Texas House Bill HB774

Texas 2025 - 89th Regular

• Filed: 11/12/24

Caption

Relating to municipal and county ad valorem tax relief.

Impact

If passed, HB 774 would amend existing laws under Chapter 140 of the Local Government Code and Chapter 26 of the Tax Code to establish a framework for determining and utilizing surplus revenue for tax relief. Particularly, it specifies the process for calculating the annual tax rate limits a county or municipality can set, taking both inflation and population growth into consideration. This regulation aims to ensure that local governments do not set tax rates that exceed the prescribed limits based on their financial conditions, potentially leading to financial strain for some counties and municipalities that may be reliant on higher tax revenues.

Summary

House Bill 774 seeks to provide ad valorem tax relief for municipalities and counties in Texas by mandating the use of surplus revenue generated in the preceding fiscal year. This revenue must be allocated towards reducing ad valorem taxes that property owners are required to pay in the current fiscal year. The bill outlines specific definitions related to consumer price index, inflation rate, and population growth rate that will help determine the extent of surplus revenue available for tax reduction purposes. By implementing this act, local governments can offer a systematic approach to tax relief that is directly linked to their financial performance in the preceding year.

Contention

Notably, one of the potential points of contention lies in how the definitions and calculations related to surplus revenue may be interpreted. Some local officials may argue that the constraints on tax rate increases could impede necessary funding for public services or infrastructure. Meanwhile, proponents of the bill argue that it provides a fair avenue for relieving the tax burden on property owners. The bill also poses implications for local governance, as it would standardize tax relief calculations across Texas, possibly leading to reduced local autonomy in setting fiscal policies.

Texas Constitutional Statutes Affected

Local Government Code

• Chapter 140. Miscellaneous Financial Provisions Affecting Municipalities, Counties, And Other Local Governments
  • Section: New Section

Tax Code

• Chapter 26. Assessment
  • Section: New Section