Texas 2021 - 87th Regular

Texas House Bill HB3770 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	87R2877 BEF/MEW/TJB-F
2	2	By: White H.B. No. 3770
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to the repeal of or limitations on certain state and local
8	8	taxes, including ad valorem taxes, the enactment of state and local
9	9	value added taxes, and related school finance and administration
10	10	reform; imposing taxes.
11	11	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
12	12	ARTICLE 1. STATE VALUE ADDED TAX
13	13	SECTION 1.01. DEFINITIONS. In this article:
14	14	(1) "Input tax" means the aggregate amount of all
15	15	state and local value added taxes imposed under this Act that have
16	16	accrued with respect to services and property supplied to a
17	17	taxpayer during a calendar quarter and used or held for use by the
18	18	taxpayer in the ordinary course of the taxpayer's trade or
19	19	business.
20	20	(2) "Output tax" means the aggregate amount of all
21	21	state and local value added taxes imposed under this Act that have
22	22	accrued with respect to services and property supplied by a
23	23	taxpayer during a calendar quarter in the ordinary course of the
24	24	taxpayer's trade or business.
25	25	(3) "Taxpayer" means a person on whom the value added
26	26	tax is imposed.
27	27	(4) "Value added tax" means the tax imposed under
28	28	Section 1.02 of this article.
29	29	SECTION 1.02. VALUE ADDED TAX IMPOSED. A value added tax is
30	30	imposed on each person in this state who supplies any service or
31	31	property in the ordinary course of a trade or business in which the
32	32	person engages for profit.
33	33	SECTION 1.03. RATE OF TAX. The rate of the value added tax
34	34	is 6.72 percent of the taxpayer's taxable receipts from the supply
35	35	of services or property.
36	36	SECTION 1.04. DETERMINATION OF TAX PAYABLE. The total
37	37	amount of state and local value added taxes under this Act payable
38	38	by a taxpayer for a calendar quarter is the amount, if any, by which
39	39	the taxpayer's output tax exceeds the taxpayer's input tax.
40	40	SECTION 1.05. EXEMPTIONS. (a) The comptroller by rule
41	41	shall exempt from the value added tax:
42	42	(1) small businesses;
43	43	(2) governmental entities; and
44	44	(3) religious, educational, and public service
45	45	organizations.
46	46	(b) The comptroller shall refund the amount of any input tax
47	47	that has been accrued by an entity exempt under Subsection (a) of
48	48	this section.
49	49	SECTION 1.06. EXCLUSIONS. The comptroller by rule shall
50	50	exclude the following services and property from the value added
51	51	tax:
52	52	(1) monetary instruments, financial assets, and
53	53	investments;
54	54	(2) intercompany services;
55	55	(3) employment services;
56	56	(4) incidental transactions;
57	57	(5) transfers of common interests in property;
58	58	(6) services and property taxed by other law,
59	59	including Chapters 201 and 202, Tax Code; and
60	60	(7) services and property this state is prohibited
61	61	from taxing by federal law or the Texas Constitution.
62	62	SECTION 1.07. RULES. The comptroller shall adopt all rules
63	63	necessary to implement, administer, and enforce the state value
64	64	added tax and all local value added taxes under this Act.
65	65	SECTION 1.08. DISPOSITION OF REVENUE. All proceeds from
66	66	the collection of the value added tax shall be deposited to the
67	67	credit of the general revenue fund.
68	68	SECTION 1.09. EFFECTIVE DATE OF ARTICLE. This article
69	69	takes effect January 1, 2026.
70	70	ARTICLE 2. LOCAL VALUE ADDED TAXES
71	71	SECTION 2.01. LOCAL SALES AND USE TAXES PROHIBITED.
72	72	Notwithstanding any other law, a political subdivision may not
73	73	impose a sales or use tax on or after the effective date of this
74	74	article.
75	75	SECTION 2.02. LOCAL VALUE ADDED TAXES. (a) A political
76	76	subdivision that was authorized to impose a sales and use tax
77	77	immediately before the effective date of this article may impose a
78	78	local value added tax on and after the effective date of this
79	79	article.
80	80	(b) A local value added tax is administered, collected, and
81	81	enforced by the comptroller in the same manner as the state value
82	82	added tax. The tax applies to the supply of services or property in
83	83	the territory of the political subdivision.
84	84	(c) The comptroller shall allocate and remit to each
85	85	appropriate taxing jurisdiction proceeds from the collection of
86	86	local value added taxes by the comptroller.
87	87	SECTION 2.03. RATES OF LOCAL VALUE ADDED TAXES. (a) The
88	88	combined rate of all local value added taxes may not exceed two
89	89	percent at any location in the territory of a political
90	90	subdivision.
91	91	(b) The maximum combined rate provided by Subsection (a) of
92	92	this section does not apply to or include a school district
93	93	enrichment value added tax under Article 3 of this Act.
94	94	(c) On the effective date of this article, a political
95	95	subdivision may begin imposing the local value added tax at a rate
96	96	not to exceed the rate at which the political subdivision imposed a
97	97	sales and use tax immediately before the effective date of this
98	98	article. Subject to Subsection (a) of this section, the governing
99	99	body of a political subdivision that imposes a local value added tax
100	100	may adopt an order or ordinance changing the rate of or repealing
101	101	the tax imposed by the political subdivision.
102	102	SECTION 2.04. EFFECTIVE DATE OF ARTICLE. This article
103	103	takes effect January 1, 2026.
104	104	ARTICLE 3. SCHOOL DISTRICT ENRICHMENT VALUE ADDED TAX
105	105	SECTION 3.01. TAX AUTHORIZED. (a) A school district may
106	106	adopt or repeal a school district enrichment value added tax at an
107	107	election in which a majority of the qualified voters of the school
108	108	district approve the adoption or repeal of the tax.
109	109	(b) A school district enrichment value added tax is
110	110	administered, collected, and enforced by the comptroller in the
111	111	same manner as the state value added tax. The tax applies to the
112	112	supply of services or property in the territory of the school
113	113	district.
114	114	SECTION 3.02. MAXIMUM RATE. The rate of the school district
115	115	enrichment value added tax may not exceed 0.5 percent.
116	116	SECTION 3.03. USE OF TAX REVENUE BY SCHOOL DISTRICT. (a)
117	117	Revenue from the school district enrichment value added tax is for
118	118	the use and benefit of the school district. The revenue must be
119	119	used exclusively for school enrichment facilities and activities
120	120	and for the payment of the principal of and interest on debt
121	121	incurred to fund school enrichment facilities and activities.
122	122	(b) Revenue from the school district enrichment value added
123	123	tax may not be used for an expenditure or investment that is:
124	124	(1) necessary to comply with the legislature's duty
125	125	under Section 1, Article VII, Texas Constitution, to provide for
126	126	the general diffusion of knowledge and an efficient system of
127	127	public schools, including by providing funding for instructional
128	128	facilities; and
129	129	(2) eligible for funding through the Foundation School
130	130	Program.
131	131	SECTION 3.04. PLEDGE OF REVENUE. A school district may
132	132	pledge a portion of the revenue from the school district enrichment
133	133	value added tax for the payment of obligations issued to pay all or
134	134	part of the cost of a school enrichment project in the school
135	135	district.
136	136	SECTION 3.05. EFFECTIVE DATE OF ARTICLE. This article
137	137	takes effect January 1, 2026.
138	138	ARTICLE 4. AD VALOREM TAXES
139	139	SECTION 4.01. PROHIBITION ON IMPOSITION OF AD VALOREM
140	140	TAXES. (a) Notwithstanding any other law, a political subdivision
141	141	may not impose an ad valorem tax for any purpose unless the
142	142	legislature by law has, on or after January 1, 2023, specifically
143	143	authorized the political subdivision to impose the tax. To the
144	144	extent of a conflict, this section controls over a conflicting
145	145	provision in a general or special law.
146	146	(b) The change in law made by this section does not affect
147	147	tax liability accruing before the effective date of this section.
148	148	(c) This section takes effect January 1, 2026, but only if
149	149	on or before that date a constitutional amendment to prohibit a
150	150	political subdivision from imposing an ad valorem tax for any
151	151	purpose unless the legislature by law has specifically authorized
152	152	the political subdivision to impose the tax is approved by the
153	153	voters. If such a constitutional amendment is not approved by the
154	154	voters on or before that date, this section has no effect.
155	155	SECTION 4.02. REPORT. (a) The comptroller shall prepare a
156	156	report that:
157	157	(1) recommends for each political subdivision
158	158	authorized to impose an ad valorem tax whether the legislature
159	159	should authorize the political subdivision to continue to impose
160	160	the tax on and after January 1, 2026; and
161	161	(2) recommends any change in constitutional or
162	162	statutory law needed to implement this Act.
163	163	(b) Not later than December 1, 2021, the comptroller shall
164	164	prepare and make available to each political subdivision that
165	165	imposes an ad valorem tax a form to be completed by the political
166	166	subdivision to assist the comptroller in making the recommendations
167	167	described by Subsection (a) of this section.
168	168	(c) Not later than February 1, 2022, each political
169	169	subdivision authorized to impose an ad valorem tax shall complete
170	170	and submit to the comptroller the form described by Subsection (b)
171	171	of this section. A political subdivision must prepare and submit
172	172	the form in the manner and format prescribed by the comptroller.
173	173	(d) On request of the comptroller, a political subdivision
174	174	shall promptly provide information for and assistance in preparing
175	175	the report under Subsection (a) of this section.
176	176	(e) Not later than December 1, 2022, the comptroller shall
177	177	submit to the governor, lieutenant governor, speaker of the house
178	178	of representatives, and members of the legislature the report
179	179	required by Subsection (a) of this section.
180	180	(f) This section expires January 1, 2023.
181	181	SECTION 4.03. EFFECTIVE DATE OF ARTICLE. Except as
182	182	otherwise provided by this article, this article takes effect
183	183	September 1, 2021.
184	184	ARTICLE 5. SCHOOL FINANCE
185	185	SECTION 5.01. FOUNDATION SCHOOL PROGRAM FUNDING. Beginning
186	186	with the 2026-2027 school year, the legislature shall appropriate
187	187	money to fund the Foundation School Program under Chapter 48,
188	188	Education Code, in an amount, excluding money collected by a school
189	189	district through the imposition of a tax, necessary to:
190	190	(1) comply with the legislature's duty under Section
191	191	1, Article VII, Texas Constitution, to provide for the general
192	192	diffusion of knowledge and an efficient system of public schools,
193	193	including by providing funding for instructional facilities;
194	194	(2) achieve the state policy under Section 48.001,
195	195	Education Code, and the purposes of the Foundation School Program
196	196	under Section 48.002, Education Code;
197	197	(3) provide the basic allotment under Section 48.051,
198	198	Education Code, in an amount of at least $6,160 per student in
199	199	average daily attendance; and
200	200	(4) provide a minimal level of revenue to provide
201	201	school districts an opportunity to pursue locally funded enrichment
202	202	programs.
203	203	SECTION 5.02. IMPOSITION OF MAINTENANCE AND OPERATIONS AND
204	204	DEBT SERVICE TAX BY SCHOOL DISTRICT PROHIBITED. (a)
205	205	Notwithstanding any other law and except as provided by Subsection
206	206	(b) of this section, a school district may not impose a tax for
207	207	maintenance and operations or debt service purposes on or after
208	208	January 1, 2026, unless specifically authorized by the legislature
209	209	as provided by SECTION 4.01 of this Act.
210	210	(b) Subsection (a) of this section does not affect the
211	211	authority of a school district to impose an enrichment value added
212	212	tax at a rate not to exceed 0.5 percent in accordance with Article 3
213	213	of this Act for the purpose of providing additional revenue to
214	214	enrich the educational opportunities of students enrolled in the
215	215	district. The revenue attributable to the tax authorized under
216	216	this subsection is in addition to any money the district receives
217	217	from the state.
218	218	(c) A reference in the Education Code, the Tax Code, or any
219	219	other law to a school district's authority to impose a maintenance
220	220	tax, a maintenance and operations tax, or a debt service tax may not
221	221	be construed in a manner inconsistent with this section.
222	222	SECTION 5.03. STATE ASSISTANCE FOR TRANSITION TO SCHOOL
223	223	DISTRICT ENRICHMENT VALUE ADDED TAX. (a) For purposes of
224	224	budgeting, funding, and debt servicing, the commissioner of
225	225	education shall assist school districts in transitioning from the
226	226	use of maintenance and operations and debt service tax revenue to
227	227	the use of state funding and enrichment value added tax revenue.
228	228	(b) Not later than March 1, 2026, each school district shall
229	229	prepare and submit to the commissioner of education a transition
230	230	report certified by the comptroller that provides for the following
231	231	10 state fiscal years estimates regarding:
232	232	(1) budgets;
233	233	(2) sources of funding;
234	234	(3) debt service;
235	235	(4) operating and capital expenditures; and
236	236	(5) public bond offerings.
237	237	(c) In the transition report prepared under Subsection (b)
238	238	of this section, a school district shall, in accordance with the
239	239	policy and purposes described by Sections 48.001 and 48.002,
240	240	Education Code, classify as "foundational" or "enrichment":
241	241	(1) each projected operating and capital expenditure
242	242	and the proportion of each current and projected debt and debt
243	243	service requirement; and
244	244	(2) the proportional amounts of current and projected
245	245	debts and debt service requirements, based on the proposed uses for
246	246	the revenue.
247	247	(d) Based on school districts' reports under Subsection (b)
248	248	of this section, the commissioner of education shall prepare and
249	249	present to the comptroller recommendations for refunding,
250	250	redeeming, or amending outstanding bonds for which school districts
251	251	pledged maintenance and operations or debt service tax revenue for
252	252	payment.
253	253	(e) Notwithstanding any other law, the commissioner of
254	254	education shall provide state funding for the payment of any bonds
255	255	classified by a school district as a "foundational" bond under
256	256	Subsection (c) of this section. A school district assumes full
257	257	financial responsibility for any bond classified as an "enrichment"
258	258	bond.
259	259	(f) The commissioner of education shall annually prepare
260	260	and provide a report to the legislature and the comptroller
261	261	regarding funding under the Foundation School Program and the
262	262	transition by school districts to imposing a value added enrichment
263	263	tax. The report must include recommendations for legislative
264	264	action to facilitate the funding transitions required under this
265	265	Act while maintaining and improving the efficiency, quality, and
266	266	results of public education in this state.
267	267	SECTION 5.04. REPORT REGARDING SCHOOL DISTRICT
268	268	REORGANIZATION. (a) As soon as practicable after the effective
269	269	date of this article, the commissioner of education shall consult
270	270	with school districts to develop recommendations regarding the
271	271	reorganization of school districts with populations of 100,000 or
272	272	more into smaller districts to promote increased community and
273	273	parental engagement. The recommendations must include provisions
274	274	for:
275	275	(1) preserving and promoting open-enrollment charter
276	276	schools that attract students from broadly dispersed geographic
277	277	areas; and
278	278	(2) organizing school districts based on geographic
279	279	proximity, shared community ties and interests, and transportation
280	280	patterns and limitations.
281	281	(b) Not later than September 1, 2025, the commissioner of
282	282	education shall provide the legislature with a report containing
283	283	the recommendations developed under Subsection (a) of this section.
284	284	SECTION 5.05. EFFECTIVE DATE OF ARTICLE. This article
285	285	takes effect September 1, 2021.
286	286	ARTICLE 6. REPEALED PROVISIONS
287	287	SECTION 6.01. TAX CODE. (a) The following provisions of
288	288	the Tax Code are repealed:
289	289	(1) Chapter 142;
290	290	(2) Subtitles E, F, G, H, I, and J, Title 2; and
291	291	(3) Subtitle C, Title 3.
292	292	(b) The repeal of a provision by this section does not
293	293	affect tax liability accruing before the effective date of this
294	294	article. That liability continues in effect as if this article had
295	295	not been enacted, and the former law is continued in effect for the
296	296	collection of taxes due and for civil and criminal enforcement of
297	297	the liability for those taxes.
298	298	SECTION 6.02. EDUCATION CODE. The following provisions of
299	299	the Education Code are repealed:
300	300	(1) Section 45.0032;
301	301	(2) Chapter 46;
302	302	(3) Sections 48.255, 48.2551, 48.2552, 48.2553,
303	303	48.256, 48.257, 48.258, 48.259, and 48.260;
304	304	(4) Sections 48.267(b) and (c);
305	305	(5) Sections 48.271 and 48.275; and
306	306	(6) Chapter 49.
307	307	SECTION 6.03. EFFECTIVE DATE OF ARTICLE. This article
308	308	takes effect January 1, 2026.