Texas House Bill HB148

Texas 2021 - 87th 3rd C.S.

Caption

Relating to the effect of the receipt by a municipality or county of certain federal coronavirus relief money on the computation of certain ad valorem tax rates of and the procedure for adoption of a tax rate by the municipality or county.

Impact

The proposed changes would affect how municipalities and counties compute their no-new-revenue tax rates and voter-approval tax rates for the years starting from 2022 through 2024. Specifically, the tax rates would decrease or increase based on the federal relief money received in 2021 and 2022. This creates a mechanism that could potentially stabilize local tax rates during periods of financial uncertainty caused by economic disruptions like the COVID-19 pandemic.

Summary

House Bill 148 is a legislative proposal that addresses the influence of federal coronavirus relief funds on the calculation and adoption of ad valorem tax rates for municipalities and counties in Texas. The bill introduces amendments to the Tax Code that specifically pertain to the treatment of money received by local governments from the Coronavirus Local Fiscal Recovery Fund, which was established under the American Rescue Plan Act of 2021. It aims to adjust tax rates based on federal funding received by local entities to mitigate the financial impact of the pandemic.

Contention

There may be concerns surrounding the bill related to fiscal independence and the long-term sustainability of relying on federal funds to influence local taxation. Stakeholders might argue that while the temporary relief can provide immediate benefits, it may distort the natural tax rate calculations, leading to complications in local governance and budget planning in the future. As such, the bill could prompt discussions about the balance of state and local authority in tax matters and the implications of federal dependency.

Provisions

The bill is set to expire on January 1, 2026, indicating that its effects are intended to be temporary. This time limitation could both appease concerns regarding overreach by placing a sunset clause on the provisions, as well as bring uncertainty to municipalities that will have to plan for possible changes in tax revenue streams post-2026.