89R14373 JBD-D
By: Zaffirini S.B. No. 2588
A BILL TO BE ENTITLED
AN ACT
relating to the conversion of all or a portion of a municipal sales
and use tax originally adopted for the purpose of sports and
community venues to a municipal sales and use tax for economic
development purposes.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 334.089(a), Local Government Code, is
amended to read as follows:
(a) Except as provided by Section 334.090, a [A] sales and
use tax imposed under this subchapter may not be collected after the
last day of the first calendar quarter occurring after notification
to the comptroller by the municipality or county that the
municipality or county has abolished the tax or that all bonds or
other obligations of the municipality or county that are payable in
whole or in part from money in the venue project fund, including any
refunding bonds or other obligations, have been paid in full or the
full amount of money, exclusive of guaranteed interest, necessary
to pay in full the bonds and other obligations has been set aside in
a trust account dedicated to the payment of the bonds and other
obligations.
SECTION 2. Subchapter D, Chapter 334, Local Government
Code, is amended by adding Section 334.090 to read as follows:
Sec. 334.090. CONVERSION OF TAX. (a) A sales and use tax
imposed under this subchapter is abolished or the rate of the tax is
reduced, as applicable, on the date a conversion of all or a portion
of the tax under Section 504.263 or 505.260 takes effect.
(b) A municipality shall notify the comptroller of a
conversion described by Subsection (a) not later than the 60th day
before the date the conversion takes effect.
SECTION 3. Subchapter F, Chapter 504, Local Government
Code, is amended by adding Section 504.263 to read as follows:
Sec. 504.263. ELECTION TO CONVERT CERTAIN SALES AND USE TAX
AUTHORITY. (a) This section applies only to a municipality that:
(1) has adopted a sales and use tax under Subchapter D,
Chapter 334; and
(2) on September 1, 2025, has or will have outstanding
bonded indebtedness for bonds issued under Section 334.043 that are
payable wholly or partly from the sales and use tax.
(b) A municipality may convert all or a portion of a sales
and use tax originally adopted under Subchapter D, Chapter 334, to a
sales and use tax under this subchapter if the conversion is
approved by a majority of the voters of the municipality voting at
an election held for that purpose.
(c) In an election to convert all or a portion of a sales and
use tax as provided by this section, the ballot shall be printed to
provide for voting for or against the proposition: "The conversion
of (insert "the" or "a portion of the," as applicable) sales and use
tax originally adopted for the purpose of financing a sports and
community venue project to a (insert the appropriate tax rate that
is an increment of one-eighth of one percent) sales and use tax for
the promotion and development of new and expanded business
enterprises."
(d) For purposes of Chapter 321, Tax Code, an election under
this section is an election to adopt a sales and use tax under this
subchapter and, as applicable, to abolish or reduce the rate of the
tax under Subchapter D, Chapter 334.
(e) Notwithstanding Section 321.102, Tax Code, a conversion
under this section takes effect on the first day after the date all
bonds described by Subsection (a)(2), including any refunding
bonds, have been paid in full or the full amount of money, exclusive
of guaranteed interest, necessary to pay the bonds in full has been
set aside in a trust account dedicated to the payment of the bonds.
(f) Notwithstanding Section 321.405(a), Tax Code, a
municipality that converts all or a portion of a tax under this
section shall comply with Section 321.405, Tax Code, not later than
the 60th day before the date the conversion takes effect.
(g) The conversion of all or a portion of a sales and use tax
under this section:
(1) abolishes or reduces the rate of a tax adopted
under Subchapter D, Chapter 334, as applicable;
(2) imposes a sales and use tax under this subchapter:
(A) at the same rate as the tax under Subchapter
D, Chapter 334, was imposed, if that tax is abolished; or
(B) at a rate equal to the reduction in the rate
of the tax under Subchapter D, Chapter 334, if that rate is reduced;
and
(3) may not affect the combined rate of all sales and
use taxes imposed by political subdivisions of this state in any
territory in which the tax is imposed.
(h) If a sales and use tax conversion under this section is
not approved, the election does not affect the municipality's
authority to impose the sales and use tax adopted under Chapter 334,
or the rate of that tax, as provided by that chapter.
(i) If conversion of a portion of a sales and use tax is
approved under this section, the municipality may continue to
impose the portion of the tax under Subchapter D, Chapter 334, that
was not converted as provided by that chapter.
(j) For a tax converted under this subchapter, the election
requirement under Subsection (b) is satisfied and another election
is not required if the voters of the authorizing municipality
approved the conversion at an election called or held before the
effective date of the Act enacting this section under an ordinance
calling the election that:
(1) was published in a newspaper of general
circulation in the municipality at least 14 days before the date of
the election; and
(2) expressly stated that the election was being
called or held in anticipation of the enactment of enabling and
implementing legislation without further elections.
SECTION 4. Subchapter F, Chapter 505, Local Government
Code, is amended by adding Section 505.260 to read as follows:
Sec. 505.260. ELECTION TO CONVERT CERTAIN SALES AND USE TAX
AUTHORITY. (a) This section applies only to a municipality that:
(1) has adopted a sales and use tax under Subchapter D,
Chapter 334; and
(2) on September 1, 2025, has or will have outstanding
bonded indebtedness for bonds issued under Section 334.043 that are
payable wholly or partly from the sales and use tax.
(b) A municipality may convert all or a portion of a sales
and use tax originally adopted under Subchapter D, Chapter 334, to a
sales and use tax under this subchapter if the conversion is
approved by a majority of the voters of the municipality voting at
an election held for that purpose.
(c) In an election to convert all or a portion of a sales and
use tax as provided by this section, the ballot shall be printed to
provide for voting for or against the proposition: "The conversion
of (insert "the" or "a portion of the," as applicable) sales and use
tax originally adopted for the purpose of financing a sports and
community venue project to a (insert the appropriate tax rate that
is an increment of one-eighth of one percent) sales and use tax for
economic development projects described by Chapter 505, Local
Government Code."
(d) For purposes of Chapter 321, Tax Code, an election under
this section is an election to adopt a sales and use tax under this
subchapter and, as applicable, to abolish or reduce the rate of the
tax under Subchapter D, Chapter 334.
(e) Notwithstanding Section 321.102, Tax Code, a conversion
under this section takes effect on the first day after the date all
bonds described by Subsection (a)(2), including any refunding
bonds, have been paid in full or the full amount of money, exclusive
of guaranteed interest, necessary to pay the bonds in full has been
set aside in a trust account dedicated to the payment of the bonds.
(f) Notwithstanding Section 321.405(a), Tax Code, a
municipality that converts all or a portion of a tax under this
section shall comply with Section 321.405, Tax Code, not later than
the 60th day before the date the conversion takes effect.
(g) The conversion of all or a portion of a sales and use tax
under this section:
(1) abolishes or reduces the rate of a tax adopted
under Subchapter D, Chapter 334, as applicable;
(2) imposes a sales and use tax under this subchapter:
(A) at the same rate as the tax under Subchapter
D, Chapter 334, was imposed, if that tax is abolished; or
(B) at a rate equal to the reduction in the rate
of the tax under Subchapter D, Chapter 334, if that rate is reduced;
and
(3) may not affect the combined rate of all sales and
use taxes imposed by political subdivisions of this state in any
territory in which the tax is imposed.
(h) If a sales and use tax conversion under this section is
not approved, the election does not affect the municipality's
authority to impose the sales and use tax adopted under Chapter 334,
or the rate of that tax, as provided by that chapter.
(i) If conversion of a portion of a sales and use tax is
approved under this section, the municipality may continue to
impose the portion of the tax under Subchapter D, Chapter 334, that
was not converted as provided by that chapter.
(j) For a tax converted under this subchapter, the election
requirement under Subsection (b) is satisfied and another election
is not required if the voters of the authorizing municipality
approved the conversion at an election called or held before the
effective date of the Act enacting this section under an ordinance
calling the election that:
(1) was published in a newspaper of general
circulation in the municipality at least 14 days before the date of
the election; and
(2) expressly stated that the election was being
called or held in anticipation of the enactment of enabling and
implementing legislation without further elections.
SECTION 5. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2025.