adding Section 49.23604 to read as follows:

Sec. 49.23604. UNUSED INCREMENT RATE. (a) In this section:

(1) "Actual tax rate" means a district's actual tax

rate used to levy taxes in the applicable preceding tax year.

(2) "Current total value" has the meaning assigned by

Section 26.012, Tax Code.

(3) "Foregone revenue amount" means the greater of:

(A) zero; or

(B) the amount expressed in dollars calculated

according to the following formula:

FOREGONE REVENUE AMOUNT = (VOTER-APPROVAL TAX RATE - ACTUAL

TAX RATE) x PRECEDING TOTAL VALUE

(4) "Preceding total value" means a district's current

total value in the applicable preceding tax year.

(5) "Voter-approval tax rate" means a district's

voter-approval tax rate in the applicable preceding tax year, as

adopted by the district during the applicable preceding tax year,

less the unused increment rate for that preceding tax year.

(6) "Year 1" means the third tax year preceding the

current tax year.

(7) "Year 2" means the second tax year preceding the

current tax year.

(8) "Year 3" means the tax year preceding the current

tax year.

(b) In Section 49.23602, "unused increment rate" means the

greater of:

(1) zero; or

(2) the rate expressed in dollars per $100 of taxable

value calculated according to the following formula:

UNUSED INCREMENT RATE = (YEAR 1 FOREGONE REVENUE AMOUNT +

YEAR 2 FOREGONE REVENUE AMOUNT + YEAR 3 FOREGONE REVENUE AMOUNT) /

CURRENT TOTAL VALUE

SECTION 13. The following provisions are repealed:

(1) Section 45.0032(d), Education Code;

(2) Section 120.007(d), Local Government Code;

(3) Section 26.012(19), Tax Code;

(4) Section 26.013, Tax Code;

(5) Section 26.042, Tax Code; and

(6) Section 26.0501(c), Tax Code.

SECTION 14. 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 15. This Act takes effect January 1, 2026.