Texas 2025 - 89th Regular

Texas House Bill HB3601 Compare Versions

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1	1	89R12409 RDS-D
2	2	By: Lowe H.B. No. 3601
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6	6
7	7	A BILL TO BE ENTITLED
8	8	AN ACT
9	9	relating to the calculation of certain ad valorem tax rates of a
10	10	taxing unit and the manner in which a proposed ad valorem tax rate
11	11	that exceeds the voter-approval tax rate is approved.
12	12	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
13	13	SECTION 1. Section 48.202(f), Education Code, is amended to
14	14	read as follows:
15	15	(f) For a school year in which the dollar amount guaranteed
16	16	level of state and local funds per weighted student per cent of tax
17	17	effort ("GL") under Subsection (a-1)(2) exceeds the dollar amount
18	18	guaranteed level of state and local funds per weighted student per
19	19	cent of tax effort ("GL") under Subsection (a-1)(2) for the
20	20	preceding school year, a school district shall reduce the
21	21	district's tax rate under Section 45.0032(b)(2) for the tax year
22	22	that corresponds to that school year to a rate that results in the
23	23	amount of state and local funds per weighted student per cent of tax
24	24	effort available to the district at the dollar amount guaranteed
25	25	level for the preceding school year. A school district is not
26	26	entitled to the amount equal to the increase of revenue described by
27	27	this subsection for the school year for which the district must
28	28	reduce the district's tax rate. For [Unless Section 26.042(e), Tax
29	29	Code, applies to the district, for] a tax year in which a district
30	30	must reduce the district's tax rate under this subsection, the
31	31	district may not increase the district's maintenance and operations
32	32	tax rate to a rate that exceeds the maximum maintenance and
33	33	operations tax rate permitted under Section 45.003(d) or (f), as
34	34	applicable, minus the reduction of tax effort required under this
35	35	subsection. This subsection does not apply if the amount of state
36	36	funds appropriated for a school year specifically excludes the
37	37	amount necessary to provide the dollar amount guaranteed level of
38	38	state and local funds per weighted student per cent of tax effort
39	39	under Subsection (a-1)(2).
40	40	SECTION 2. Sections 281.124(d) and (f), Health and Safety
41	41	Code, are amended to read as follows:
42	42	(d) If at least two-thirds [a majority] of the votes cast in
43	43	the election favor the proposition, the tax rate for the specified
44	44	tax year is the rate approved by the voters, and that rate is not
45	45	subject to Section 26.07, Tax Code. The board shall adopt the tax
46	46	rate as provided by Chapter 26, Tax Code.
47	47	(f) Notwithstanding any other law, if at least two-thirds [a
48	48	majority] of the votes cast in the election favor the proposition, a
49	49	governing body with approval authority over the district's budget
50	50	or tax rate may not disapprove the tax rate approved by the voters
51	51	or disapprove the budget based solely on the tax rate approved by
52	52	the voters.
53	53	SECTION 3. Section 1101.254(f), Special District Local Laws
54	54	Code, is amended to read as follows:
55	55	(f) This section does not affect the applicability of
56	56	Section 26.07, Tax Code, to the district's tax rate, except that if
57	57	at least two-thirds of the district voters approve a tax rate
58	58	increase under this section, Section 26.07, Tax Code, does not
59	59	apply to the tax rate for that year.
60	60	SECTION 4. Section 3828.157, Special District Local Laws
61	61	Code, is amended to read as follows:
62	62	Sec. 3828.157. INAPPLICABILITY OF CERTAIN TAX CODE
63	63	PROVISIONS. Sections 26.04, [26.042,] 26.05, and 26.07, [and
64	64	26.075,] Tax Code, do not apply to a tax imposed under Section
65	65	3828.153 or 3828.156.
66	66	SECTION 5. Section 8876.152(a), Special District Local Laws
67	67	Code, is amended to read as follows:
68	68	(a) Sections 26.04, [26.042,] 26.05, 26.06, 26.061, and
69	69	26.07, [and 26.075,] Tax Code, do not apply to a tax imposed by the
70	70	district.
71	71	SECTION 6. Section 26.04(c), Tax Code, is amended to read as
72	72	follows:
73	73	(c) After the assessor for the taxing unit submits the
74	74	appraisal roll for the taxing unit to the governing body of the
75	75	taxing unit as required by Subsection (b), an officer or employee
76	76	designated by the governing body shall calculate the no-new-revenue
77	77	tax rate and the voter-approval tax rate for the taxing unit, where:
78	78	(1) "No-new-revenue tax rate" means a rate expressed
79	79	in dollars per $100 of taxable value calculated according to the
80	80	following formula:
81	81	NO-NEW-REVENUE TAX RATE = (LAST YEAR'S LEVY - LOST PROPERTY
82	82	LEVY) / (CURRENT TOTAL VALUE - NEW PROPERTY VALUE)
83	83	; and
84	84	(2) "Voter-approval tax rate" means a rate expressed
85	85	in dollars per $100 of taxable value calculated according to the
86	86	following [applicable] formula:
87	87	[(A) for a special taxing unit:]
88	88	VOTER-APPROVAL TAX RATE = [(]NO-NEW-REVENUE MAINTENANCE AND
89	89	OPERATIONS RATE [x 1.08)] + CURRENT DEBT RATE
90	90	[; or
91	91	[(B) for a taxing unit other than a special taxing
92	92	unit:
93	93	[VOTER-APPROVAL TAX RATE = (NO-NEW-REVENUE MAINTENANCE AND
94	94	OPERATIONS RATE x 1.035) + (CURRENT DEBT RATE + UNUSED INCREMENT
95	95	RATE)]
96	96	SECTION 7. Sections 26.041(a), (b), and (c), Tax Code, are
97	97	amended to read as follows:
98	98	(a) In the first year in which an additional sales and use
99	99	tax is required to be collected, the no-new-revenue tax rate and
100	100	voter-approval tax rate for the taxing unit are calculated
101	101	according to the following formulas:
102	102	NO-NEW-REVENUE TAX RATE = [(LAST YEAR'S LEVY -
103	103	LOST PROPERTY LEVY) / (CURRENT TOTAL VALUE - NEW
104	104	PROPERTY VALUE)] - SALES TAX GAIN RATE
105	105	and
106	106	VOTER-APPROVAL TAX RATE [FOR SPECIAL TAXING UNIT]
107	107	= [(]NO-NEW-REVENUE MAINTENANCE AND OPERATIONS RATE [x
108	108	1.08)] + [(]CURRENT DEBT RATE - SALES TAX GAIN RATE[)
109	109	[or
110	110	[VOTER-APPROVAL TAX RATE FOR TAXING UNIT OTHER
111	111	THAN SPECIAL TAXING UNIT = (NO-NEW-REVENUE MAINTENANCE
112	112	AND OPERATIONS RATE x 1.035) + (CURRENT DEBT RATE +
113	113	UNUSED INCREMENT RATE - SALES TAX GAIN RATE)]
114	114	where "sales tax gain rate" means a number expressed in dollars per
115	115	$100 of taxable value, calculated by dividing the revenue that will
116	116	be generated by the additional sales and use tax in the following
117	117	year as calculated under Subsection (d) by the current total value.
118	118	(b) Except as provided by Subsections (a) and (c), in a year
119	119	in which a taxing unit imposes an additional sales and use tax, the
120	120	voter-approval tax rate for the taxing unit is calculated according
121	121	to the following formula, regardless of whether the taxing unit
122	122	levied a property tax in the preceding year:
123	123	VOTER-APPROVAL TAX RATE [FOR SPECIAL TAXING UNIT]
124	124	= [[(]LAST YEAR'S MAINTENANCE AND OPERATIONS EXPENSE
125	125	[x 1.08)] / (CURRENT TOTAL VALUE - NEW PROPERTY VALUE)]
126	126	+ (CURRENT DEBT RATE - SALES TAX REVENUE RATE)
127	127	[or
128	128	[VOTER-APPROVAL TAX RATE FOR TAXING UNIT OTHER
129	129	THAN SPECIAL TAXING UNIT = [(LAST YEAR'S MAINTENANCE
130	130	AND OPERATIONS EXPENSE x 1.035) / (CURRENT TOTAL VALUE
131	131	- NEW PROPERTY VALUE)] + (CURRENT DEBT RATE + UNUSED
132	132	INCREMENT RATE - SALES TAX REVENUE RATE)]
133	133	where "last year's maintenance and operations expense" means the
134	134	amount spent for maintenance and operations from property tax and
135	135	additional sales and use tax revenues in the preceding year, and
136	136	"sales tax revenue rate" means a number expressed in dollars per
137	137	$100 of taxable value, calculated by dividing the revenue that will
138	138	be generated by the additional sales and use tax in the current year
139	139	as calculated under Subsection (d) by the current total value.
140	140	(c) In a year in which a taxing unit that has been imposing
141	141	an additional sales and use tax ceases to impose an additional sales
142	142	and use tax, the no-new-revenue tax rate and voter-approval tax
143	143	rate for the taxing unit are calculated according to the following
144	144	formulas:
145	145	NO-NEW-REVENUE TAX RATE = [(LAST YEAR'S LEVY -
146	146	LOST PROPERTY LEVY) / (CURRENT TOTAL VALUE - NEW
147	147	PROPERTY VALUE)] + SALES TAX LOSS RATE
148	148	and
149	149	VOTER-APPROVAL TAX RATE [FOR SPECIAL TAXING UNIT]
150	150	= [[(]LAST YEAR'S MAINTENANCE AND OPERATIONS EXPENSE
151	151	[x 1.08)] / (CURRENT TOTAL VALUE - NEW PROPERTY VALUE)]
152	152	+ CURRENT DEBT RATE
153	153	[or
154	154	[VOTER-APPROVAL TAX RATE FOR TAXING UNIT OTHER
155	155	THAN SPECIAL TAXING UNIT = [(LAST YEAR'S MAINTENANCE
156	156	AND OPERATIONS EXPENSE x 1.035) / (CURRENT TOTAL VALUE
157	157	- NEW PROPERTY VALUE)] + (CURRENT DEBT RATE + UNUSED
158	158	INCREMENT RATE)]
159	159	where "sales tax loss rate" means a number expressed in dollars per
160	160	$100 of taxable value, calculated by dividing the amount of sales
161	161	and use tax revenue generated in the last four quarters for which
162	162	the information is available by the current total value and "last
163	163	year's maintenance and operations expense" means the amount spent
164	164	for maintenance and operations from property tax and additional
165	165	sales and use tax revenues in the preceding year.
166	166	SECTION 8. Sections 26.06(b-1) and (b-3), Tax Code, are
167	167	amended to read as follows:
168	168	(b-1) If the proposed tax rate exceeds the no-new-revenue
169	169	tax rate and the voter-approval tax rate of the taxing unit, the
170	170	notice must contain a statement in the following form:
171	171	"NOTICE OF PUBLIC HEARING ON TAX INCREASE
172	172	"PROPOSED TAX RATE $__________ per $100
173	173	"NO-NEW-REVENUE TAX RATE $__________ per $100
174	174	"VOTER-APPROVAL TAX RATE $__________ per $100
175	175	"The no-new-revenue tax rate is the tax rate for the (current
176	176	tax year) tax year that will raise the same amount of property tax
177	177	revenue for (name of taxing unit) from the same properties in both
178	178	the (preceding tax year) tax year and the (current tax year) tax
179	179	year.
180	180	"The voter-approval tax rate is the highest tax rate that
181	181	(name of taxing unit) may adopt without holding an election to seek
182	182	voter approval of the rate.
183	183	"The proposed tax rate is greater than the no-new-revenue tax
184	184	rate. This means that (name of taxing unit) is proposing to
185	185	increase property taxes for the (current tax year) tax year.
186	186	"A public hearing on the proposed tax rate will be held on
187	187	(date and time) at (meeting place).
188	188	"The proposed tax rate is also greater than the
189	189	voter-approval tax rate. If (name of taxing unit) adopts the
190	190	proposed tax rate, (name of taxing unit) is required to hold an
191	191	election so that the voters may accept or reject the proposed tax
192	192	rate. Unless at least two-thirds [If a majority] of the voters
193	193	accept [reject] the proposed tax rate, the tax rate of the (name of
194	194	taxing unit) will be the voter-approval tax rate. The election will
195	195	be held on (date of election). You may contact the (name of office
196	196	responsible for administering the election) for information about
197	197	voting locations. The hours of voting on election day are (voting
198	198	hours).
199	199	"Your taxes owed under any of the tax rates mentioned above
200	200	can be calculated as follows:
201	201	"Property tax amount = tax rate x taxable value of your
202	202	property / 100
203	203	"(Names of all members of the governing body, showing how
204	204	each voted on the proposal to consider the tax increase or, if one
205	205	or more were absent, indicating the absences.)
206	206	"Visit Texas.gov/PropertyTaxes to find a link to your local
207	207	property tax database on which you can easily access information
208	208	regarding your property taxes, including information about
209	209	proposed tax rates and scheduled public hearings of each entity
210	210	that taxes your property.
211	211	"The 86th Texas Legislature modified the manner in which the
212	212	voter-approval tax rate is calculated to limit the rate of growth of
213	213	property taxes in the state."
214	214	(b-3) If the proposed tax rate does not exceed the
215	215	no-new-revenue tax rate but exceeds the voter-approval tax rate of
216	216	the taxing unit, the notice must contain a statement in the
217	217	following form:
218	218	"NOTICE OF PUBLIC HEARING ON TAX RATE
219	219	"PROPOSED TAX RATE $__________ per $100
220	220	"NO-NEW-REVENUE TAX RATE $__________ per $100
221	221	"VOTER-APPROVAL TAX RATE $__________ per $100
222	222	"The no-new-revenue tax rate is the tax rate for the (current
223	223	tax year) tax year that will raise the same amount of property tax
224	224	revenue for (name of taxing unit) from the same properties in both
225	225	the (preceding tax year) tax year and the (current tax year) tax
226	226	year.
227	227	"The voter-approval tax rate is the highest tax rate that
228	228	(name of taxing unit) may adopt without holding an election to seek
229	229	voter approval of the rate.
230	230	"The proposed tax rate is not greater than the no-new-revenue
231	231	tax rate. This means that (name of taxing unit) is not proposing to
232	232	increase property taxes for the (current tax year) tax year.
233	233	"A public hearing on the proposed tax rate will be held on
234	234	(date and time) at (meeting place).
235	235	"The proposed tax rate is greater than the voter-approval tax
236	236	rate. If (name of taxing unit) adopts the proposed tax rate, (name
237	237	of taxing unit) is required to hold an election so that the voters
238	238	may accept or reject the proposed tax rate. Unless at least
239	239	two-thirds [If a majority] of the voters accept [reject] the
240	240	proposed tax rate, the tax rate of the (name of taxing unit) will be
241	241	the voter-approval tax rate. The election will be held on (date of
242	242	election). You may contact the (name of office responsible for
243	243	administering the election) for information about voting
244	244	locations. The hours of voting on election day are (voting hours).
245	245	"Your taxes owed under any of the tax rates mentioned above
246	246	can be calculated as follows:
247	247	"Property tax amount = tax rate x taxable value of your
248	248	property / 100
249	249	"(Names of all members of the governing body, showing how
250	250	each voted on the proposal to consider the tax rate or, if one or
251	251	more were absent, indicating the absences.)
252	252	"Visit Texas.gov/PropertyTaxes to find a link to your local
253	253	property tax database on which you can easily access information
254	254	regarding your property taxes, including information about
255	255	proposed tax rates and scheduled public hearings of each entity
256	256	that taxes your property.
257	257	"The 86th Texas Legislature modified the manner in which the
258	258	voter-approval tax rate is calculated to limit the rate of growth of
259	259	property taxes in the state."
260	260	SECTION 9. Sections 26.07(b) and (d), Tax Code, are amended
261	261	to read as follows:
262	262	(b) If the governing body of a [special] taxing unit [or a
263	263	municipality with a population of 30,000 or more] adopts a tax rate
264	264	that exceeds the taxing unit's voter-approval tax rate, [or the
265	265	governing body of a taxing unit other than a special taxing unit or
266	266	a municipality with a population of less than 30,000 regardless of
267	267	whether it is a special taxing unit adopts a tax rate that exceeds
268	268	the greater of the taxing unit's voter-approval tax rate or de
269	269	minimis rate,] the registered voters of the taxing unit at an
270	270	election held for that purpose must determine whether to approve
271	271	the adopted tax rate.
272	272	(d) If at least two-thirds [a majority] of the votes cast in
273	273	the election favor the proposition, the tax rate for the current
274	274	year is the rate that was adopted by the governing body.
275	275	SECTION 10. Section 26.08(c), Tax Code, is amended to read
276	276	as follows:
277	277	(c) If at least two-thirds [a majority] of the votes cast in
278	278	the election favor the proposition, the tax rate for the current
279	279	year is the rate that was adopted by the governing body.
280	280	SECTION 11. Sections 31.12(a) and (b), Tax Code, are
281	281	amended to read as follows:
282	282	(a) If a refund of a tax provided by Section 11.431(b),
283	283	26.07(g), [26.075(k),] 26.15(f), 31.11, 31.111, or 31.112 is paid
284	284	on or before the 60th day after the date the liability for the
285	285	refund arises, no interest is due on the amount refunded. If not
286	286	paid on or before that 60th day, the amount of the tax to be refunded
287	287	accrues interest at a rate of one percent for each month or part of a
288	288	month that the refund is unpaid, beginning with the date on which
289	289	the liability for the refund arises.
290	290	(b) For purposes of this section, liability for a refund
291	291	arises:
292	292	(1) if the refund is required by Section 11.431(b), on
293	293	the date the chief appraiser notifies the collector for the taxing
294	294	unit of the approval of the late homestead exemption;
295	295	(2) if the refund is required by Section 26.07(g) [or
296	296	26.075(k)], on the date the results of the election to approve [or
297	297	reduce] the tax rate[, as applicable,] are certified;
298	298	(3) if the refund is required by Section 26.15(f):
299	299	(A) for a correction to the tax roll made under
300	300	Section 26.15(b), on the date the change in the tax roll is
301	301	certified to the assessor for the taxing unit under Section 25.25;
302	302	or
303	303	(B) for a correction to the tax roll made under
304	304	Section 26.15(c), on the date the change in the tax roll is ordered
305	305	by the governing body of the taxing unit;
306	306	(4) if the refund is required by Section 31.11, on the
307	307	date the auditor for the taxing unit determines that the payment was
308	308	erroneous or excessive or, if the amount of the refund exceeds the
309	309	applicable amount specified by Section 31.11(a), on the date the
310	310	governing body of the taxing unit approves the refund;
311	311	(5) if the refund is required by Section 31.111, on the
312	312	date the collector for the taxing unit determines that the payment
313	313	was erroneous; or
314	314	(6) if the refund is required by Section 31.112, on the
315	315	date required by Section 31.112(d) or (e), as applicable.
316	316	SECTION 12. Section 33.08(b), Tax Code, is amended to read
317	317	as follows:
318	318	(b) The governing body of the taxing unit or appraisal
319	319	district, in the manner required by law for official action, may
320	320	provide that taxes that become delinquent on or after June 1 under
321	321	Section [26.075(j),] 26.15(e), 31.03, 31.031, 31.032, 31.033,
322	322	31.04, or 42.42 incur an additional penalty to defray costs of
323	323	collection. The amount of the penalty may not exceed the amount of
324	324	the compensation specified in the applicable contract with an
325	325	attorney under Section 6.30 to be paid in connection with the
326	326	collection of the delinquent taxes.
327	327	SECTION 13. Section 49.057, Water Code, is amended by
328	328	amending Subsection (b) and adding Subsection (j) to read as
329	329	follows:
330	330	(b) The board shall adopt an annual budget. The board of a
331	331	developed district[, as defined by Section 49.23602,] shall include
332	332	as an appendix to the budget the district's:
333	333	(1) audited financial statements;
334	334	(2) bond transcripts; and
335	335	(3) engineer's reports required by Section 49.106.
336	336	(j) In this section, "developed district" means a district
337	337	that has financed, completed, and issued bonds to pay for all land,
338	338	works, improvements, facilities, plants, equipment, and appliances
339	339	necessary to serve at least 95 percent of the projected build-out of
340	340	the district in accordance with the purposes for its creation or the
341	341	purposes authorized by the constitution, this code, or any other
342	342	law.
343	343	SECTION 14. Section 49.107(g), Water Code, is amended to
344	344	read as follows:
345	345	(g) Sections 26.04, [26.042,] 26.05, 26.061, and 26.07,
346	346	[and 26.075,] Tax Code, do not apply to a tax levied and collected
347	347	under this section or an ad valorem tax levied and collected for the
348	348	payment of the interest on and principal of bonds issued by a
349	349	district.
350	350	SECTION 15. Section 49.108(f), Water Code, is amended to
351	351	read as follows:
352	352	(f) Sections 26.04, [26.042,] 26.05, 26.061, and 26.07,
353	353	[and 26.075,] Tax Code, do not apply to a tax levied and collected
354	354	for payments made under a contract approved in accordance with this
355	355	section.
356	356	SECTION 16. Section 49.236(a), Water Code, is amended to
357	357	read as follows:
358	358	(a) Before the board adopts an ad valorem tax rate for the
359	359	district for debt service, operation and maintenance purposes, or
360	360	contract purposes, the board shall give notice of each meeting of
361	361	the board at which the adoption of a tax rate will be considered.
362	362	The notice must:
363	363	(1) contain a statement in substantially the following
364	364	form:
365	365	"NOTICE OF PUBLIC HEARING ON TAX RATE
366	366	"The (name of the district) will hold a public hearing on a
367	367	proposed tax rate for the tax year (year of tax levy) on (date and
368	368	time) at (meeting place). Your individual taxes may increase at a
369	369	greater or lesser rate, or even decrease, depending on the tax rate
370	370	that is adopted and on the change in the taxable value of your
371	371	property in relation to the change in taxable value of all other
372	372	property. The change in the taxable value of your property in
373	373	relation to the change in the taxable value of all other property
374	374	determines the distribution of the tax burden among all property
375	375	owners.
376	376	"Visit Texas.gov/PropertyTaxes to find a link to your local
377	377	property tax database on which you can easily access information
378	378	regarding your property taxes, including information about
379	379	proposed tax rates and scheduled public hearings of each entity
380	380	that taxes your property.
381	381	"(Names of all board members and, if a vote was taken, an
382	382	indication of how each voted on the proposed tax rate and an
383	383	indication of any absences.)";
384	384	(2) contain the following information:
385	385	(A) the district's total adopted tax rate for the
386	386	preceding year and the proposed tax rate, expressed as an amount per
387	387	$100;
388	388	(B) the difference, expressed as an amount per
389	389	$100 and as a percent increase or decrease, as applicable, in the
390	390	proposed tax rate compared to the adopted tax rate for the preceding
391	391	year;
392	392	(C) the average appraised value of a residence
393	393	homestead in the district in the preceding year and in the current
394	394	year; the district's total homestead exemption, other than an
395	395	exemption available only to disabled persons or persons 65 years of
396	396	age or older, applicable to that appraised value in each of those
397	397	years; and the average taxable value of a residence homestead in the
398	398	district in each of those years, disregarding any homestead
399	399	exemption available only to disabled persons or persons 65 years of
400	400	age or older;
401	401	(D) the amount of tax that would have been
402	402	imposed by the district in the preceding year on a residence
403	403	homestead appraised at the average appraised value of a residence
404	404	homestead in that year, disregarding any homestead exemption
405	405	available only to disabled persons or persons 65 years of age or
406	406	older;
407	407	(E) the amount of tax that would be imposed by the
408	408	district in the current year on a residence homestead appraised at
409	409	the average appraised value of a residence homestead in that year,
410	410	disregarding any homestead exemption available only to disabled
411	411	persons or persons 65 years of age or older, if the proposed tax
412	412	rate is adopted;
413	413	(F) the difference between the amounts of tax
414	414	calculated under Paragraphs (D) and (E), expressed in dollars and
415	415	cents and described as the annual percentage increase or decrease,
416	416	as applicable, in the tax to be imposed by the district on the
417	417	average residence homestead in the district in the current year if
418	418	the proposed tax rate is adopted; and
419	419	(G) if the proposed combined debt service,
420	420	operation and maintenance, and contract tax rate requires [or
421	421	authorizes] an election to approve [or reduce] the tax rate, [as
422	422	applicable,] a description of the purpose of the proposed tax
423	423	increase;
424	424	(3) contain a statement in substantially the following
425	425	form[, as applicable:
426	426	[(A) if the district is a district described by
427	427	Section 49.23601]:
428	428	"NOTICE OF VOTE ON TAX RATE
429	429	"If the district adopts a combined debt service, operation
430	430	and maintenance, and contract tax rate that would result in the
431	431	taxes on the average residence homestead increasing from the
432	432	preceding year [by more than eight percent], an election must be
433	433	held to determine whether to approve the operation and maintenance
434	434	tax rate under Section 49.23601, Water Code.";
435	435	[(B) if the district is a district described by
436	436	Section 49.23602:
437	437	["NOTICE OF VOTE ON TAX RATE
438	438	["If the district adopts a combined debt service, operation
439	439	and maintenance, and contract tax rate that would result in the
440	440	taxes on the average residence homestead increasing by more than
441	441	3.5 percent, an election must be held to determine whether to
442	442	approve the operation and maintenance tax rate under Section
443	443	49.23602, Water Code."; or
444	444	[(C) if the district is a district described by
445	445	Section 49.23603:
446	446	["NOTICE OF TAXPAYERS' RIGHT TO ELECTION TO REDUCE TAX RATE
447	447	["If the district adopts a combined debt service, operation
448	448	and maintenance, and contract tax rate that would result in the
449	449	taxes on the average residence homestead increasing by more than
450	450	eight percent, the qualified voters of the district by petition may
451	451	require that an election be held to determine whether to reduce the
452	452	operation and maintenance tax rate to the voter-approval tax rate
453	453	under Section 49.23603, Water Code.";] and
454	454	(4) include the following statement: "The 86th Texas
455	455	Legislature modified the manner in which the voter-approval tax
456	456	rate is calculated to limit the rate of growth of property taxes in
457	457	the state.".
458	458	SECTION 17. The heading to Section 49.23601, Water Code, is
459	459	amended to read as follows:
460	460	Sec. 49.23601. AUTOMATIC ELECTION TO APPROVE TAX RATE [FOR
461	461	LOW TAX RATE DISTRICTS].
462	462	SECTION 18. Sections 49.23601(a) and (c), Water Code, are
463	463	amended to read as follows:
464	464	(a) In this section, "voter-approval tax rate" means the
465	465	rate equal to the sum of the following tax rates for the district:
466	466	(1) the current year's debt service tax rate;
467	467	(2) the current year's contract tax rate; and
468	468	(3) the operation and maintenance tax rate that would
469	469	impose [1.08 times] the amount of [the] operation and maintenance
470	470	tax imposed by the district in the preceding year on a residence
471	471	homestead appraised at the average appraised value of a residence
472	472	homestead in the district in that year, disregarding any homestead
473	473	exemption available only to disabled persons or persons 65 years of
474	474	age or older.
475	475	(c) If the board of a district adopts a combined debt
476	476	service, contract, and operation and maintenance tax rate that
477	477	would impose more than [1.08 times] the amount of tax imposed by the
478	478	district in the preceding year on a residence homestead appraised
479	479	at the average appraised value of a residence homestead in the
480	480	district in that year, disregarding any homestead exemption
481	481	available only to disabled persons or persons 65 years of age or
482	482	older, an election must be held in accordance with the procedures
483	483	provided by Sections 26.07(c)-(g), Tax Code, to determine whether
484	484	to approve the adopted tax rate. If the adopted tax rate is not
485	485	approved at the election, the district's tax rate is the
486	486	voter-approval tax rate.
487	487	SECTION 19. The following provisions are repealed:
488	488	(1) Section 45.0032(d), Education Code;
489	489	(2) Section 120.007(d), Local Government Code;
490	490	(3) Sections 26.012(8-a) and (19), Tax Code;
491	491	(4) Section 26.013, Tax Code;
492	492	(5) Section 26.042, Tax Code;
493	493	(6) Section 26.0501(c), Tax Code;
494	494	(7) Section 26.063, Tax Code;
495	495	(8) Section 26.075, Tax Code;
496	496	(9) Section 49.23601(b), Water Code;
497	497	(10) Section 49.23602, Water Code; and
498	498	(11) Section 49.23603, Water Code.
499	499	SECTION 20. This Act applies only to ad valorem taxes
500	500	imposed for an ad valorem tax year that begins on or after the
501	501	effective date of this Act.
502	502	SECTION 21. Sections 281.124(d) and (f), Health and Safety
503	503	Code, Section 1101.254(f), Special District Local Laws Code, and
504	504	Sections 26.07(d) and 26.08(c), Tax Code, as amended by this Act,
505	505	apply only to an election held on or after the effective date of
506	506	this Act. An election held before the effective date of this Act is
507	507	governed by the law in effect on the date the election was held, and
508	508	that law is continued in effect for that purpose.
509	509	SECTION 22. This Act takes effect January 1, 2026.