Texas House Bill HB158

Texas 2025 - 89th 1st C.S.

• Filed: 7/21/25

Caption

Relating to the repeal of provisions providing for the calculation of an unused increment rate and the use of that rate in calculating certain other ad valorem tax rates.

Impact

The repeal of the unused increment rate could streamline tax calculations for local governments, potentially making it easier for them to establish appropriate taxing measures based on their financial needs. With these adjustments, local taxing units may find it simpler to navigate tax regulations, thus fostering a more predictable environment for revenue generation which in turn may influence local service funding. The bill's provisions will take effect on January 1, 2026, and will only apply to ad valorem taxes imposed for any tax year beginning after that date, setting a new framework for future budgeting and fiscal planning.

Summary

House Bill 158 addresses the repeal of provisions that govern the calculation of an unused increment rate, affecting how certain ad valorem tax rates are calculated. This bill amends existing sections of the Texas Tax Code, primarily modifying the 'no-new-revenue tax rate' and the 'voter-approval tax rate.' The proposed changes predominantly concern local taxing units and their ability to levy taxes based on property values and past revenue, directly impacting how communities fund local services and projects.

Contention

A key point of contention surrounding HB 158 may involve the balance between local control and the implications of state-level tax policy changes. Some stakeholders might argue that the repeal of the unused increment rate could limit local governments’ flexibility in managing their financial resources, while others may advocate for the simplicity it introduces. Opponents of this move could emphasize concerns that changes in tax rate calculations might lead to reduced funding for essential services in smaller municipalities, particularly those that rely heavily on property taxes to generate revenue.

Texas Constitutional Statutes Affected

Tax Code

• Chapter 26. Assessment
  • Section: New Section
  • Section: 0501

Water Code

• Chapter 49. Provisions Applicable To All Districts
  • Section: 23602

Local Government Code

• Chapter 120. Election For Reduction Of Funding Or Resources For Certain Primary Law Enforcement Agencies
  • Section: 007