BILL ANALYSIS


                                                        H.B. 1537
                                             By: Craddick (Brown)
                                                          Finance
                                                         05-16-95
                              Senate Committee Report (Unamended)
BACKGROUND

A city sets its tax rate and develops its budget based on
anticipated collection of tax revenues.  Corrections to the tax
roll, allowed under current law, take place after a city has
completed its tax and budget process.  Consequently, a city's
budgeting may be based on revenues that will not exist because some
revenues will be deducted as a result of corrections.

The process of calculating the effective tax rate creates a deficit
for subsequent tax years.  Currently, the effective tax rate is
defined as the tax rate that would need to be levied to raise the
same amount of property tax revenue as was raised in the previous
year.  If the tax rate in any given year is incorrect and causes a
budget deficit, the calculation for the next year will necessarily
be based on an incorrect figure.

PURPOSE

As proposed, H.B. 1537 reformulates the calculation of the
effective tax rate and rollback tax rate which allows a taxing unit
to add corrections and property tax refunds for the previous year
to the tax rolls.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not grant any
additional rulemaking authority to a state officer, institution, or
agency.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 26.012(11), Tax Code, as follows:

     (11)  Defines "last year's debt levy" as the total of the
     amount of taxes that would be generated by multiplying the
     total taxable value of property on the appraisal roll for the
     preceding year, other than corrections made under Section
     25.25(d) of this code, by the debt rate; and the amount of
     debt taxes refunded by the taxing unit in the preceding year
     for tax years before that year.
     
SECTION 2. Amends Section 26.012(13), Tax Code, to make conforming
changes to the definition of "last year's levy."

SECTION 3. Amends Section 26.012(14), Tax Code, to make conforming
changes to the definition of "last year's total value."

SECTION 4. Amends Section 26.08, Tax Code, by adding Subsection
(i), as follows:

     (i) Requires, for the purposes of this section, increases in
     taxable values and tax levies occurring within a reinvestment
     zone under Chapter 311, in which a school district is a
     participant, to be eliminated from the calculation of the tax
     rate adopted by the governing body of the school district.
SECTION 5. Emergency clause.
           Effective date:  90 days after adjournment.