85R1720 SMH-D
By: Canales H.B. No. 345
A BILL TO BE ENTITLED
AN ACT
relating to the calculation of the ad valorem rollback tax rate of a
taxing unit.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 26.012, Tax Code, is amended by adding
Subdivisions (2-a) and (10-a) to read as follows:
(2-a) "Consumer price index" means the average over a
calendar year of the index that the comptroller considers to most
accurately report changes in the purchasing power of the dollar for
consumers in this state.
(10-a) "Inflation rate" means the amount, expressed in
decimal form rounded to the nearest thousandth, computed by
determining the percentage change in the consumer price index for
the preceding calendar year as compared to the consumer price index
for the calendar year preceding that calendar year.
SECTION 2. Section 26.04, Tax Code, is amended by adding
Subsections (b-1) and (c-1) and amending Subsection (c) to read as
follows:
(b-1) By August 1 or as soon thereafter as practicable, the
comptroller shall determine the inflation rate for the current year
and publish the rate in the Texas Register.
(c) An officer or employee designated by the governing body
shall calculate the effective tax rate and the rollback tax rate for
the unit, where:
(1) "Effective tax rate" means a rate expressed in
dollars per $100 of taxable value calculated according to the
following formula:
EFFECTIVE TAX RATE = (LAST YEAR'S LEVY - LOST PROPERTY
LEVY) / (CURRENT TOTAL VALUE - NEW PROPERTY VALUE)
; and
(2) "Rollback tax rate" means a rate expressed in
dollars per $100 of taxable value calculated according to the
following formula:
ROLLBACK TAX RATE = (EFFECTIVE MAINTENANCE AND
OPERATIONS RATE x 1.05 [1.08]) + CURRENT DEBT RATE
(c-1) Notwithstanding any other provision of this section,
if the inflation rate exceeds five percent, the designated officer
or employee shall substitute the amount equal to the sum of one and
the lesser of the inflation rate or 0.08 for "1.05" in the
calculation of the rollback tax rate.
SECTION 3. Section 26.041, Tax Code, is amended by amending
Subsections (a), (b), and (c) and adding Subsection (c-1) to read as
follows:
(a) In the first year in which an additional sales and use
tax is required to be collected, the effective tax rate and rollback
tax rate for the unit are calculated according to the following
formulas:
EFFECTIVE TAX RATE = [(LAST YEAR'S LEVY - LOST PROPERTY
LEVY) / (CURRENT TOTAL VALUE - NEW PROPERTY VALUE)] -
SALES TAX GAIN RATE
and
ROLLBACK TAX RATE = (EFFECTIVE MAINTENANCE AND
OPERATIONS RATE x 1.05 [1.08]) + CURRENT DEBT 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) [of this section] by the
current total value.
(b) Except as provided by Subsections (a) and (c) [of this
section], in a year in which a taxing unit imposes an additional
sales and use tax the rollback tax rate for the unit is calculated
according to the following formula, regardless of whether the unit
levied a property tax in the preceding year:
ROLLBACK TAX RATE = [(LAST YEAR'S MAINTENANCE AND
OPERATIONS EXPENSE x 1.05 [1.08]) / ([TOTAL] CURRENT
TOTAL VALUE - NEW PROPERTY VALUE)] + (CURRENT DEBT 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) [of this section] 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 effective tax rate and rollback tax rate for the
unit are calculated according to the following formulas:
EFFECTIVE TAX RATE = [(LAST YEAR'S LEVY - LOST PROPERTY
LEVY) / (CURRENT TOTAL VALUE - NEW PROPERTY VALUE)] +
SALES TAX LOSS RATE
and
ROLLBACK TAX RATE = [(LAST YEAR'S MAINTENANCE AND
OPERATIONS EXPENSE x 1.05 [1.08]) / ([TOTAL] CURRENT
TOTAL VALUE - NEW PROPERTY VALUE)] + CURRENT DEBT 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.
(c-1) Notwithstanding any other provision of this section,
if the inflation rate exceeds five percent, the designated officer
or employee shall substitute the amount equal to the sum of one and
the lesser of the inflation rate or 0.08 for "1.05" in the
calculation of the rollback tax rate.
SECTION 4. Section 8876.152(b), Special District Local Laws
Code, is amended to read as follows:
(b) Sections 49.236(a)(1) and (2) and (b) [Section 49.236],
Water Code, apply [as added by Chapter 248 (H.B. 1541), Acts of the
78th Legislature, Regular Session, 2003, applies] to the district.
SECTION 5. Section 49.236, Water Code, as added by Chapter
335 (S.B. 392), Acts of the 78th Legislature, Regular Session,
2003, is amended by amending Subsections (a) and (d) and adding
Subsection (e) 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 or
decrease, depending on the change in the taxable value of your
property in relation to the change in taxable value of all other
property and the tax rate that is adopted.
"(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; [and]
(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 exceeds the
rollback tax rate, a description of the purpose of the proposed tax
increase; and
(3) contain a statement in substantially the following
form:
"NOTICE OF TAXPAYERS' RIGHT TO ROLLBACK ELECTION
"If operation and maintenance taxes on the average residence
homestead increase by more than five [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 rollback tax rate under Section 49.236(d), Water
Code."
(d) If the governing body of a district adopts a combined
debt service, operation and maintenance, and contract tax rate that
exceeds the rollback tax rate [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], the qualified voters of the district by
petition may require that an election be held to determine whether
[or not] to reduce the tax rate adopted for the current year to the
rollback tax rate in accordance with the procedures provided by
Sections 26.07(b)-(g) and 26.081, Tax Code. For purposes of
Sections 26.07(b)-(g) and this section [subsection], the rollback
tax rate is the sum of the following tax rates:
(1) the current year's debt service tax rate;
(2) the current year's [and] contract tax rate; and
(3) [rates plus] the operation and maintenance tax
rate that would impose 1.05 [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.
(e) Notwithstanding any other provision of this section, if
the inflation rate as determined by the comptroller under Section
26.04(b-1), Tax Code, exceeds five percent, the board shall
substitute "the lesser of the inflation rate or eight percent" for
"five percent" in Subsection (a) of this section and the amount
equal to the sum of one and the lesser of the inflation rate as
determined by the comptroller under Section 26.04(b-1), Tax Code,
or 0.08 for "1.05" in Subsection (d) of this section.
SECTION 6. The following provisions are repealed:
(1) Section 49.236, Water Code, as added by Chapter
248 (H.B. 1541), Acts of the 78th Legislature, Regular Session,
2003; and
(2) Section 49.2361, Water Code.
SECTION 7. (a) The change in law made by this Act applies to
the ad valorem tax rate of a taxing unit beginning with the 2017 tax
year, except as provided by Subsection (b) of this section.
(b) If the governing body of a taxing unit adopted an ad
valorem tax rate for the taxing unit for the 2017 tax year before
the effective date of this Act, the change in law made by this Act
applies to the ad valorem tax rate of that taxing unit beginning
with the 2018 tax year, and the law in effect when the tax rate was
adopted applies to the 2017 tax year with respect to that taxing
unit.
SECTION 8. 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 on the 91st day after the last day of the
legislative session.