BILL ANALYSIS Senate Research Center S.B. 1814 88R6746 SHH-D By: Bettencourt Local Government 4/6/2023 As Filed AUTHOR'S / SPONSOR'S STATEMENT OF INTENT Current law allows a taxing unit to levy an unrestricted interest and sinking property tax rate necessary to generate sufficient revenue to cover the required debt service for the current tax year. The interest and sinking tax rate declines as the total amount of debt outstanding from issuances is paid off, over time. However, the governing bodies of some taxing jurisdictions elect to retire debt earlier than required by a bonds covenant and schedule. These decisions require that the interest and sinking rate be set higher than would otherwise be required, leading taxpayers to pay higher tax bills than they otherwise would. S.B. 1814 seeks to amend the definition of "current debt" for purposes of calculating an interest and sinking tax rate, to include only the minimum amount required by a bond issuance's schedule. As proposed, S.B. 1814 amends current law relating to the definition of current debt service for the purpose of calculating the current debt rate of a taxing unit for ad valorem tax purposes. RULEMAKING AUTHORITY This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 26.012(3), Tax Code, as follows: (3) Defines "current debt service" as the minimum dollar amount required to be expended for debt service for the current year, rather than defining "current debt" as debt service for the current year. SECTION 2. Provides that this Act applies only to ad valorem taxes imposed for an ad valorem tax year that begins on or after the effective date of this Act. SECTION 3. Effective date: January 1, 2024.
BILL ANALYSIS
Senate Research Center S.B. 1814
88R6746 SHH-D By: Bettencourt
Local Government
4/6/2023
As Filed
Senate Research Center
S.B. 1814
88R6746 SHH-D
By: Bettencourt
Local Government
4/6/2023
As Filed
AUTHOR'S / SPONSOR'S STATEMENT OF INTENT
Current law allows a taxing unit to levy an unrestricted interest and sinking property tax rate necessary to generate sufficient revenue to cover the required debt service for the current tax year. The interest and sinking tax rate declines as the total amount of debt outstanding from issuances is paid off, over time. However, the governing bodies of some taxing jurisdictions elect to retire debt earlier than required by a bonds covenant and schedule. These decisions require that the interest and sinking rate be set higher than would otherwise be required, leading taxpayers to pay higher tax bills than they otherwise would.
S.B. 1814 seeks to amend the definition of "current debt" for purposes of calculating an interest and sinking tax rate, to include only the minimum amount required by a bond issuance's schedule.
As proposed, S.B. 1814 amends current law relating to the definition of current debt service for the purpose of calculating the current debt rate of a taxing unit for ad valorem tax purposes.
RULEMAKING AUTHORITY
This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Section 26.012(3), Tax Code, as follows:
(3) Defines "current debt service" as the minimum dollar amount required to be expended for debt service for the current year, rather than defining "current debt" as debt service for the current year.
SECTION 2. Provides that this Act applies only to ad valorem taxes imposed for an ad valorem tax year that begins on or after the effective date of this Act.
SECTION 3. Effective date: January 1, 2024.