Texas Senate Bill SB42

Texas 2021 - 87th 3rd C.S.

Caption

Relating to prohibiting the imposition of municipal ad valorem taxes on property that does not receive full municipal services.

Impact

The enactment of SB42 will directly affect how local governments can levy taxes on properties situated in areas that may be underdeveloped or underserved. By preventing municipalities from taxing these properties, the bill aims to ease the financial burdens on property owners in such locales, potentially fostering economic development and encouraging growth. Furthermore, this measure could shift the responsibility of funding local services away from property owners in these areas while also raising questions about the sustainability of municipal revenues.

Summary

Senate Bill 42 (SB42) introduces a significant change to the imposition of municipal ad valorem taxes. Specifically, the bill prohibits municipalities from imposing property taxes on areas that do not receive full municipal services. This legislative measure is grounded in the principle that residents or property owners in areas lacking full municipal services should not be burdened with taxation that reflects a level of service they do not receive. The bill allows for exceptions to this prohibition through written agreements between the municipality and individual landowners, enabling flexibility for specific cases where both parties agree to a tax arrangement.

Contention

Controversy around SB42 centers on the balance of fiscal responsibility for municipalities and the principle of equitable taxation. Proponents argue that the bill prevents unfair taxation and promotes fairness for property owners who are not receiving adequate services. Critics, however, may contend that such a move could lead to financial shortfalls for municipalities, limiting their ability to provide essential services broadly. This tension between reducing tax burdens on certain property owners and ensuring adequate funding for local government services is likely to be a point of contention during discussions and hearings regarding the bill.