Texas 2025 - 89th Regular

Texas House Bill HB5502 Compare Versions

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1	1		By: Vasut H.B. No. 5502
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4	6		A BILL TO BE ENTITLED
5	7		AN ACT
6	8		relating to the calculation of certain ad valorem tax rates of a
7	9		taxing unit and the manner in which a proposed ad valorem tax rate
8	10		that exceeds the voter-approval tax rate is approved; making
9	11		conforming changes.
10	12		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	13		SECTION 1. Section 48.202(f), Education Code, is amended to
12	14		read as follows:
13	15		(f) For a school year in which the dollar amount guaranteed
14	16		level of state and local funds per weighted student per cent of tax
15	17		effort ("GL") under Subsection (a-1)(2) exceeds the dollar amount
16	18		guaranteed level of state and local funds per weighted student per
17	19		cent of tax effort ("GL") under Subsection (a-1)(2) for the
18	20		preceding school year, a school district shall reduce the
19	21		district's tax rate under Section 45.0032(b)(2) for the tax year
20	22		that corresponds to that school year to a rate that results in the
21	23		amount of state and local funds per weighted student per cent of tax
22	24		effort available to the district at the dollar amount guaranteed
23	25		level for the preceding school year. A school district is not
24	26		entitled to the amount equal to the increase of revenue described by
25	27		this subsection for the school year for which the district must
26	28		reduce the district's tax rate. For [Unless Section 26.042(e), Tax
27	29		Code, applies to the district, for] a tax year in which a district
28	30		must reduce the district's tax rate under this subsection, the
29	31		district may not increase the district's maintenance and operations
30	32		tax rate to a rate that exceeds the maximum maintenance and
31	33		operations tax rate permitted under Section 45.003(d) or (f), as
32	34		applicable, minus the reduction of tax effort required under this
33	35		subsection. This subsection does not apply if the amount of state
34	36		funds appropriated for a school year specifically excludes the
35	37		amount necessary to provide the dollar amount guaranteed level of
36	38		state and local funds per weighted student per cent of tax effort
37	39		under Subsection (a-1)(2).
38	40		SECTION 2. Section 3828.157, Special District Local Laws
39	41		Code, is amended to read as follows:
40	42		Sec. 3828.157. INAPPLICABILITY OF CERTAIN TAX CODE
41	43		PROVISIONS. Sections 26.04, [26.042,] 26.05, and 26.07, [and
42	44		26.075,] Tax Code, do not apply to a tax imposed under Section
43	45		3828.153 or 3828.156.
44	46		SECTION 3. Section 8876.152(a), Special District Local Laws
45	47		Code, is amended to read as follows:
46	48		(a) Sections 26.04, [26.042,] 26.05, 26.06, 26.061, and
47	49		26.07, [and 26.075,] Tax Code, do not apply to a tax imposed by the
48	50		district.
49	51		SECTION 4. Section 26.012(18), Tax Code, is amended to read
50	52		as follows:
51	53		(18) "No-new-revenue maintenance and operations rate"
52	54		means a rate expressed in dollars per $100 of taxable value
53	55		calculated as follows:
54	56		(A) for a taxing unit other than a school
55	57		district, the rate calculated according to the following formula:
56	58		NO-NEW-REVENUE MAINTENANCE AND OPERATIONS RATE = (LAST
57	59		YEAR'S LEVY - LAST YEAR'S DEBT LEVY - LAST YEAR'S JUNIOR COLLEGE
58	60		LEVY) / (CURRENT TOTAL VALUE [- NEW PROPERTY VALUE])
59	61		; or
60	62		(B) for a school district, the rate calculated as
61	63		provided by Section 44.004(c)(5)(A)(ii)(a), Education Code.
62	64		SECTION 5. Section 26.04(c), Tax Code, is amended to read as
63	65		follows:
64	66		(c) After the assessor for the taxing unit submits the
65	67		appraisal roll for the taxing unit to the governing body of the
66	68		taxing unit as required by Subsection (b), an officer or employee
67	69		designated by the governing body shall calculate the no-new-revenue
68	70		tax rate and the voter-approval tax rate for the taxing unit, where:
69	71		(1) "No-new-revenue tax rate" means a rate expressed
70	72		in dollars per $100 of taxable value calculated according to the
71	73		following formula:
72	74		NO-NEW-REVENUE TAX RATE = (LAST YEAR'S LEVY [- LOST PROPERTY
73	75		LEVY]) / (CURRENT TOTAL VALUE [- NEW PROPERTY VALUE])
74	76		; and
75	77		(2) "Voter-approval tax rate" means a rate expressed
76	78		in dollars per $100 of taxable value calculated according to the
77	79		following [applicable] formula:
78	80		[(A) for a special taxing unit:]
79	81		VOTER-APPROVAL TAX RATE = [(]NO-NEW-REVENUE MAINTENANCE AND
80	82		OPERATIONS RATE [x 1.08)] + CURRENT DEBT RATE
81	83		[; or
82	84		[(B) for a taxing unit other than a special taxing
83	85		unit:
84	86		[VOTER-APPROVAL TAX RATE = (NO-NEW-REVENUE MAINTENANCE AND
85	87		OPERATIONS RATE x 1.035) + (CURRENT DEBT RATE + UNUSED INCREMENT
86	88		RATE)]
87	89		SECTION 6. Sections 26.041(a), (b), (c), (g), and (h), Tax
88	90		Code, are amended to read as follows:
89	91		(a) In the first year in which an additional sales and use
90	92		tax is required to be collected, the no-new-revenue tax rate and
91	93		voter-approval tax rate for the taxing unit are calculated
92	94		according to the following formulas:
93	95		NO-NEW-REVENUE TAX RATE = [(LAST YEAR'S LEVY [-
94	96		LOST PROPERTY LEVY]) / (CURRENT TOTAL VALUE [- NEW
95	97		PROPERTY VALUE])] - SALES TAX GAIN RATE
96	98		and
97	99		VOTER-APPROVAL TAX RATE [FOR SPECIAL TAXING UNIT]
98	100		= [(]NO-NEW-REVENUE MAINTENANCE AND OPERATIONS RATE [x
99	101		1.08)] + [(]CURRENT DEBT RATE - SALES TAX GAIN RATE[)
100	102		[or
101	103		[VOTER-APPROVAL TAX RATE FOR TAXING UNIT OTHER
102	104		THAN SPECIAL TAXING UNIT = (NO-NEW-REVENUE MAINTENANCE
103	105		AND OPERATIONS RATE x 1.035) + (CURRENT DEBT RATE +
104	106		UNUSED INCREMENT RATE - SALES TAX GAIN RATE)]
105	107		where "sales tax gain rate" means a number expressed in dollars per
106	108		$100 of taxable value, calculated by dividing the revenue that will
107	109		be generated by the additional sales and use tax in the following
108	110		year as calculated under Subsection (d) by the current total value.
109	111		(b) Except as provided by Subsections (a) and (c), in a year
110	112		in which a taxing unit imposes an additional sales and use tax, the
111	113		voter-approval tax rate for the taxing unit is calculated according
112	114		to the following formula, regardless of whether the taxing unit
113	115		levied a property tax in the preceding year:
114	116		VOTER-APPROVAL TAX RATE [FOR SPECIAL TAXING UNIT]
115	117		= [[(]LAST YEAR'S MAINTENANCE AND OPERATIONS EXPENSE
116	118		[x 1.08)] / (CURRENT TOTAL VALUE [- NEW PROPERTY
117	119		VALUE])] + (CURRENT DEBT RATE - SALES TAX REVENUE RATE)
118	120		[or
119	121		[VOTER-APPROVAL TAX RATE FOR TAXING UNIT OTHER
120	122		THAN SPECIAL TAXING UNIT = [(LAST YEAR'S MAINTENANCE
121	123		AND OPERATIONS EXPENSE x 1.035) / (CURRENT TOTAL VALUE
122	124		- NEW PROPERTY VALUE)] + (CURRENT DEBT RATE + UNUSED
123	125		INCREMENT RATE - SALES TAX REVENUE RATE)]
124	126		where "last year's maintenance and operations expense" means the
125	127		amount spent for maintenance and operations from property tax and
126	128		additional sales and use tax revenues in the preceding year, and
127	129		"sales tax revenue rate" means a number expressed in dollars per
128	130		$100 of taxable value, calculated by dividing the revenue that will
129	131		be generated by the additional sales and use tax in the current year
130	132		as calculated under Subsection (d) by the current total value.
131	133		(c) In a year in which a taxing unit that has been imposing
132	134		an additional sales and use tax ceases to impose an additional sales
133	135		and use tax, the no-new-revenue tax rate and voter-approval tax
134	136		rate for the taxing unit are calculated according to the following
135	137		formulas:
136	138		NO-NEW-REVENUE TAX RATE = [(LAST YEAR'S LEVY [-
137	139		LOST PROPERTY LEVY]) / (CURRENT TOTAL VALUE [- NEW
138	140		PROPERTY VALUE])] + SALES TAX LOSS RATE
139	141		and
140	142		VOTER-APPROVAL TAX RATE [FOR SPECIAL TAXING UNIT]
141	143		= [[(]LAST YEAR'S MAINTENANCE AND OPERATIONS EXPENSE
142	144		[x 1.08)] / (CURRENT TOTAL VALUE [- NEW PROPERTY
143	145		VALUE])] + CURRENT DEBT RATE
144	146		[or
145	147		[VOTER-APPROVAL TAX RATE FOR TAXING UNIT OTHER
146	148		THAN SPECIAL TAXING UNIT = [(LAST YEAR'S MAINTENANCE
147	149		AND OPERATIONS EXPENSE x 1.035) / (CURRENT TOTAL VALUE
148	150		- NEW PROPERTY VALUE)] + (CURRENT DEBT RATE + UNUSED
149	151		INCREMENT RATE)]
150	152		where "sales tax loss rate" means a number expressed in dollars per
151	153		$100 of taxable value, calculated by dividing the amount of sales
152	154		and use tax revenue generated in the last four quarters for which
153	155		the information is available by the current total value and "last
154	156		year's maintenance and operations expense" means the amount spent
155	157		for maintenance and operations from property tax and additional
156	158		sales and use tax revenues in the preceding year.
157	159		(g) If the rate of the additional sales and use tax is
158	160		increased, the designated officer or employee shall make two
159	161		projections, in the manner provided by Subsection (d), of the
160	162		revenue generated by the additional sales and use tax in the
161	163		following year. The first projection must take into account the
162	164		increase and the second projection must not take into account the
163	165		increase. The designated officer or employee shall then subtract
164	166		the amount of the result of the second projection from the amount of
165	167		the result of the first projection to determine the revenue
166	168		generated as a result of the increase in the additional sales and
167	169		use tax. In the first year in which an additional sales and use tax
168	170		is increased, the no-new-revenue tax rate for the taxing unit is the
169	171		no-new-revenue tax rate before the increase minus a number the
170	172		numerator of which is the revenue generated as a result of the
171	173		increase in the additional sales and use tax, as determined under
172	174		this subsection, and the denominator of which is the current total
173	175		value [minus the new property value].
174	176		(h) If the rate of the additional sales and use tax is
175	177		decreased, the designated officer or employee shall make two
176	178		projections, in the manner provided by Subsection (d), of the
177	179		revenue generated by the additional sales and use tax in the
178	180		following year. The first projection must take into account the
179	181		decrease and the second projection must not take into account the
180	182		decrease. The designated officer or employee shall then subtract
181	183		the amount of the result of the first projection from the amount of
182	184		the result of the second projection to determine the revenue lost as
183	185		a result of the decrease in the additional sales and use tax. In
184	186		the first year in which an additional sales and use tax is
185	187		decreased, the no-new-revenue tax rate for the taxing unit is the
186	188		no-new-revenue tax rate before the decrease plus a number the
187	189		numerator of which is the revenue lost as a result of the decrease
188	190		in the additional sales and use tax, as determined under this
189	191		subsection, and the denominator of which is the current total value
190	192		[minus the new property value].
191	193		SECTION 7. Sections 26.044(a) and (b), Tax Code, are
192	194		amended to read as follows:
193	195		(a) The first time that a county adopts a tax rate after
194	196		September 1, 1991, in which the state criminal justice mandate
195	197		applies to the county, the no-new-revenue maintenance and operation
196	198		rate for the county is increased by the rate calculated according to
197	199		the following formula:
198	200		(State Criminal Justice Mandate) / (Current Total
199	201		Value [- New Property Value])
200	202		(b) In the second and subsequent years that a county adopts
201	203		a tax rate, if the amount spent by the county for the state criminal
202	204		justice mandate increased over the previous year, the
203	205		no-new-revenue maintenance and operation rate for the county is
204	206		increased by the rate calculated according to the following
205	207		formula:
206	208		(This Year's State Criminal Justice Mandate -
207	209		Previous Year's State Criminal Justice Mandate) /
208	210		(Current Total Value [- New Property Value])
209	211		SECTION 8. Sections 26.0441(a) and (b), Tax Code, are
210	212		amended to read as follows:
211	213		(a) In the first tax year in which a taxing unit adopts a tax
212	214		rate after January 1, 2000, and in which the enhanced minimum
213	215		eligibility standards for indigent health care established under
214	216		Section 61.006, Health and Safety Code, apply to the taxing unit,
215	217		the no-new-revenue maintenance and operations rate for the taxing
216	218		unit is increased by the rate computed according to the following
217	219		formula:
218	220		Amount of Increase = Enhanced Indigent Health
219	221		Care Expenditures / (Current Total Value [- New
220	222		Property Value])
221	223		(b) In each subsequent tax year, if the taxing unit's
222	224		enhanced indigent health care expenses exceed the amount of those
223	225		expenses for the preceding year, the no-new-revenue maintenance and
224	226		operations rate for the taxing unit is increased by the rate
225	227		computed according to the following formula:
226	228		Amount of Increase = (Current Tax Year's Enhanced
227	229		Indigent Health Care Expenditures - Preceding Tax
228	230		Year's Indigent Health Care Expenditures) / (Current
229	231		Total Value [- New Property Value])
230	232		SECTION 9. Section 26.0442(b), Tax Code, is amended to read
231	233		as follows:
232	234		(b) If a county's indigent defense compensation
233	235		expenditures exceed the amount of those expenditures for the
234	236		preceding tax year, the no-new-revenue maintenance and operations
235	237		rate for the county is increased by the lesser of the rates computed
236	238		according to the following formulas:
237	239		(Current Tax Year's Indigent Defense
238	240		Compensation Expenditures - Preceding Tax Year's
239	241		Indigent Defense Compensation Expenditures) /
240	242		(Current Total Value [- New Property Value])
241	243		or
242	244		(Preceding Tax Year's Indigent Defense
243	245		Compensation Expenditures x 0.05) / (Current Total
244	246		Value [- New Property Value])
245	247		SECTION 10. Section 26.0443(b), Tax Code, is amended to
246	248		read as follows:
247	249		(b) If a county's or municipality's eligible county hospital
248	250		expenditures exceed the amount of those expenditures for the
249	251		preceding tax year, the no-new-revenue maintenance and operations
250	252		rate for the county or municipality, as applicable, is increased by
251	253		the lesser of the rates computed according to the following
252	254		formulas:
253	255		(Current Tax Year's Eligible County Hospital
254	256		Expenditures - Preceding Tax Year's Eligible County
255	257		Hospital Expenditures) / (Current Total Value [- New
256	258		Property Value])
257	259		or
258	260		(Preceding Tax Year's Eligible County Hospital
259	261		Expenditures x 0.08) / (Current Total Value [- New
260	262		Property Value])
261	263		SECTION 11. Section 26.0444(b), Tax Code, is amended to
262	264		read as follows:
263	265		(b) The no-new-revenue maintenance and operations rate for
264	266		a defunding municipality is decreased by the rate computed
265	267		according to the following formula:
266	268		Municipal Public Safety Expenditure Adjustment /
267	269		(Current Total Value [- New Property Value])
268	270		SECTION 12. Section 26.07(b), Tax Code, is amended to read
269	271		as follows:
270	272		(b) If the governing body of a [special] taxing unit [or a
271	273		municipality with a population of 30,000 or more] adopts a tax rate
272	274		that exceeds the taxing unit's voter-approval tax rate, [or the
273	275		governing body of a taxing unit other than a special taxing unit or
274	276		a municipality with a population of less than 30,000 regardless of
275	277		whether it is a special taxing unit adopts a tax rate that exceeds
276	278		the greater of the taxing unit's voter-approval tax rate or de
277	279		minimis rate,] the registered voters of the taxing unit at an
278	280		election held for that purpose must determine whether to approve
279	281		the adopted tax rate.
280	282		SECTION 13. Sections 31.12(a) and (b), Tax Code, are
281	283		amended to read as follows:
282	284		(a) If a refund of a tax provided by Section 11.431(b),
283	285		26.07(g), [26.075(k),] 26.15(f), 31.11, 31.111, or 31.112 is paid
284	286		on or before the 60th day after the date the liability for the
285	287		refund arises, no interest is due on the amount refunded. If not
286	288		paid on or before that 60th day, the amount of the tax to be refunded
287	289		accrues interest at a rate of one percent for each month or part of a
288	290		month that the refund is unpaid, beginning with the date on which
289	291		the liability for the refund arises.
290	292		(b) For purposes of this section, liability for a refund
291	293		arises:
292	294		(1) if the refund is required by Section 11.431(b), on
293	295		the date the chief appraiser notifies the collector for the taxing
294	296		unit of the approval of the late homestead exemption;
295	297		(2) if the refund is required by Section 26.07(g) [or
296	298		26.075(k)], on the date the results of the election to approve [or
297	299		reduce] the tax rate[, as applicable,] are certified;
298	300		(3) if the refund is required by Section 26.15(f):
299	301		(A) for a correction to the tax roll made under
300	302		Section 26.15(b), on the date the change in the tax roll is
301	303		certified to the assessor for the taxing unit under Section 25.25;
302	304		or
303	305		(B) for a correction to the tax roll made under
304	306		Section 26.15(c), on the date the change in the tax roll is ordered
305	307		by the governing body of the taxing unit;
306	308		(4) if the refund is required by Section 31.11, on the
307	309		date the auditor for the taxing unit determines that the payment was
308	310		erroneous or excessive or, if the amount of the refund exceeds the
309	311		applicable amount specified by Section 31.11(a), on the date the
310	312		governing body of the taxing unit approves the refund;
311	313		(5) if the refund is required by Section 31.111, on the
312	314		date the collector for the taxing unit determines that the payment
313	315		was erroneous; or
314	316		(6) if the refund is required by Section 31.112, on the
315	317		date required by Section 31.112(d) or (e), as applicable.
316	318		SECTION 14. Section 33.08(b), Tax Code, is amended to read
317	319		as follows:
318	320		(b) The governing body of the taxing unit or appraisal
319	321		district, in the manner required by law for official action, may
320	322		provide that taxes that become delinquent on or after June 1 under
321	323		Section [26.075(j),] 26.15(e), 31.03, 31.031, 31.032, 31.033,
322	324		31.04, or 42.42 incur an additional penalty to defray costs of
323	325		collection. The amount of the penalty may not exceed the amount of
324	326		the compensation specified in the applicable contract with an
325	327		attorney under Section 6.30 to be paid in connection with the
326	328		collection of the delinquent taxes.
327	329		SECTION 15. Section 49.057, Water Code, is amended by
328	330		amending Subsection (b) and adding Subsection (j) to read as
329	331		follows:
330	332		(b) The board shall adopt an annual budget. The board of a
331	333		developed district[, as defined by Section 49.23602,] shall include
332	334		as an appendix to the budget the district's:
333	335		(1) audited financial statements;
334	336		(2) bond transcripts; and
335	337		(3) engineer's reports required by Section 49.106.
336	338		(j) In this section, "developed district" means a district
337	339		that has financed, completed, and issued bonds to pay for all land,
338	340		works, improvements, facilities, plants, equipment, and appliances
339	341		necessary to serve at least 95 percent of the projected build-out of
340	342		the district in accordance with the purposes for its creation or the
341	343		purposes authorized by the constitution, this code, or any other
342	344		law.
343	345		SECTION 16. Section 49.107(g), Water Code, is amended to
344	346		read as follows:
345	347		(g) Sections 26.04, [26.042,] 26.05, 26.061, and 26.07,
346	348		[and 26.075,] Tax Code, do not apply to a tax levied and collected
347	349		under this section or an ad valorem tax levied and collected for the
348	350		payment of the interest on and principal of bonds issued by a
349	351		district.
350	352		SECTION 17. Section 49.108(f), Water Code, is amended to
351	353		read as follows:
352	354		(f) Sections 26.04, [26.042,] 26.05, 26.061, and 26.07,
353	355		[and 26.075,] Tax Code, do not apply to a tax levied and collected
354	356		for payments made under a contract approved in accordance with this
355	357		section.
356	358		SECTION 18. Section 49.236(a), Water Code, is amended to
357	359		read as follows:
358	360		(a) Before the board adopts an ad valorem tax rate for the
359	361		district for debt service, operation and maintenance purposes, or
360	362		contract purposes, the board shall give notice of each meeting of
361	363		the board at which the adoption of a tax rate will be considered.
362	364		The notice must:
363	365		(1) contain a statement in substantially the following
364	366		form:
365	367		"NOTICE OF PUBLIC HEARING ON TAX RATE
366	368		"The (name of the district) will hold a public hearing on a
367	369		proposed tax rate for the tax year (year of tax levy) on (date and
368	370		time) at (meeting place). Your individual taxes may increase at a
369	371		greater or lesser rate, or even decrease, depending on the tax rate
370	372		that is adopted and on the change in the taxable value of your
371	373		property in relation to the change in taxable value of all other
372	374		property. The change in the taxable value of your property in
373	375		relation to the change in the taxable value of all other property
374	376		determines the distribution of the tax burden among all property
375	377		owners.
376	378		"Visit Texas.gov/PropertyTaxes to find a link to your local
377	379		property tax database on which you can easily access information
378	380		regarding your property taxes, including information about
379	381		proposed tax rates and scheduled public hearings of each entity
380	382		that taxes your property.
381	383		"(Names of all board members and, if a vote was taken, an
382	384		indication of how each voted on the proposed tax rate and an
383	385		indication of any absences.)";
384	386		(2) contain the following information:
385	387		(A) the district's total adopted tax rate for the
386	388		preceding year and the proposed tax rate, expressed as an amount per
387	389		$100;
388	390		(B) the difference, expressed as an amount per
389	391		$100 and as a percent increase or decrease, as applicable, in the
390	392		proposed tax rate compared to the adopted tax rate for the preceding
391	393		year;
392	394		(C) the average appraised value of a residence
393	395		homestead in the district in the preceding year and in the current
394	396		year; the district's total homestead exemption, other than an
395	397		exemption available only to disabled persons or persons 65 years of
396	398		age or older, applicable to that appraised value in each of those
397	399		years; and the average taxable value of a residence homestead in the
398	400		district in each of those years, disregarding any homestead
399	401		exemption available only to disabled persons or persons 65 years of
400	402		age or older;
401	403		(D) the amount of tax that would have been
402	404		imposed by the district in the preceding year on a residence
403	405		homestead appraised at the average appraised value of a residence
404	406		homestead in that year, disregarding any homestead exemption
405	407		available only to disabled persons or persons 65 years of age or
406	408		older;
407	409		(E) the amount of tax that would be imposed by the
408	410		district in the current year on a residence homestead appraised at
409	411		the average appraised value of a residence homestead in that year,
410	412		disregarding any homestead exemption available only to disabled
411	413		persons or persons 65 years of age or older, if the proposed tax
412	414		rate is adopted;
413	415		(F) the difference between the amounts of tax
414	416		calculated under Paragraphs (D) and (E), expressed in dollars and
415	417		cents and described as the annual percentage increase or decrease,
416	418		as applicable, in the tax to be imposed by the district on the
417	419		average residence homestead in the district in the current year if
418	420		the proposed tax rate is adopted; and
419	421		(G) if the proposed combined debt service,
420	422		operation and maintenance, and contract tax rate requires [or
421	423		authorizes] an election to approve [or reduce] the tax rate, [as
422	424		applicable,] a description of the purpose of the proposed tax
423	425		increase;
424	426		(3) contain a statement in substantially the following
425	427		form[, as applicable:
426	428		[(A) if the district is a district described by
427	429		Section 49.23601]:
428	430		"NOTICE OF VOTE ON TAX RATE
429	431		"If the district adopts a combined debt service, operation
430	432		and maintenance, and contract tax rate that would result in the
431	433		taxes on the average residence homestead increasing from the
432	434		preceding year [by more than eight percent], an election must be
433	435		held to determine whether to approve the operation and maintenance
434	436		tax rate under Section 49.23601, Water Code.";
435	437		[(B) if the district is a district described by
436	438		Section 49.23602:
437	439		["NOTICE OF VOTE ON TAX RATE
438	440		["If the district adopts a combined debt service, operation
439	441		and maintenance, and contract tax rate that would result in the
440	442		taxes on the average residence homestead increasing by more than
441	443		3.5 percent, an election must be held to determine whether to
442	444		approve the operation and maintenance tax rate under Section
443	445		49.23602, Water Code."; or
444	446		[(C) if the district is a district described by
445	447		Section 49.23603:
446	448		["NOTICE OF TAXPAYERS' RIGHT TO ELECTION TO REDUCE TAX RATE
447	449		["If the district adopts a combined debt service, operation
448	450		and maintenance, and contract tax rate that would result in the
449	451		taxes on the average residence homestead increasing by more than
450	452		eight percent, the qualified voters of the district by petition may
451	453		require that an election be held to determine whether to reduce the
452	454		operation and maintenance tax rate to the voter-approval tax rate
453	455		under Section 49.23603, Water Code.";] and
454	456		(4) include the following statement: "The 86th Texas
455	457		Legislature modified the manner in which the voter-approval tax
456	458		rate is calculated to limit the rate of growth of property taxes in
457	459		the state.".
458	460		SECTION 19. The heading to Section 49.23601, Water Code, is
459	461		amended to read as follows:
460	462		Sec. 49.23601. AUTOMATIC ELECTION TO APPROVE TAX RATE [FOR
461	463		LOW TAX RATE DISTRICTS].
462	464		SECTION 20. Sections 49.23601(a) and (c), Water Code, are
463	465		amended to read as follows:
464	466		(a) In this section, "voter-approval tax rate" means the
465	467		rate equal to the sum of the following tax rates for the district:
466	468		(1) the current year's debt service tax rate;
467	469		(2) the current year's contract tax rate; and
468	470		(3) the operation and maintenance tax rate that would
469	471		impose [1.08 times] the amount of [the] operation and maintenance
470	472		tax imposed by the district in the preceding year on a residence
471	473		homestead appraised at the average appraised value of a residence
472	474		homestead in the district in that year, disregarding any homestead
473	475		exemption available only to disabled persons or persons 65 years of
474	476		age or older.
475	477		(c) If the board of a district adopts a combined debt
476	478		service, contract, and operation and maintenance tax rate that
477	479		would impose more than [1.08 times] the amount of tax imposed by the
478	480		district in the preceding year on a residence homestead appraised
479	481		at the average appraised value of a residence homestead in the
480	482		district in that year, disregarding any homestead exemption
481	483		available only to disabled persons or persons 65 years of age or
482	484		older, an election must be held in accordance with the procedures
483	485		provided by Sections 26.07(c)-(g), Tax Code, to determine whether
484	486		to approve the adopted tax rate. If the adopted tax rate is not
485	487		approved at the election, the district's tax rate is the
486	488		voter-approval tax rate.
487	489		SECTION 21. The following provisions are repealed:
488	490		(1) Section 45.0032(d), Education Code;
489	491		(2) Section 120.007(d), Local Government Code;
490	492		(3) Sections 26.012(8-a), (15), and (19), Tax Code;
491	493		(4) Section 26.013, Tax Code;
492	494		(5) Section 26.042, Tax Code;
493	495		(6) Section 26.0501(c), Tax Code;
494	496		(7) Section 26.063, Tax Code;
495	497		(8) Section 26.075, Tax Code;
496	498		(9) Section 49.23601(b), Water Code;
497	499		(10) Section 49.23602, Water Code; and
498	500		(11) Section 49.23603, Water Code.
499	501		SECTION 22. This Act applies only to ad valorem taxes
500	502		imposed for an ad valorem tax year that begins on or after the
501	503		effective date of this Act.
502	504		SECTION 23. This Act takes effect January 1, 2026.