85S10039 CJC-D
By: Swanson H.B. No. 91
A BILL TO BE ENTITLED
AN ACT
relating to the abolition of ad valorem taxes and a study of
alternative methods of taxation to replace revenue lost to
political subdivisions as a result of the abolition of ad valorem
taxes.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. (a) The legislature finds that:
(1) the imposition of ad valorem taxes is an
inherently inequitable means to generate revenue necessary to fund
the provision of essential services to residents of this state;
(2) ad valorem taxes may increase annually without
regard to the property owner's ability to pay;
(3) ad valorem taxes are perpetual and detrimental to
private property rights as secured by the Texas Constitution;
(4) the use of ad valorem taxes as a means to finance
the maintenance of public free schools has led directly to three
decades of school finance litigation in which the Texas Supreme
Court has referred to the system as "Byzantine" and has urged the
legislature to "choose a new path" of revenue for public free
schools;
(5) the use of ad valorem taxes by local governmental
entities as a means to generate revenue to fund the provision of
essential services places a disproportionate burden on those
residents that own property to pay for services that are enjoyed by
all residents; and
(6) the legislature has an obligation to ensure that
local governmental entities provide essential services in a manner
that is fair and fiscally responsible, and should encourage the use
of a more equitable source of revenue, such as the sales tax, to
fund the provision of those services.
(b) It is the intent of the legislature to abolish ad
valorem taxes and to create a more equitable means of funding the
provision of essential services to residents of this state by local
governmental entities and of meeting the state's constitutional
duty to make suitable provision for the support and maintenance of
an efficient system of public free schools.
SECTION 2. (a) The comptroller of public accounts shall
conduct a comprehensive study of alternative methods of taxation to
replace local tax revenue that will be lost when ad valorem taxes
are abolished.
(b) For each alternative method of taxation considered by
the comptroller, the comptroller shall:
(1) consider whether political subdivisions that
currently impose ad valorem taxes would have the authority to
impose the proposed alternative tax;
(2) determine the average tax rate for the proposed
alternative tax imposed by each type of political subdivision that
would be necessary to generate the same amount of tax revenue as the
amount of tax revenue lost as a result of the abolition of ad
valorem taxes;
(3) determine, if appropriate, the effect that
broadening the application of the proposed alternative tax at the
local level would have on the tax rates identified under
Subdivision (2) of this subsection;
(4) identify whether tax revenue generated by the
proposed alternative tax would require redistribution to offset
disparities in available local tax revenue as a result of the
abolition of ad valorem taxes and, if so, evaluate the different
mechanisms of redistribution available; and
(5) identify and examine any other issue that would
need to be addressed to implement the abolition of ad valorem taxes.
(c) On request of the comptroller, a state agency or
political subdivision shall provide information for and assistance
in conducting the study under this section.
(d) Not later than December 1, 2018, the comptroller shall
prepare and submit to the governor, lieutenant governor, speaker of
the house of representatives, and members of the legislature a
written report containing the results of the study and any
recommendations for legislative or other action.
(e) This section expires September 1, 2019.
SECTION 3. (a) Title 1, Tax Code, is repealed.
(b) Notwithstanding any other law, this state or a political
subdivision of this state may not impose an ad valorem tax. To the
extent of a conflict, this section controls over a conflicting
provision in a general or special law.
(c) The change in law made by this section does not affect
tax liability accruing before the effective date of this section.
That liability continues in effect as if this section had not been
enacted, and the former law is continued in effect for the
collection of taxes due and for civil and criminal enforcement of
the liability for those taxes.
(d) This section takes effect January 1, 2022.
SECTION 4. Except as otherwise provided by this Act, this
Act takes effect December 1, 2017.