87R1115 TJB-D
By: Bernal H.B. No. 183
A BILL TO BE ENTITLED
AN ACT
relating to a limitation on the total amount of ad valorem taxes
that a school district may impose on certain residence homesteads
following a substantial school tax increase.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter B, Chapter 11, Tax Code, is amended by
adding Section 11.262 to read as follows:
Sec. 11.262. LIMITATION OF SCHOOL TAXES ON CERTAIN
HOMESTEADS FOLLOWING SUBSTANTIAL TAX INCREASE. (a) In this
section, "residence homestead" has the meaning assigned by Section
11.13.
(b) The chief appraiser shall appraise, and the tax assessor
for each school district shall calculate the taxes on, each
residence homestead in the manner provided by law for other
property.
(c) Except as provided by Subsection (g), if an individual
qualifies property as the individual's residence homestead for at
least 15 consecutive tax years and the total amount of school
district taxes imposed on the property in that 15th tax year is at
least 120 percent greater than the total amount of those taxes
imposed in the first of those tax years, not including taxes imposed
on the appraised value of all improvements made to the property
during that period, a school district may not impose taxes on that
residence homestead in a subsequent tax year in an amount that
exceeds the least of the following amounts:
(1) the amount of school taxes calculated for the
current tax year under Subsection (b);
(2) the amount of school taxes imposed for that 15th
tax year; or
(3) the amount of school taxes as limited under
Section 11.26, if applicable.
(c-1) An individual may not receive a limitation on taxes
under Subsection (c) based on an increase in taxes for any period
that began before the 2008 tax year.
(d) If an individual who qualifies for a limitation under
this section dies, the surviving spouse of the individual is
entitled to continue receiving the limitation on school taxes
imposed by a school district on the residence homestead of the
individual if the property:
(1) is the residence homestead of the surviving spouse
on the date that the individual dies; and
(2) remains the residence homestead of the surviving
spouse.
(e) Except as provided by Subsection (d) or (f), a
limitation under this section expires on January 1 if the property
is not the residence homestead of the individual entitled to the
limitation for the preceding tax year.
(f) A limitation under this section does not expire if:
(1) an owner of an interest in the residence homestead
conveys the interest to a qualifying trust as defined by Section
11.13(j) and the owner or the owner's spouse is:
(A) a trustor of the trust; and
(B) entitled to occupy the property; or
(2) the owner of the structure qualifies for an
exemption under Section 11.13 under the circumstances described by
Section 11.135(a).
(g) Except as provided by Subsection (h), a school district
may increase the tax on a residence homestead subject to a
limitation under this section in the first year the appraised value
of the property is increased as the result of an improvement made to
the property in the preceding tax year. The amount of the tax
increase is determined by applying the current tax rate of the
school district to the difference in the taxable value of the
property with the improvement and the taxable value the property
would have had without the improvement. A limitation imposed by
this section then applies to the increased amount of tax until
another improvement is made to the property.
(h) An improvement to a residence homestead is not treated
as an improvement under Subsection (g) if the improvement is:
(1) a repair;
(2) required to be made to comply with a governmental
requirement; or
(3) subject to Subsection (i), a replacement structure
for a structure that was rendered uninhabitable or unusable by a
casualty or by wind or water damage.
(i) A replacement structure described by Subsection (h)(3)
is considered to be an improvement under Subsection (g) only if:
(1) the square footage of the replacement structure
exceeds the square footage of the replaced structure as the
replaced structure existed before the casualty or damage occurred;
or
(2) the exterior of the replacement structure is of
higher quality construction and composition than that of the
replaced structure.
(j) If the appraisal roll provides for taxation of appraised
value for a prior year because a limitation under this section was
erroneously allowed, the tax assessor for the school district shall
add as back taxes due, as provided by Section 26.09(d), the positive
difference, if any, between the tax that should have been imposed
for that tax year and the tax that was imposed because of the
provisions of this section.
(k) For each school district in an appraisal district, the
chief appraiser shall determine the portion of the appraised value
of residence homesteads of individuals on which school district
taxes are not imposed in a tax year because of the limitation under
this section. That portion is calculated by determining the
taxable value that, if multiplied by the tax rate adopted by the
school district for the tax year, would produce an amount equal to
the amount of tax that would have been imposed by the school
district on those properties if the limitation under this section
were not in effect, but that was not imposed because of that
limitation. The chief appraiser shall determine that taxable value
and certify it to the comptroller as soon as practicable for each
tax year.
SECTION 2. Sections 23.19(b) and (g), Tax Code, are amended
to read as follows:
(b) If an appraisal district receives a written request for
the appraisal of real property and improvements of a cooperative
housing corporation according to the separate interests of the
corporation's stockholders, the chief appraiser shall separately
appraise the interests described by Subsection (d) if the
conditions required by Subsections (e) and (f) have been met.
Separate appraisal under this section is for the purposes of
administration of tax exemptions, determination of applicable
limitations of taxes under Section 11.26, [or] 11.261, or 11.262,
and apportionment by a cooperative housing corporation of property
taxes among its stockholders but is not the basis for determining
value on which a tax is imposed under this title. A stockholder
whose interest is separately appraised under this section may
protest and appeal the appraised value in the manner provided by
this title for protest and appeal of the appraised value of other
property.
(g) A tax bill or a separate statement accompanying the tax
bill to a cooperative housing corporation for which interests of
stockholders are separately appraised under this section must
state, in addition to the information required by Section 31.01,
the appraised value and taxable value of each interest separately
appraised. Each exemption claimed as provided by this title by a
person entitled to the exemption shall also be deducted from the
total appraised value of the property of the corporation. The total
tax imposed by a school district, county, municipality, or junior
college district shall be reduced by any amount that represents an
increase in taxes attributable to separately appraised interests of
the real property and improvements that are subject to the
limitation of taxes prescribed by Section 11.26, [or] 11.261, or
11.262. The corporation shall apportion among its stockholders
liability for reimbursing the corporation for property taxes
according to the relative taxable values of their interests.
SECTION 3. Sections 26.012(6), (13), and (14), Tax Code,
are amended to read as follows:
(6) "Current total value" means the total taxable
value of property listed on the appraisal roll for the current year,
including all appraisal roll supplements and corrections as of the
date of the calculation, less the taxable value of property
exempted for the current tax year for the first time under Section
11.31 or 11.315, except that:
(A) the current total value for a school district
excludes:
(i) the total value of homesteads that
qualify for a tax limitation as provided by Sections [Section]
11.26 and 11.262; and
(ii) new property value of property that is
subject to an agreement entered into under Chapter 313; and
(B) the current total value for a county,
municipality, or junior college district excludes the total value
of homesteads that qualify for a tax limitation provided by Section
11.261.
(13) "Last year's levy" means the total of:
(A) the amount of taxes that would be generated
by multiplying the total tax rate adopted by the governing body in
the preceding year by the total taxable value of property on the
appraisal roll for the preceding year, including:
(i) taxable value that was reduced in an
appeal under Chapter 42;
(ii) all appraisal roll supplements and
corrections other than corrections made pursuant to Section
25.25(d), as of the date of the calculation, except that last year's
taxable value for a school district excludes the total value of
homesteads that qualified for a tax limitation as provided by
Sections [Section] 11.26 and 11.262 and last year's taxable value
for a county, municipality, or junior college district excludes the
total value of homesteads that qualified for a tax limitation as
provided by Section 11.261; and
(iii) the portion of taxable value of
property that is the subject of an appeal under Chapter 42 on July
25 that is not in dispute; and
(B) the amount of taxes refunded by the taxing
unit in the preceding year for tax years before that year.
(14) "Last year's total value" means the total taxable
value of property listed on the appraisal roll for the preceding
year, including all appraisal roll supplements and corrections,
other than corrections made pursuant to Section 25.25(d), as of the
date of the calculation, except that:
(A) last year's taxable value for a school
district excludes the total value of homesteads that qualified for
a tax limitation as provided by Sections [Section] 11.26 and
11.262; and
(B) last year's taxable value for a county,
municipality, or junior college district excludes the total value
of homesteads that qualified for a tax limitation as provided by
Section 11.261.
SECTION 4. 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.";
(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 amount required 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; and
(10) contain the following statement in bold print:
"Under state law, the dollar amount of school taxes imposed on a
residence homestead that qualifies as the owner's residence
homestead for at least 15 consecutive years, during which time the
total amount of school district taxes imposed on the property has
increased by at least 120 percent, may not be increased above the
amount of school taxes imposed on the property in that 15th
consecutive year, regardless of changes in tax rate or property
value.".
SECTION 5. Section 403.302(d), Government Code, is amended
to read as follows:
(d) For the purposes of this section, "taxable value" means
the market value of all taxable property less:
(1) the total dollar amount of any residence homestead
exemptions lawfully granted under Section 11.13(b) or (c), Tax
Code, in the year that is the subject of the study for each school
district;
(2) one-half of the total dollar amount of any
residence homestead exemptions granted under Section 11.13(n), Tax
Code, in the year that is the subject of the study for each school
district;
(3) the total dollar amount of any exemptions granted
before May 31, 1993, within a reinvestment zone under agreements
authorized by Chapter 312, Tax Code;
(4) subject to Subsection (e), the total dollar amount
of any captured appraised value of property that:
(A) is within a reinvestment zone created on or
before May 31, 1999, or is proposed to be included within the
boundaries of a reinvestment zone as the boundaries of the zone and
the proposed portion of tax increment paid into the tax increment
fund by a school district are described in a written notification
provided by the municipality or the board of directors of the zone
to the governing bodies of the other taxing units in the manner
provided by former Section 311.003(e), Tax Code, before May 31,
1999, and within the boundaries of the zone as those boundaries
existed on September 1, 1999, including subsequent improvements to
the property regardless of when made;
(B) generates taxes paid into a tax increment
fund created under Chapter 311, Tax Code, under a reinvestment zone
financing plan approved under Section 311.011(d), Tax Code, on or
before September 1, 1999; and
(C) is eligible for tax increment financing under
Chapter 311, Tax Code;
(5) the total dollar amount of any captured appraised
value of property that:
(A) is within a reinvestment zone:
(i) created on or before December 31, 2008,
by a municipality with a population of less than 18,000; and
(ii) the project plan for which includes
the alteration, remodeling, repair, or reconstruction of a
structure that is included on the National Register of Historic
Places and requires that a portion of the tax increment of the zone
be used for the improvement or construction of related facilities
or for affordable housing;
(B) generates school district taxes that are paid
into a tax increment fund created under Chapter 311, Tax Code; and
(C) is eligible for tax increment financing under
Chapter 311, Tax Code;
(6) the total dollar amount of any exemptions granted
under Section 11.251 or 11.253, Tax Code;
(7) the difference between the comptroller's estimate
of the market value and the productivity value of land that
qualifies for appraisal on the basis of its productive capacity,
except that the productivity value estimated by the comptroller may
not exceed the fair market value of the land;
(8) the portion of the appraised value of residence
homesteads of individuals who receive a tax limitation under
Section 11.26 or 11.262, Tax Code, on which school district taxes
are not imposed in the year that is the subject of the study,
calculated as if the residence homesteads were appraised at the
full value required by law;
(9) a portion of the market value of property not
otherwise fully taxable by the district at market value because of
action required by statute or the constitution of this state, other
than Section 11.311, Tax Code, that, if the tax rate adopted by the
district is applied to it, produces an amount equal to the
difference between the tax that the district would have imposed on
the property if the property were fully taxable at market value and
the tax that the district is actually authorized to impose on the
property, if this subsection does not otherwise require that
portion to be deducted;
(10) the market value of all tangible personal
property, other than manufactured homes, owned by a family or
individual and not held or used for the production of income;
(11) the appraised value of property the collection of
delinquent taxes on which is deferred under Section 33.06, Tax
Code;
(12) the portion of the appraised value of property
the collection of delinquent taxes on which is deferred under
Section 33.065, Tax Code;
(13) the amount by which the market value of a
residence homestead to which Section 23.23, Tax Code, applies
exceeds the appraised value of that property as calculated under
that section; and
(14) the total dollar amount of any exemptions granted
under Section 11.35, Tax Code.
SECTION 6. The limitation on school taxes provided by
Section 11.262, Tax Code, as added by 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 7. This Act takes effect January 1, 2022, but only
if the constitutional amendment proposed by the 87th Legislature,
Regular Session, 2021, authorizing the legislature to limit the
total amount of ad valorem taxes that a school district may impose
on the residence homestead of an individual and the surviving
spouse of the individual if the individual qualifies the property
as the individual's residence homestead for 15 consecutive tax
years and the school taxes on the property increase by at least 120
percent during that period is approved by the voters. If that
amendment is not approved by the voters, this Act has no effect.