89R12980 RDS-D
By: Bettencourt S.B. No. 3026
A BILL TO BE ENTITLED
AN ACT
relating to the calculation of certain ad valorem tax rates of a
taxing unit and the manner in which a proposed ad valorem tax rate
that exceeds the voter-approval tax rate is approved; making
conforming changes.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 48.202(f), Education Code, is amended to
read as follows:
(f) For a school year in which the dollar amount guaranteed
level of state and local funds per weighted student per cent of tax
effort ("GL") under Subsection (a-1)(2) exceeds the dollar amount
guaranteed level of state and local funds per weighted student per
cent of tax effort ("GL") under Subsection (a-1)(2) for the
preceding school year, a school district shall reduce the
district's tax rate under Section 45.0032(b)(2) for the tax year
that corresponds to that school year to a rate that results in the
amount of state and local funds per weighted student per cent of tax
effort available to the district at the dollar amount guaranteed
level for the preceding school year. A school district is not
entitled to the amount equal to the increase of revenue described by
this subsection for the school year for which the district must
reduce the district's tax rate. For [Unless Section 26.042(e), Tax
Code, applies to the district, for] a tax year in which a district
must reduce the district's tax rate under this subsection, the
district may not increase the district's maintenance and operations
tax rate to a rate that exceeds the maximum maintenance and
operations tax rate permitted under Section 45.003(d) or (f), as
applicable, minus the reduction of tax effort required under this
subsection. This subsection does not apply if the amount of state
funds appropriated for a school year specifically excludes the
amount necessary to provide the dollar amount guaranteed level of
state and local funds per weighted student per cent of tax effort
under Subsection (a-1)(2).
SECTION 2. Section 3828.157, Special District Local Laws
Code, is amended to read as follows:
Sec. 3828.157. INAPPLICABILITY OF CERTAIN TAX CODE
PROVISIONS. Sections 26.04, [26.042,] 26.05, and 26.07, [and
26.075,] Tax Code, do not apply to a tax imposed under Section
3828.153 or 3828.156.
SECTION 3. Section 8876.152(a), Special District Local Laws
Code, is amended to read as follows:
(a) Sections 26.04, [26.042,] 26.05, 26.06, 26.061, and
26.07, [and 26.075,] Tax Code, do not apply to a tax imposed by the
district.
SECTION 4. Section 26.012(18), Tax Code, is amended to read
as follows:
(18) "No-new-revenue maintenance and operations rate"
means a rate expressed in dollars per $100 of taxable value
calculated as follows:
(A) for a taxing unit other than a school
district, the rate calculated according to the following formula:
NO-NEW-REVENUE MAINTENANCE AND OPERATIONS RATE = (LAST
YEAR'S LEVY - LAST YEAR'S DEBT LEVY - LAST YEAR'S JUNIOR COLLEGE
LEVY) / (CURRENT TOTAL VALUE [- NEW PROPERTY VALUE])
; or
(B) for a school district, the rate calculated as
provided by Section 44.004(c)(5)(A)(ii)(a), Education Code.
SECTION 5. Section 26.04(c), Tax Code, is amended to read as
follows:
(c) After the assessor for the taxing unit submits the
appraisal roll for the taxing unit to the governing body of the
taxing unit as required by Subsection (b), an officer or employee
designated by the governing body shall calculate the no-new-revenue
tax rate and the voter-approval tax rate for the taxing unit, where:
(1) "No-new-revenue tax rate" means a rate expressed
in dollars per $100 of taxable value calculated according to the
following formula:
NO-NEW-REVENUE TAX RATE = (LAST YEAR'S LEVY [- LOST PROPERTY
LEVY]) / (CURRENT TOTAL VALUE [- NEW PROPERTY VALUE])
; and
(2) "Voter-approval tax rate" means a rate expressed
in dollars per $100 of taxable value calculated according to the
following [applicable] formula:
[(A) for a special taxing unit:]
VOTER-APPROVAL TAX RATE = [(]NO-NEW-REVENUE MAINTENANCE AND
OPERATIONS RATE [x 1.08)] + CURRENT DEBT RATE
[; or
[(B) for a taxing unit other than a special taxing
unit:
[VOTER-APPROVAL TAX RATE = (NO-NEW-REVENUE MAINTENANCE AND
OPERATIONS RATE x 1.035) + (CURRENT DEBT RATE + UNUSED INCREMENT
RATE)]
SECTION 6. Sections 26.041(a), (b), (c), (g), and (h), Tax
Code, are amended to read as follows:
(a) In the first year in which an additional sales and use
tax is required to be collected, the no-new-revenue tax rate and
voter-approval tax rate for the taxing unit are calculated
according to the following formulas:
NO-NEW-REVENUE TAX RATE = [(LAST YEAR'S LEVY [-
LOST PROPERTY LEVY]) / (CURRENT TOTAL VALUE [- NEW
PROPERTY VALUE])] - SALES TAX GAIN RATE
and
VOTER-APPROVAL TAX RATE [FOR SPECIAL TAXING UNIT]
= [(]NO-NEW-REVENUE MAINTENANCE AND OPERATIONS RATE [x
1.08)] + [(]CURRENT DEBT RATE - SALES TAX GAIN RATE[)
[or
[VOTER-APPROVAL TAX RATE FOR TAXING UNIT OTHER
THAN SPECIAL TAXING UNIT = (NO-NEW-REVENUE MAINTENANCE
AND OPERATIONS RATE x 1.035) + (CURRENT DEBT RATE +
UNUSED INCREMENT RATE - SALES TAX GAIN RATE)]
where "sales tax gain rate" means a number expressed in dollars per
$100 of taxable value, calculated by dividing the revenue that will
be generated by the additional sales and use tax in the following
year as calculated under Subsection (d) by the current total value.
(b) Except as provided by Subsections (a) and (c), in a year
in which a taxing unit imposes an additional sales and use tax, the
voter-approval tax rate for the taxing unit is calculated according
to the following formula, regardless of whether the taxing unit
levied a property tax in the preceding year:
VOTER-APPROVAL TAX RATE [FOR SPECIAL TAXING UNIT]
= [[(]LAST YEAR'S MAINTENANCE AND OPERATIONS EXPENSE
[x 1.08)] / (CURRENT TOTAL VALUE [- NEW PROPERTY
VALUE])] + (CURRENT DEBT RATE - SALES TAX REVENUE RATE)
[or
[VOTER-APPROVAL TAX RATE FOR TAXING UNIT OTHER
THAN SPECIAL TAXING UNIT = [(LAST YEAR'S MAINTENANCE
AND OPERATIONS EXPENSE x 1.035) / (CURRENT TOTAL VALUE
- NEW PROPERTY VALUE)] + (CURRENT DEBT RATE + UNUSED
INCREMENT RATE - SALES TAX REVENUE RATE)]
where "last year's maintenance and operations expense" means the
amount spent for maintenance and operations from property tax and
additional sales and use tax revenues in the preceding year, and
"sales tax revenue rate" means a number expressed in dollars per
$100 of taxable value, calculated by dividing the revenue that will
be generated by the additional sales and use tax in the current year
as calculated under Subsection (d) by the current total value.
(c) In a year in which a taxing unit that has been imposing
an additional sales and use tax ceases to impose an additional sales
and use tax, the no-new-revenue tax rate and voter-approval tax
rate for the taxing unit are calculated according to the following
formulas:
NO-NEW-REVENUE TAX RATE = [(LAST YEAR'S LEVY [-
LOST PROPERTY LEVY]) / (CURRENT TOTAL VALUE [- NEW
PROPERTY VALUE])] + SALES TAX LOSS RATE
and
VOTER-APPROVAL TAX RATE [FOR SPECIAL TAXING UNIT]
= [[(]LAST YEAR'S MAINTENANCE AND OPERATIONS EXPENSE
[x 1.08)] / (CURRENT TOTAL VALUE [- NEW PROPERTY
VALUE])] + CURRENT DEBT RATE
[or
[VOTER-APPROVAL TAX RATE FOR TAXING UNIT OTHER
THAN SPECIAL TAXING UNIT = [(LAST YEAR'S MAINTENANCE
AND OPERATIONS EXPENSE x 1.035) / (CURRENT TOTAL VALUE
- NEW PROPERTY VALUE)] + (CURRENT DEBT RATE + UNUSED
INCREMENT RATE)]
where "sales tax loss rate" means a number expressed in dollars per
$100 of taxable value, calculated by dividing the amount of sales
and use tax revenue generated in the last four quarters for which
the information is available by the current total value and "last
year's maintenance and operations expense" means the amount spent
for maintenance and operations from property tax and additional
sales and use tax revenues in the preceding year.
(g) If the rate of the additional sales and use tax is
increased, the designated officer or employee shall make two
projections, in the manner provided by Subsection (d), of the
revenue generated by the additional sales and use tax in the
following year. The first projection must take into account the
increase and the second projection must not take into account the
increase. The designated officer or employee shall then subtract
the amount of the result of the second projection from the amount of
the result of the first projection to determine the revenue
generated as a result of the increase in the additional sales and
use tax. In the first year in which an additional sales and use tax
is increased, the no-new-revenue tax rate for the taxing unit is the
no-new-revenue tax rate before the increase minus a number the
numerator of which is the revenue generated as a result of the
increase in the additional sales and use tax, as determined under
this subsection, and the denominator of which is the current total
value [minus the new property value].
(h) If the rate of the additional sales and use tax is
decreased, the designated officer or employee shall make two
projections, in the manner provided by Subsection (d), of the
revenue generated by the additional sales and use tax in the
following year. The first projection must take into account the
decrease and the second projection must not take into account the
decrease. The designated officer or employee shall then subtract
the amount of the result of the first projection from the amount of
the result of the second projection to determine the revenue lost as
a result of the decrease in the additional sales and use tax. In
the first year in which an additional sales and use tax is
decreased, the no-new-revenue tax rate for the taxing unit is the
no-new-revenue tax rate before the decrease plus a number the
numerator of which is the revenue lost as a result of the decrease
in the additional sales and use tax, as determined under this
subsection, and the denominator of which is the current total value
[minus the new property value].
SECTION 7. Sections 26.044(a) and (b), Tax Code, are
amended to read as follows:
(a) The first time that a county adopts a tax rate after
September 1, 1991, in which the state criminal justice mandate
applies to the county, the no-new-revenue maintenance and operation
rate for the county is increased by the rate calculated according to
the following formula:
(State Criminal Justice Mandate) / (Current Total
Value [- New Property Value])
(b) In the second and subsequent years that a county adopts
a tax rate, if the amount spent by the county for the state criminal
justice mandate increased over the previous year, the
no-new-revenue maintenance and operation rate for the county is
increased by the rate calculated according to the following
formula:
(This Year's State Criminal Justice Mandate -
Previous Year's State Criminal Justice Mandate) /
(Current Total Value [- New Property Value])
SECTION 8. Sections 26.0441(a) and (b), Tax Code, are
amended to read as follows:
(a) In the first tax year in which a taxing unit adopts a tax
rate after January 1, 2000, and in which the enhanced minimum
eligibility standards for indigent health care established under
Section 61.006, Health and Safety Code, apply to the taxing unit,
the no-new-revenue maintenance and operations rate for the taxing
unit is increased by the rate computed according to the following
formula:
Amount of Increase = Enhanced Indigent Health
Care Expenditures / (Current Total Value [- New
Property Value])
(b) In each subsequent tax year, if the taxing unit's
enhanced indigent health care expenses exceed the amount of those
expenses for the preceding year, the no-new-revenue maintenance and
operations rate for the taxing unit is increased by the rate
computed according to the following formula:
Amount of Increase = (Current Tax Year's Enhanced
Indigent Health Care Expenditures - Preceding Tax
Year's Indigent Health Care Expenditures) / (Current
Total Value [- New Property Value])
SECTION 9. Section 26.0442(b), Tax Code, is amended to read
as follows:
(b) If a county's indigent defense compensation
expenditures exceed the amount of those expenditures for the
preceding tax year, the no-new-revenue maintenance and operations
rate for the county is increased by the lesser of the rates computed
according to the following formulas:
(Current Tax Year's Indigent Defense
Compensation Expenditures - Preceding Tax Year's
Indigent Defense Compensation Expenditures) /
(Current Total Value [- New Property Value])
or
(Preceding Tax Year's Indigent Defense
Compensation Expenditures x 0.05) / (Current Total
Value [- New Property Value])
SECTION 10. Section 26.0443(b), Tax Code, is amended to
read as follows:
(b) If a county's or municipality's eligible county hospital
expenditures exceed the amount of those expenditures for the
preceding tax year, the no-new-revenue maintenance and operations
rate for the county or municipality, as applicable, is increased by
the lesser of the rates computed according to the following
formulas:
(Current Tax Year's Eligible County Hospital
Expenditures - Preceding Tax Year's Eligible County
Hospital Expenditures) / (Current Total Value [- New
Property Value])
or
(Preceding Tax Year's Eligible County Hospital
Expenditures x 0.08) / (Current Total Value [- New
Property Value])
SECTION 11. Section 26.0444(b), Tax Code, is amended to
read as follows:
(b) The no-new-revenue maintenance and operations rate for
a defunding municipality is decreased by the rate computed
according to the following formula:
Municipal Public Safety Expenditure Adjustment /
(Current Total Value [- New Property Value])
SECTION 12. Section 26.07(b), Tax Code, is amended to read
as follows:
(b) If the governing body of a [special] taxing unit [or a
municipality with a population of 30,000 or more] adopts a tax rate
that exceeds the taxing unit's voter-approval tax rate, [or the
governing body of a taxing unit other than a special taxing unit or
a municipality with a population of less than 30,000 regardless of
whether it is a special taxing unit adopts a tax rate that exceeds
the greater of the taxing unit's voter-approval tax rate or de
minimis rate,] the registered voters of the taxing unit at an
election held for that purpose must determine whether to approve
the adopted tax rate.
SECTION 13. Sections 31.12(a) and (b), Tax Code, are
amended to read as follows:
(a) If a refund of a tax provided by Section 11.431(b),
26.07(g), [26.075(k),] 26.15(f), 31.11, 31.111, or 31.112 is paid
on or before the 60th day after the date the liability for the
refund arises, no interest is due on the amount refunded. If not
paid on or before that 60th day, the amount of the tax to be refunded
accrues interest at a rate of one percent for each month or part of a
month that the refund is unpaid, beginning with the date on which
the liability for the refund arises.
(b) For purposes of this section, liability for a refund
arises:
(1) if the refund is required by Section 11.431(b), on
the date the chief appraiser notifies the collector for the taxing
unit of the approval of the late homestead exemption;
(2) if the refund is required by Section 26.07(g) [or
26.075(k)], on the date the results of the election to approve [or
reduce] the tax rate[, as applicable,] are certified;
(3) if the refund is required by Section 26.15(f):
(A) for a correction to the tax roll made under
Section 26.15(b), on the date the change in the tax roll is
certified to the assessor for the taxing unit under Section 25.25;
or
(B) for a correction to the tax roll made under
Section 26.15(c), on the date the change in the tax roll is ordered
by the governing body of the taxing unit;
(4) if the refund is required by Section 31.11, on the
date the auditor for the taxing unit determines that the payment was
erroneous or excessive or, if the amount of the refund exceeds the
applicable amount specified by Section 31.11(a), on the date the
governing body of the taxing unit approves the refund;
(5) if the refund is required by Section 31.111, on the
date the collector for the taxing unit determines that the payment
was erroneous; or
(6) if the refund is required by Section 31.112, on the
date required by Section 31.112(d) or (e), as applicable.
SECTION 14. Section 33.08(b), Tax Code, is amended to read
as follows:
(b) The governing body of the taxing unit or appraisal
district, in the manner required by law for official action, may
provide that taxes that become delinquent on or after June 1 under
Section [26.075(j),] 26.15(e), 31.03, 31.031, 31.032, 31.033,
31.04, or 42.42 incur an additional penalty to defray costs of
collection. The amount of the penalty may not exceed the amount of
the compensation specified in the applicable contract with an
attorney under Section 6.30 to be paid in connection with the
collection of the delinquent taxes.
SECTION 15. Section 49.057, Water Code, is amended by
amending Subsection (b) and adding Subsection (j) to read as
follows:
(b) The board shall adopt an annual budget. The board of a
developed district[, as defined by Section 49.23602,] shall include
as an appendix to the budget the district's:
(1) audited financial statements;
(2) bond transcripts; and
(3) engineer's reports required by Section 49.106.
(j) In this section, "developed district" means a district
that has financed, completed, and issued bonds to pay for all land,
works, improvements, facilities, plants, equipment, and appliances
necessary to serve at least 95 percent of the projected build-out of
the district in accordance with the purposes for its creation or the
purposes authorized by the constitution, this code, or any other
law.
SECTION 16. Section 49.107(g), Water Code, is amended to
read as follows:
(g) Sections 26.04, [26.042,] 26.05, 26.061, and 26.07,
[and 26.075,] Tax Code, do not apply to a tax levied and collected
under this section or an ad valorem tax levied and collected for the
payment of the interest on and principal of bonds issued by a
district.
SECTION 17. Section 49.108(f), Water Code, is amended to
read as follows:
(f) Sections 26.04, [26.042,] 26.05, 26.061, and 26.07,
[and 26.075,] Tax Code, do not apply to a tax levied and collected
for payments made under a contract approved in accordance with this
section.
SECTION 18. Section 49.236(a), Water Code, is amended to
read as follows:
(a) Before the board adopts an ad valorem tax rate for the
district for debt service, operation and maintenance purposes, or
contract purposes, the board shall give notice of each meeting of
the board at which the adoption of a tax rate will be considered.
The notice must:
(1) contain a statement in substantially the following
form:
"NOTICE OF PUBLIC HEARING ON TAX RATE
"The (name of the district) will hold a public hearing on a
proposed tax rate for the tax year (year of tax levy) on (date and
time) at (meeting place). Your individual taxes may increase at a
greater or lesser rate, or even decrease, depending on the tax rate
that is adopted and on the change in the taxable value of your
property in relation to the change in taxable value of all other
property. The change in the taxable value of your property in
relation to the change in the taxable value of all other property
determines the distribution of the tax burden among all property
owners.
"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.
"(Names of all board members and, if a vote was taken, an
indication of how each voted on the proposed tax rate and an
indication of any absences.)";
(2) contain the following information:
(A) the district's total adopted tax rate for the
preceding year and the proposed tax rate, expressed as an amount per
$100;
(B) the difference, expressed as an amount per
$100 and as a percent increase or decrease, as applicable, in the
proposed tax rate compared to the adopted tax rate for the preceding
year;
(C) the average appraised value of a residence
homestead in the district in the preceding year and in the current
year; the district's total homestead exemption, other than an
exemption available only to disabled persons or persons 65 years of
age or older, applicable to that appraised value in each of those
years; and the average taxable value of a residence homestead in the
district in each of those years, disregarding any homestead
exemption available only to disabled persons or persons 65 years of
age or older;
(D) the amount of tax that would have been
imposed by the district in the preceding year on a residence
homestead appraised at the average appraised value of a residence
homestead in that year, disregarding any homestead exemption
available only to disabled persons or persons 65 years of age or
older;
(E) the amount of tax that would be imposed by the
district in the current year on a residence homestead appraised at
the average appraised value of a residence homestead in that year,
disregarding any homestead exemption available only to disabled
persons or persons 65 years of age or older, if the proposed tax
rate is adopted;
(F) the difference between the amounts of tax
calculated under Paragraphs (D) and (E), expressed in dollars and
cents and described as the annual percentage increase or decrease,
as applicable, in the tax to be imposed by the district on the
average residence homestead in the district in the current year if
the proposed tax rate is adopted; and
(G) if the proposed combined debt service,
operation and maintenance, and contract tax rate requires [or
authorizes] an election to approve [or reduce] the tax rate, [as
applicable,] a description of the purpose of the proposed tax
increase;
(3) contain a statement in substantially the following
form[, as applicable:
[(A) if the district is a district described by
Section 49.23601]:
"NOTICE OF VOTE ON TAX RATE
"If the district adopts a combined debt service, operation
and maintenance, and contract tax rate that would result in the
taxes on the average residence homestead increasing from the
preceding year [by more than eight percent], an election must be
held to determine whether to approve the operation and maintenance
tax rate under Section 49.23601, Water Code.";
[(B) if the district is a district described by
Section 49.23602:
["NOTICE OF VOTE ON TAX RATE
["If the district adopts a combined debt service, operation
and maintenance, and contract tax rate that would result in the
taxes on the average residence homestead increasing by more than
3.5 percent, an election must be held to determine whether to
approve the operation and maintenance tax rate under Section
49.23602, Water Code."; or
[(C) if the district is a district described by
Section 49.23603:
["NOTICE OF TAXPAYERS' RIGHT TO ELECTION TO REDUCE TAX RATE
["If the district adopts a combined debt service, operation
and maintenance, and contract tax rate that would result in the
taxes on the average residence homestead increasing by more than
eight percent, the qualified voters of the district by petition may
require that an election be held to determine whether to reduce the
operation and maintenance tax rate to the voter-approval tax rate
under Section 49.23603, Water Code.";] and
(4) include the following statement: "The 86th Texas
Legislature modified the manner in which the voter-approval tax
rate is calculated to limit the rate of growth of property taxes in
the state.".
SECTION 19. The heading to Section 49.23601, Water Code, is
amended to read as follows:
Sec. 49.23601. AUTOMATIC ELECTION TO APPROVE TAX RATE [FOR
LOW TAX RATE DISTRICTS].
SECTION 20. Sections 49.23601(a) and (c), Water Code, are
amended to read as follows:
(a) In this section, "voter-approval tax rate" means the
rate equal to the sum of the following tax rates for the district:
(1) the current year's debt service tax rate;
(2) the current year's contract tax rate; and
(3) the operation and maintenance tax rate that would
impose [1.08 times] the amount of [the] operation and maintenance
tax imposed by the district in the preceding year on a residence
homestead appraised at the average appraised value of a residence
homestead in the district in that year, disregarding any homestead
exemption available only to disabled persons or persons 65 years of
age or older.
(c) If the board of a district adopts a combined debt
service, contract, and operation and maintenance tax rate that
would impose more than [1.08 times] the amount of tax imposed by the
district in the preceding year on a residence homestead appraised
at the average appraised value of a residence homestead in the
district in that year, disregarding any homestead exemption
available only to disabled persons or persons 65 years of age or
older, an election must be held in accordance with the procedures
provided by Sections 26.07(c)-(g), Tax Code, to determine whether
to approve the adopted tax rate. If the adopted tax rate is not
approved at the election, the district's tax rate is the
voter-approval tax rate.
SECTION 21. The following provisions are repealed:
(1) Section 45.0032(d), Education Code;
(2) Section 120.007(d), Local Government Code;
(3) Sections 26.012(8-a), (15), and (19), Tax Code;
(4) Section 26.013, Tax Code;
(5) Section 26.042, Tax Code;
(6) Section 26.0501(c), Tax Code;
(7) Section 26.063, Tax Code;
(8) Section 26.075, Tax Code;
(9) Section 49.23601(b), Water Code;
(10) Section 49.23602, Water Code; and
(11) Section 49.23603, Water Code.
SECTION 22. 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.
SECTION 23. This Act takes effect January 1, 2026.