| 1 | 1 | | 87R5688 SMT-D |
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| 2 | 2 | | By: Slawson H.B. No. 3935 |
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| 3 | 3 | | |
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| 4 | 4 | | |
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| 5 | 5 | | A BILL TO BE ENTITLED |
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| 6 | 6 | | AN ACT |
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| 7 | 7 | | relating to the distribution of municipal sales and use tax revenue |
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| 8 | 8 | | to a municipality that reduces the funding allocated to law |
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| 9 | 9 | | enforcement agencies. |
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| 10 | 10 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 11 | 11 | | SECTION 1. Subchapter F, Chapter 321, Tax Code, is amended |
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| 12 | 12 | | by adding Section 321.5025 to read as follows: |
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| 13 | 13 | | Sec. 321.5025. DISTRIBUTION OF TRUST FUNDS TO DEFUNDING |
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| 14 | 14 | | MUNICIPALITIES. (a) For purposes of this section, "defunding |
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| 15 | 15 | | municipality" means a municipality: |
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| 16 | 16 | | (1) that adopts a budget for a fiscal year that, |
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| 17 | 17 | | compared to the budget adopted by the municipality for the |
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| 18 | 18 | | preceding fiscal year, reduces the total amount of funding for use |
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| 19 | 19 | | by the municipality's law enforcement agency, adjusted for |
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| 20 | 20 | | inflation; and |
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| 21 | 21 | | (2) for which the criminal justice division of the |
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| 22 | 22 | | governor's office issues a written determination finding that: |
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| 23 | 23 | | (A) the municipality has taken the action |
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| 24 | 24 | | described by Subdivision (1); and |
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| 25 | 25 | | (B) the action creates a public safety hazard |
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| 26 | 26 | | that requires the state to intervene and provide additional law |
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| 27 | 27 | | enforcement services for the municipality. |
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| 28 | 28 | | (b) Notwithstanding Section 321.502, the comptroller may |
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| 29 | 29 | | not, before July 1 of each state fiscal year, send to a defunding |
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| 30 | 30 | | municipality its share of the taxes collected by the comptroller |
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| 31 | 31 | | under this chapter during the state fiscal year. Before sending the |
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| 32 | 32 | | municipality its share of the taxes, the comptroller shall deduct |
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| 33 | 33 | | 150 percent of the amount reported to the comptroller for the |
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| 34 | 34 | | municipality under Subsection (c) and credit that deducted amount |
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| 35 | 35 | | to the general revenue fund. Money credited to the general revenue |
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| 36 | 36 | | fund under this subsection may be appropriated only to the |
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| 37 | 37 | | Department of Public Safety. |
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| 38 | 38 | | (c) Not later than August 1 of each state fiscal year, the |
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| 39 | 39 | | criminal justice division of the governor's office shall report to |
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| 40 | 40 | | the comptroller for each defunding municipality the amount of money |
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| 41 | 41 | | the state spent in that state fiscal year to provide law enforcement |
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| 42 | 42 | | services in that defunding municipality. |
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| 43 | 43 | | (d) A municipality is no longer considered to be a defunding |
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| 44 | 44 | | municipality for purposes of this section when the criminal justice |
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| 45 | 45 | | division of the governor's office issues a written determination |
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| 46 | 46 | | finding that the municipality has adopted a budget that reverses |
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| 47 | 47 | | the funding reductions, adjusted for inflation. |
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| 48 | 48 | | (e) The criminal justice division of the governor's office |
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| 49 | 49 | | shall: |
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| 50 | 50 | | (1) compute the inflation rate used to make |
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| 51 | 51 | | determinations under this section each state fiscal year using a |
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| 52 | 52 | | price index that accurately reports changes in the purchasing power |
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| 53 | 53 | | of the dollar for municipalities in this state; and |
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| 54 | 54 | | (2) publish the inflation rate in the Texas Register. |
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| 55 | 55 | | SECTION 2. The change in law made by this Act applies only |
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| 56 | 56 | | to a distribution of municipal sales and use tax revenue to a |
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| 57 | 57 | | municipality under Subchapter F, Chapter 321, Tax Code, in a state |
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| 58 | 58 | | fiscal year that begins on or after the effective date of this Act. |
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| 59 | 59 | | SECTION 3. Notwithstanding Section 321.5025(a)(1), Tax |
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| 60 | 60 | | Code, as added by this Act, in determining whether a municipality is |
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| 61 | 61 | | a defunding municipality for purposes of the distribution of |
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| 62 | 62 | | municipal sales and use tax revenue during the 2022 state fiscal |
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| 63 | 63 | | year, the criminal justice division of the governor's office shall |
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| 64 | 64 | | compare the applicable level of funding in the budget adopted by the |
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| 65 | 65 | | municipality for the municipality's 2021 fiscal year to the |
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| 66 | 66 | | applicable level of funding in the budget adopted by the |
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| 67 | 67 | | municipality for the municipality's 2020 or 2019 fiscal year, |
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| 68 | 68 | | whichever is greater. |
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| 69 | 69 | | SECTION 4. This Act takes effect September 1, 2021. |
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