Isaac Bill Cuts Local Tax Growth Before A Vote To Zero

The text as introduced · 3,179 words

90R3474 RDS-F

By: Isaac
H.B. No. 207

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 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, and 26.07, [ and

26.075, ] Tax Code, do not apply to a tax imposed under Section

3828.153 or 3828.156.

SECTION 2. 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, and

26.07, [ and 26.075, ] Tax Code, do not apply to a tax imposed by the

district.

SECTION 3. 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 4. 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 5. 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 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 6. Sections 31.12(a) and (c), Tax Code, are amended

to read as follows:

(a) A refund of a tax provided by Section 11.35(j),

11.431(b), 11.436(b), 11.438(c), 11.439(b), 23.1243(d), 23.48(d),

23.60(d), 26.05(e), 26.07(g), [ 26.075(k), ] 26.08(d-2), 26.1115(c),

26.112(b), 26.1125(b), 26.1127(b), 26.15(f), 31.061(e), 31.071(c),

31.11, 31.111, or 31.112(c)(3) must be paid not later than the 60th

day after the date the liability for the refund arises as determined

under this section.

(c) For purposes of this section, liability for a refund

arises:

(1) if the refund is required by Section 11.35(j), on

the date the collector for the taxing unit learns the refund is

required;

(2) if the refund is required by Section 11.431(b),

11.436(b), 11.438(c), or 11.439(b), on the date the chief appraiser

notifies the collector for the taxing unit of the approval of the

applicable exemption;

(3) if the refund is required by Section 23.1243(d),

on the date the chief appraiser notifies the collector for the

taxing unit of the amount of tax to be refunded;

(4) if the refund is required by Section 23.48(d),

23.60(d), 26.1115(c), 26.112(b), 26.1125(b), or 26.1127(b), on the

date the assessor notifies the collector for the taxing unit of the

decrease in the person's tax liability;

(5) if the refund is required by Section 26.05(e), on

the date the action to enjoin the collection of taxes imposed by the

taxing unit is finally determined;

(6) if the refund is required by Section 26.07(g)[ ,

26.075(k), ] or 26.08(d-2), on the date the assessor for the taxing

unit mails the corrected tax bills under Section 26.07(f)[ ,

26.075(j), ] or 26.08(d-1), as applicable;

(7) if the refund is required by Section 26.15(f):

(A) for a correction to the tax roll made under

Section 26.15(b), on the date the change in the tax roll is

certified to the assessor for the taxing unit under Section 25.25;

or

(B) for a correction to the tax roll made under

Section 26.15(c), on the date the change in the tax roll is ordered

by the governing body of the taxing unit;

(8) if the refund is required by Section 31.061(e), on

the date the taxing unit determines that the amount credited under

Section 31.061(d) exceeds the amount due to the taxing unit;

(9) if the refund is required by Section 31.071(c), on

the date the challenge, protest, or appeal is finally determined;

(10) if the refund is required by Section 31.11, on the

date the auditor for the taxing unit determines that the payment was

erroneous or excessive;

(11) if the refund is required by Section 31.111, on

the date the collector for the taxing unit determines that the

payment was erroneous; or

(12) if the refund is required by Section

31.112(c)(3), on the date the agreement described by Section

31.112(c) is made.

SECTION 7. Section 33.08(b), Tax Code, is amended to read as

follows:

(b) The governing body of the taxing unit or appraisal

district, in the manner required by law for official action, may

provide that taxes that become delinquent on or after June 1 under

Section [ 26.075(j), ] 26.15(e), 31.03, 31.031, 31.032, 31.033,

31.04, or 42.42 incur an additional penalty to defray costs of

collection. The amount of the penalty may not exceed the amount of

the compensation specified in the applicable contract with an

attorney under Section 6.30 to be paid in connection with the

collection of the delinquent taxes.

SECTION 8. Section 49.057, Water Code, is amended by

amending Subsection (b) and adding Subsection (j) to read as

follows:

(b) The board shall adopt an annual budget. The board of a

developed district[ , as defined by Section 49.23602, ] shall include

as an appendix to the budget the district's:

(1) audited financial statements;

(2) bond transcripts; and

(3) engineer's reports required by Section 49.106.

(j) In this section, "developed district" means a district

that has financed, completed, and issued bonds to pay for all land,

works, improvements, facilities, plants, equipment, and appliances

necessary to serve at least 95 percent of the projected build-out of

the district in accordance with the purposes for its creation or the

purposes authorized by the constitution, this code, or any other

law.

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

read as follows:

(g) Sections 26.04, [ 26.042, ] 26.05, 26.061, and 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, and 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 49.236(a), Water Code, is amended to

read as follows:

(a) Before the board adopts an ad valorem tax rate for the

district for debt service, operation and maintenance purposes, or

contract purposes, the board shall give notice of each meeting of

the board at which the adoption of a tax rate will be considered.

The notice must:

(1) contain a statement in substantially the following

form:

"NOTICE OF PUBLIC HEARING ON TAX RATE

"The (name of the district) will hold a public hearing on a

proposed tax rate for the tax year (year of tax levy) on (date and

time) at (meeting place). Your individual taxes may increase at a

greater or lesser rate, or even decrease, depending on the tax rate

that is adopted and on the change in the taxable value of your

property in relation to the change in taxable value of all other

property. The change in the taxable value of your property in

relation to the change in the taxable value of all other property

determines the distribution of the tax burden among all property

owners.

"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.

"(Names of all board members and, if a vote was taken, an

indication of how each voted on the proposed tax rate and an

indication of any absences.)";

(2) contain the following information:

(A) the district's total adopted tax rate for the

preceding year and the proposed tax rate, expressed as an amount per

$100;

(B) the difference, expressed as an amount per

$100 and as a percent increase or decrease, as applicable, in the

proposed tax rate compared to the adopted tax rate for the preceding

year;

(C) the average appraised value of a residence

homestead in the district in the preceding year and in the current

year; the district's total homestead exemption, other than an

exemption available only to disabled persons or persons 65 years of

age or older, applicable to that appraised value in each of those

years; and the average taxable value of a residence homestead in the

district in each of those years, disregarding any homestead

exemption available only to disabled persons or persons 65 years of

age or older;

(D) the amount of tax that would have been

imposed by the district in the preceding year on a residence

homestead appraised at the average appraised value of a residence

homestead in that year, disregarding any homestead exemption

available only to disabled persons or persons 65 years of age or

older;

(E) the amount of tax that would be imposed by the

district in the current year on a residence homestead appraised at

the average appraised value of a residence homestead in that year,

disregarding any homestead exemption available only to disabled

persons or persons 65 years of age or older, if the proposed tax

rate is adopted;

(F) the difference between the amounts of tax

calculated under Paragraphs (D) and (E), expressed in dollars and

cents and described as the annual percentage increase or decrease,

as applicable, in the tax to be imposed by the district on the

average residence homestead in the district in the current year if

the proposed tax rate is adopted; and

(G) if the proposed combined debt service,

operation and maintenance, and contract tax rate requires [ or

authorizes ] an election to approve [ or reduce ] the tax rate, [ as

applicable, ] a description of the purpose of the proposed tax

increase;

(3) contain a statement in substantially the following

form[ , as applicable:

[ (A) if the district is a district described by

Section 49.23601 ]:

"NOTICE OF VOTE ON TAX RATE

"If the district adopts a combined debt service, operation

and maintenance, and contract tax rate that would result in the

taxes on the average residence homestead increasing from the

preceding year [ by more than eight percent ], an election must be

held to determine whether to approve the operation and maintenance

tax rate under Section 49.23601, Water Code.";

[ (B) if the district is a district described by

Section 49.23602:

[ "NOTICE OF VOTE ON TAX RATE

[ "If the district adopts a combined debt service, operation

and maintenance, and contract tax rate that would result in the

taxes on the average residence homestead increasing by more than

3.5 percent, an election must be held to determine whether to

approve the operation and maintenance tax rate under Section

49.23602, Water Code."; or

[ (C) if the district is a district described by

Section 49.23603:

[ "NOTICE OF TAXPAYERS' RIGHT TO ELECTION TO REDUCE TAX RATE

[ "If the district adopts a combined debt service, operation

and maintenance, and contract tax rate that would result in the

taxes on the average residence homestead increasing by more than

eight percent, the qualified voters of the district by petition may

require that an election be held to determine whether to reduce the

operation and maintenance tax rate to the voter-approval tax rate

under Section 49.23603, Water Code."; ] and

(4) include the following statement: "The 86th Texas

Legislature modified the manner in which the voter-approval tax

rate is calculated to limit the rate of growth of property taxes in

the state.".

SECTION 12. The heading to Section 49.23601, Water Code, is

amended to read as follows:

Sec. 49.23601. AUTOMATIC ELECTION TO APPROVE TAX RATE [ FOR

LOW TAX RATE DISTRICTS ].

SECTION 13. Sections 49.23601(a) and (c), Water Code, are

amended to read as follows:

(a) In this section, "voter-approval tax rate" means the

rate equal to the sum of the following tax rates for the district:

(1) the current year's debt service tax rate;

(2) the current year's contract tax rate; and

(3) the operation and maintenance tax rate that would

impose [ 1.08 times ] the amount of [ the ] operation and maintenance

tax imposed by the district in the preceding year on a residence

homestead appraised at the average appraised value of a residence

homestead in the district in that year, disregarding any homestead

exemption available only to disabled persons or persons 65 years of

age or older.

(c) If the board of a district adopts a combined debt

service, contract, and operation and maintenance tax rate that

would impose more than [ 1.08 times ] the amount of tax imposed by the

district in the preceding year on a residence homestead appraised

at the average appraised value of a residence homestead in the

district in that year, disregarding any homestead exemption

available only to disabled persons or persons 65 years of age or

older, an election must be held in accordance with the procedures

provided by Sections 26.07(c)-(g), Tax Code, to determine whether

to approve the adopted tax rate. If the adopted tax rate is not

approved at the election, the district's tax rate is the

voter-approval tax rate.

SECTION 14. The following provisions are repealed:

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

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

(3) Sections 26.012(8-a) and (19), Tax Code;

(4) Section 26.013, Tax Code;

(5) Section 26.042, Tax Code;

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

(7) Section 26.063, Tax Code;

(8) Section 26.075, Tax Code;

(9) Section 49.23601(b), Water Code;

(10) Section 49.23602, Water Code; and

(11) Section 49.23603, Water Code.

SECTION 15. 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 16. This Act takes effect January 1, 2028.