87R5688 SMT-D
By: Slawson H.B. No. 3935
A BILL TO BE ENTITLED
AN ACT
relating to the distribution of municipal sales and use tax revenue
to a municipality that reduces the funding allocated to law
enforcement agencies.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter F, Chapter 321, Tax Code, is amended
by adding Section 321.5025 to read as follows:
Sec. 321.5025. DISTRIBUTION OF TRUST FUNDS TO DEFUNDING
MUNICIPALITIES. (a) For purposes of this section, "defunding
municipality" means a municipality:
(1) that adopts a budget for a fiscal year that,
compared to the budget adopted by the municipality for the
preceding fiscal year, reduces the total amount of funding for use
by the municipality's law enforcement agency, adjusted for
inflation; and
(2) for which the criminal justice division of the
governor's office issues a written determination finding that:
(A) the municipality has taken the action
described by Subdivision (1); and
(B) the action creates a public safety hazard
that requires the state to intervene and provide additional law
enforcement services for the municipality.
(b) Notwithstanding Section 321.502, the comptroller may
not, before July 1 of each state fiscal year, send to a defunding
municipality its share of the taxes collected by the comptroller
under this chapter during the state fiscal year. Before sending the
municipality its share of the taxes, the comptroller shall deduct
150 percent of the amount reported to the comptroller for the
municipality under Subsection (c) and credit that deducted amount
to the general revenue fund. Money credited to the general revenue
fund under this subsection may be appropriated only to the
Department of Public Safety.
(c) Not later than August 1 of each state fiscal year, the
criminal justice division of the governor's office shall report to
the comptroller for each defunding municipality the amount of money
the state spent in that state fiscal year to provide law enforcement
services in that defunding municipality.
(d) A municipality is no longer considered to be a defunding
municipality for purposes of this section when the criminal justice
division of the governor's office issues a written determination
finding that the municipality has adopted a budget that reverses
the funding reductions, adjusted for inflation.
(e) The criminal justice division of the governor's office
shall:
(1) compute the inflation rate used to make
determinations under this section each state fiscal year using a
price index that accurately reports changes in the purchasing power
of the dollar for municipalities in this state; and
(2) publish the inflation rate in the Texas Register.
SECTION 2. The change in law made by this Act applies only
to a distribution of municipal sales and use tax revenue to a
municipality under Subchapter F, Chapter 321, Tax Code, in a state
fiscal year that begins on or after the effective date of this Act.
SECTION 3. Notwithstanding Section 321.5025(a)(1), Tax
Code, as added by this Act, in determining whether a municipality is
a defunding municipality for purposes of the distribution of
municipal sales and use tax revenue during the 2022 state fiscal
year, the criminal justice division of the governor's office shall
compare the applicable level of funding in the budget adopted by the
municipality for the municipality's 2021 fiscal year to the
applicable level of funding in the budget adopted by the
municipality for the municipality's 2020 or 2019 fiscal year,
whichever is greater.
SECTION 4. This Act takes effect September 1, 2021.