By: Meyer H.B. No. 19
A BILL TO BE ENTITLED
AN ACT
relating to the issuance and repayment of debt by local
governments, including the adoption of an ad valorem tax rate and
the use of ad valorem tax revenue for the repayment of debt.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 44.004(c), Education Code, is amended to
read as follows:
(c) The notice of public meeting to discuss and adopt the
budget and the proposed tax rate may not be smaller than one-quarter
page of a standard-size or a tabloid-size newspaper, and the
headline on the notice must be in 18-point or larger type. Subject
to Subsection (d), the notice must:
(1) contain a statement in the following form:
"NOTICE OF PUBLIC MEETING TO DISCUSS BUDGET AND PROPOSED TAX RATE
"The (name of school district) will hold a public meeting at
(time, date, year) in (name of room, building, physical location,
city, state). The purpose of this meeting is to discuss the school
district's budget that will determine the tax rate that will be
adopted. Public participation in the discussion is invited." The
statement of the purpose of the meeting must be in bold type. In
reduced type, the notice must state: "The tax rate that is
ultimately adopted at this meeting or at a separate meeting at a
later date may not exceed the proposed rate shown below unless the
district publishes a revised notice containing the same information
and comparisons set out below and holds another public meeting to
discuss the revised notice." In addition, in reduced type, the
notice must state: "Visit Texas.gov/PropertyTaxes to find a link to
your local property tax database on which you can easily access
information regarding your property taxes, including information
about proposed tax rates and scheduled public hearings of each
entity that taxes your property.";
(2) contain a section entitled "Comparison of Proposed
Budget with Last Year's Budget," which must show the difference,
expressed as a percent increase or decrease, as applicable, in the
amounts budgeted for the preceding fiscal year and the amount
budgeted for the fiscal year that begins in the current tax year for
each of the following:
(A) maintenance and operations;
(B) debt service; and
(C) total expenditures;
(3) contain a section entitled "Total Appraised Value
and Total Taxable Value," which must show the total appraised value
and the total taxable value of all property and the total appraised
value and the total taxable value of new property taxable by the
district in the preceding tax year and the current tax year as
calculated under Section 26.04, Tax Code;
(4) contain a statement of the total amount of the
outstanding and unpaid bonded indebtedness of the school district;
(5) contain a section entitled "Comparison of Proposed
Rates with Last Year's Rates," which must:
(A) show in rows the tax rates described by
Subparagraphs (i)-(iii), expressed as amounts per $100 valuation of
property, for columns entitled "Maintenance & Operations,"
"Interest & Sinking Fund," and "Total," which is the sum of
"Maintenance & Operations" and "Interest & Sinking Fund":
(i) the school district's "Last Year's
Rate";
(ii) the "Rate to Maintain Same Level of
Maintenance & Operations Revenue & Pay Debt Service," which:
(a) in the case of "Maintenance &
Operations," is the tax rate that, when applied to the current
taxable value for the district, as certified by the chief appraiser
under Section 26.01, Tax Code, and as adjusted to reflect changes
made by the chief appraiser as of the time the notice is prepared,
would impose taxes in an amount that, when added to state funds to
be distributed to the district under Chapter 48, would provide the
same amount of maintenance and operations taxes and state funds
distributed under Chapter 48 per student in average daily
attendance for the applicable school year that was available to the
district in the preceding school year; and
(b) in the case of "Interest & Sinking
Fund," is the tax rate that, when applied to the current taxable
value for the district, as certified by the chief appraiser under
Section 26.01, Tax Code, and as adjusted to reflect changes made by
the chief appraiser as of the time the notice is prepared, and when
multiplied by the district's anticipated collection rate, would
impose taxes in an amount that, when added to state funds to be
distributed to the district under Chapter 46 and any excess taxes
collected to service the district's debt during the preceding tax
year but not used for that purpose during that year, would provide
the minimum dollar amount required to be paid to service the
district's debt; and
(iii) the "Proposed Rate";
(B) contain fourth and fifth columns aligned with
the columns required by Paragraph (A) that show, for each row
required by Paragraph (A):
(i) the "Local Revenue per Student," which
is computed by multiplying the district's total taxable value of
property, as certified by the chief appraiser for the applicable
school year under Section 26.01, Tax Code, and as adjusted to
reflect changes made by the chief appraiser as of the time the
notice is prepared, by the total tax rate, and dividing the product
by the number of students in average daily attendance in the
district for the applicable school year; and
(ii) the "State Revenue per Student," which
is computed by determining the amount of state aid received or to be
received by the district under Chapters 43, 46, and 48 and dividing
that amount by the number of students in average daily attendance in
the district for the applicable school year; and
(C) contain an asterisk after each calculation
for "Interest & Sinking Fund" and a footnote to the section that, in
reduced type, states "The Interest & Sinking Fund tax revenue is
used to pay for bonded indebtedness on construction, equipment, or
both. The bonds, and the tax rate necessary to pay those bonds,
were approved by the voters of this district.";
(6) contain a section entitled "Comparison of Proposed
Levy with Last Year's Levy on Average Residence," which must:
(A) show in rows the information described by
Subparagraphs (i)-(iv), rounded to the nearest dollar, for columns
entitled "Last Year" and "This Year":
(i) "Average Market Value of Residences,"
determined using the same group of residences for each year;
(ii) "Average Taxable Value of Residences,"
determined after taking into account the limitation on the
appraised value of residences under Section 23.23, Tax Code, and
after subtracting all homestead exemptions applicable in each year,
other than exemptions available only to disabled persons or persons
65 years of age or older or their surviving spouses, and using the
same group of residences for each year;
(iii) "Last Year's Rate Versus Proposed
Rate per $100 Value"; and
(iv) "Taxes Due on Average Residence,"
determined using the same group of residences for each year; and
(B) contain the following information: "Increase
(Decrease) in Taxes" expressed in dollars and cents, which is
computed by subtracting the "Taxes Due on Average Residence" for
the preceding tax year from the "Taxes Due on Average Residence" for
the current tax year;
(7) contain the following statement in bold print:
"Under state law, the dollar amount of school taxes imposed on the
residence of a person 65 years of age or older or of the surviving
spouse of such a person, if the surviving spouse was 55 years of age
or older when the person died, may not be increased above the amount
paid in the first year after the person turned 65, regardless of
changes in tax rate or property value.";
(8) contain the following statement in bold print:
"Notice of Voter-Approval Rate: The highest tax rate the district
can adopt before requiring voter approval at an election is (the
school district voter-approval rate determined under Section
26.08, Tax Code). This election will be automatically held if the
district adopts a rate in excess of the voter-approval rate of (the
school district voter-approval rate)."; and
(9) contain a section entitled "Fund Balances," which
must include the estimated amount of interest and sinking fund
balances and the estimated amount of maintenance and operation or
general fund balances remaining at the end of the current fiscal
year that are not encumbered with or by corresponding debt
obligation, less estimated funds necessary for the operation of the
district before the receipt of the first payment under Chapter 48 in
the succeeding school year.
SECTION 2. Subchapter A, Chapter 41, Election Code, is
amended by adding Section 41.0051 to read as follows:
Sec. 41.0051. ELECTION TO ISSUE BONDS OR INCREASE AD
VALOREM TAX RATE. (a) An election to authorize the issuance of
general obligation bonds or to approve an increase in an ad valorem
tax rate shall be held on the November uniform election date.
(b) Notwithstanding Section 41.0011, an election described
by Subsection (a) may not be held as an emergency election under
that section.
(c) If a law outside this code requires an election
described by Subsection (a) to be held on a date other than the
November uniform election date, the authority administering the
election shall set the election date to comply with this section.
SECTION 3. Subchapter A, Chapter 1201, Government Code, is
amended by adding Section 1201.006 to read as follows:
Sec. 1201.006. LIMIT ON LOCAL GOVERNMENT DEBT. (a)
Notwithstanding any other law, including a provision in a municipal
charter, a political subdivision may not authorize additional debt
if the resulting annual debt service exceeds the limitation imposed
by this section. The maximum annual debt service in any fiscal year
on debt payable from property taxes may not exceed 20 percent of an
amount equal to the average of the amount of property tax
collections for the three preceding fiscal years.
SECTION 4. Chapter 1253, Government Code, is amended by
adding Section 1253.004 to read as follows:
Sec. 1253.004. ALLOCATION OF PROCEEDS. A political
subdivision shall allocate the proceeds from the issuance of
general obligation bonds authorized by the voters in the percentage
or amount stated in the ballot proposition to authorize the
issuance.
SECTION 5. Section 1431.001(2), Government Code, is amended
to read as follows:
(2) "Eligible countywide district" means a flood
control district [or a hospital district] the boundaries of which
are substantially coterminous with the boundaries of a county with
a population of three million or more [or a hospital district
created in a county with a population of more than 1.2 million that
was not included in the boundaries of a hospital district before
September 1, 2003].
SECTION 6. Section 1431.002, Government Code, is amended by
adding Subsection (d) to read as follows:
(d) Except as provided by this subsection, the governing
body of an issuer may not authorize an anticipation note to pay a
contractual obligation to be incurred if a bond proposition to
authorize the issuance of bonds for the same purpose was submitted
to the voters during the preceding five years and failed to be
approved. The governing body of an issuer may authorize an
anticipation note that the governing body is otherwise prohibited
from authorizing under this subsection in a case described by
Section 271.045(a)(1), Local Government Code.
SECTION 7. Section 1431.003(b), Government Code, is amended
to read as follows:
(b) Notwithstanding anything in this chapter to the
contrary and except as provided by Section 1431.002(d), the
governing body may exercise the authority granted to the governing
body of an issuer with regard to issuance of obligations under
Chapter 1371, except that the prohibition in that chapter on the
repayment of an obligation with ad valorem taxes does not apply to
an issuer exercising the authority granted by this section.
SECTION 8. Sections 271.043(7) and (7-a), Local Government
Code, are amended to read as follows:
(7) "Issuer" means a municipality or[,] county[, or
hospital district established under Chapter 281, Health and Safety
Code].
(7-a) "Public work" [for an issuer that is a
municipality or county:
[(A)] means any of the following public
improvements as authorized by law:
(A) [(i)] a street, road, highway, bridge,
sidewalk, or parking structure;
(B) [(ii)] a landfill;
(C) [(iii)] an airport;
(D) [(iv)] a utility system, water supply
project, water treatment plant, wastewater treatment plant, or
water or wastewater conveyance facility;
(E) [(v)] a wharf or dock; or
(F) [(vi)] a flood control and drainage
project[;
[(vii) a public safety facility, including
a police station, fire station, emergency shelter, jail, or
juvenile detention facility;
[(viii) a judicial facility;
[(ix) an administrative office building
housing the governmental functions of the municipality or county;
[(x) an animal shelter;
[(xi) a library; or
[(xii) a park or recreation facility that
is generally accessible to the public and is part of the municipal
or county park system;
[(B) means the rehabilitation, expansion,
reconstruction, or maintenance of an existing stadium, arena, civic
center, convention center, or coliseum that is owned and operated
by the municipality or county or by an entity created to act on
behalf of the municipality or county; and
[(C) does not include:
[(i) a facility for which more than 50
percent of the average annual usage is or is intended to be for
professional or semi-professional sports;
[(ii) a new stadium, arena, civic center,
convention center, or coliseum that is or is intended to be leased
by a single for-profit tenant for more than 180 days in a single
calendar year; or
[(iii) a hotel].
SECTION 9. Section 271.045, Local Government Code, is
amended by amending Subsections (a) and (b) and adding Subsections
(f) and (g) to read as follows:
(a) The governing body of an issuer may authorize
certificates only as necessary to pay a contractual obligation:
(1) to be incurred for the construction, renovation,
repair, or improvement of a public work that the governing body
determines is necessary:
(A) to comply with a state or federal law or rule,
but only if the issuer has been officially notified of
noncompliance with the law or rule [(1) construction of any public
work];
(B) to mitigate the impact of a public health
emergency in the jurisdiction of the issuer that poses an imminent
danger to the physical health or safety of the residents of the
issuer;
(C) to finance the cleanup, mitigation, or
remediation of a natural disaster in the jurisdiction of the issuer
subject to a state of disaster declared by:
(i) the governor under Section 418.014,
Government Code, in the fiscal year that the certificates are
authorized; or
(ii) the presiding officer of the governing
body of the issuer under Section 418.108, Government Code, in the
fiscal year that the certificates are authorized; or
(D) to comply with a court order [(2) purchase of
materials, supplies, equipment, machinery, buildings, land, and
rights-of-way for authorized needs and purposes]; or
(2) for professional services necessary for a public
work described by Subdivision (1) [(3) payment of contractual
obligations for professional services, including services provided
by tax appraisers, engineers, architects, attorneys, map makers,
auditors, financial advisors, and fiscal agents].
(b) If necessary because of a change order for a contractual
obligation incurred for the construction, renovation, repair, or
improvement of a public work [orders], the governing body of an
issuer may authorize the issuance of certificates [may be
authorized] in an amount not to exceed 15 [25] percent of the [a]
contractual obligation [incurred for the construction of public
works], but certificates may be delivered only in the amount
necessary to discharge the contractual obligation [obligations].
(f) The governing body of an issuer that authorizes the
issuance of a certificate shall enter into a contract for the
construction, renovation, repair, or improvement of the public work
for which the issuance is authorized not later than the 180th day
after the date the governing body authorizes the issuance.
(g) The governing body of an issuer that authorizes a
certificate to pay a contractual obligation under Subsection
(a)(1)(B) shall adopt a resolution describing the conditions and
circumstances of the public health emergency and making a
determination that the emergency exists.
SECTION 10. Section 271.0461, Local Government Code, is
amended to read as follows:
Sec. 271.0461. ADDITIONAL PURPOSE FOR CERTIFICATES:
DEMOLITION OF DANGEROUS STRUCTURES [OR RESTORATION OF HISTORIC
STRUCTURES]. Certificates may be issued by any municipality for
the payment of contractual obligations to be incurred in
demolishing dangerous structures [or restoring historic
structures] and may be sold for cash, subject to the restrictions
and other conditions of Section 271.050.
SECTION 11. Sections 271.047(c) and (d), Local Government
Code, are amended to read as follows:
(c) A certificate may not mature over a period greater than
30 [40] years from the date of the certificate and may not bear
interest at a rate greater than that allowed by Chapter 1204,
Government Code.
(d) Except as provided by this subsection, the governing
body of an issuer may not authorize a certificate to pay a
contractual obligation to be incurred if a bond proposition to
authorize the issuance of bonds for the same purpose was submitted
to the voters during the preceding five [three] years and failed to
be approved. A governing body may authorize a certificate that the
governing body is otherwise prohibited from authorizing under this
subsection[:
[(1)] in a case described by Section 271.045(a)(1)
[Sections 271.056(1)-(3); and
[(2) to comply with a state or federal law, rule, or
regulation if the political subdivision has been officially
notified of noncompliance with the law, rule, or regulation].
SECTION 12. Sections 271.049(c) and (d), Local Government
Code, are amended to read as follows:
(c) If before the date tentatively set for the authorization
of the issuance of the certificates or if before the authorization,
the municipal secretary or clerk if the issuer is a municipality, or
the county clerk if the issuer is a county, receives a petition
signed by at least two [five] percent of the registered [qualified]
voters of the issuer protesting the issuance of the certificates,
the issuer may not authorize the issuance of the certificates
unless the issuance is approved at an election ordered, held, and
conducted in the manner provided for bond elections under Chapter
1251, Government Code.
(d) This section does not apply to certificates issued for
the purposes described by Section 271.045(a)(1) [Sections
271.056(1)-(4)].
SECTION 13. Section 271.0525(c), Local Government Code, is
amended to read as follows:
(c) A petition to protest the issuance of refinancing
certificates under this section must be signed by at least two
percent of the registered [a number of qualified] voters of the
county [, residing in the county, equal to at least five percent of
the number of votes cast in that county for governor in the most
recent general election at which that office was filled].
SECTION 14. Section 271.057(a), Local Government Code, is
amended to read as follows:
(a) Except as provided by Subsection (b), a contract let
under this subchapter for the construction, renovation, repair, or
improvement of public works or the purchase of materials,
equipment, supplies, or machinery and for which competitive bidding
is required by this subchapter must be let to the lowest responsible
bidder and, as the governing body determines, may be let on a
lump-sum basis or unit price basis.
SECTION 15. Section 271.059, Local Government Code, is
amended to read as follows:
Sec. 271.059. CONTRACTOR'S BONDS. If a contract is for the
construction, renovation, repair, or improvement of public works
and is required by this subchapter to be submitted to competitive
bidding, the successful bidder must execute a good and sufficient
payment bond and performance bond. The bonds must each be:
(1) in the full amount of the contract price; and
(2) executed, in accordance with Chapter 2253,
Government Code, with a surety company authorized to do business in
this state.
SECTION 16. Section 26.012(3), Tax Code, is amended to read
as follows:
(3) "Current debt service" means the minimum dollar
amount required to be expended for debt service for the current
year.
SECTION 17. Section 26.04(e), Tax Code, is amended to read
as follows:
(e) By August 7 or as soon thereafter as practicable, the
designated officer or employee shall submit the rates to the
governing body. The designated officer or employee shall post
prominently on the home page of the taxing unit's Internet website
in the form prescribed by the comptroller:
(1) the no-new-revenue tax rate, the voter-approval
tax rate, and an explanation of how they were calculated;
(2) the estimated amount of interest and sinking fund
balances and the estimated amount of maintenance and operation or
general fund balances remaining at the end of the current fiscal
year that are not encumbered with or by corresponding existing debt
obligation; and
(3) a schedule of the taxing unit's debt obligations
showing:
(A) the minimum dollar amount of principal and
interest required to [that will] be paid to service the taxing
unit's debts in the next year from property tax revenue, including
payments of lawfully incurred contractual obligations providing
security for the payment of the principal of and interest on bonds
and other evidences of indebtedness issued on behalf of the taxing
unit by another political subdivision and, if the taxing unit is
created under Section 52, Article III, or Section 59, Article XVI,
Texas Constitution, payments on debts that the taxing unit
anticipates to incur in the next calendar year;
(B) the amount by which taxes imposed for debt
are to be increased because of the taxing unit's anticipated
collection rate; and
(C) the total of the amounts listed in Paragraphs
(A)-(B), less any amount collected in excess of the previous year's
anticipated collections certified as provided in Subsection (b).
SECTION 18. Section 26.05, Tax Code, is amended by adding
Subsections (a-1) and (a-2) to read as follows:
(a-1) The governing body of a taxing unit may approve a rate
described by Subsection (a)(1) that exceeds the rate for the taxing
unit as determined under that subsection only if:
(1) the rate is proposed to be approved by a motion
that:
(A) states the rate determined under Subsection
(a)(1);
(B) states the proposed rate;
(C) states the difference between the proposed
rate and the rate determined under Subsection (a)(1); and
(D) describes the purpose for which the excess
revenue collected from the proposed rate will be used; and
(2) the motion is approved by at least 60 percent of
the members of the governing body.
(a-2) If the governing body of a taxing unit approves a rate
described by Subsection (a)(1) under Subsection (a-1) for a tax
year, the rate approved under Subsection (a-1) is considered to be
the current debt rate of the taxing unit for that tax year. The
officer or employee designated by the governing body to calculate
the voter-approval tax rate of the taxing unit under this chapter
shall recalculate that rate to account for the new current debt
rate, and that recalculated voter-approval tax rate is considered
to be the voter-approval tax rate of the taxing unit for that tax
year.
SECTION 19. Section 26.07, Tax Code, is amended by adding
Subsection (h) to read as follows:
(h) Notwithstanding any other law, an increase in a taxing
unit's maintenance and operations tax revenue derived from an
election under this chapter may not be used or transferred to repay
debt in installment payments or otherwise.
SECTION 20. The following provisions are repealed:
(1) Section 271.046, Local Government Code;
(2) Sections 26.012(7)(A)(ii)(d), (g), and (h), Tax
Code; and
(3) Section 26.012(9), Tax Code.
SECTION 21. (a) 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.
(b) The changes in law made by this Act apply only to an
anticipation note or certificate of obligation issued on or after
the effective date of this Act. An anticipation note or certificate
of obligation issued before the effective date of this Act is
governed by the law in effect on the date the anticipation note or
certificate was issued, and the former law is continued in effect
for that purpose.
(c) The changes in law made by the Act apply only to an
election ordered on or after the effective date of this Act. An
election ordered before the effective date of this Act is governed
by the law in effect on the date the election was ordered, and that
law is continued in effect for that purpose.
SECTION 22. (a) Except as otherwise provided by this Act,
this Act takes effect September 1, 2025.
(b) The following provisions take effect January 1, 2026:
(1) Section 44.004(c), Education Code, as amended by
this Act;
(2) Section 41.0051, Election Code, as added by this
Act;
(3) Section 1201.006, Government Code, as added by
this Act;
(4) Section 26.012(3), Tax Code, as amended by this
Act;
(5) Section 26.04(e), Tax Code, as amended by this
Act; and
(6) Sections 26.05(a-1) and (a-2), Tax Code, as added
by this Act.