BILL ANALYSIS


                                                     C.S.S.B. 642
                                                     By: Montford
                                                          Finance
                                                         04-04-95
                                   Committee Report (Substituted)
BACKGROUND

Each year, the Comptroller of Public Accounts evaluates those areas
of state law administered by that agency. Due to the many changes
made in the Property Tax Code each session, adjustments are often
necessary. The Comptroller's Office has identified a number of
recommendations that would simplify the collection, enforcement,
and administration of ad valorem taxes for taxpayers, tax
collectors, and the Comptroller's Office.

PURPOSE

As proposed, C.S.S.B. 642 provides for the appraisal of property
for ad valorem taxation and the assessment and collection of ad
valorem taxes.

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 17.091(a), (b), and (e), Civil Practice
and Remedies Code, as follows:

     (a) Provides that the secretary of state, rather than the
     comptroller, is an agent in a suit growing out of property
     taxation by the state or a legal subdivision of the state in
     which a person who is a defendant is a nonresident, for
     service of process on that defendant if the defendant owned,
     had, or claimed a taxable interest in property in this state
     on the first day of a tax year for which taxes have not been
     paid.
     
     (b) Makes a conforming change.
     
     (e) Requires service of process on the secretary of state,
     rather than the comptroller, under this section to be
     accompanied by the fee provided by Section A(20), Article
     10.01 (Texas Business Corporation Act). Deletes the provision
     that the fee for the comptroller's certification of the
     service of process on the defendant or of any other matter
     related to the service of process is $10. Makes conforming
     changes.
SECTION 2. Amends Section 11.86(d), Education Code, to authorize
the comptroller, on request of the commissioner of education or a
school district, to audit a school district to determine the total
taxable value of property in the school district. Requires the
Comptroller to certify the findings of the audit to the
Commissioner of Education.

SECTION 3. Amends Section 825.405(i), Government Code, to require
the comptroller, no later than seven days after the final date the
comptroller certifies to the commissioner of education changes to
the property value study conducted under Section 11.86, Education
Code, to certify to the Teacher Retirement System of Texas certain
effective tax rates.

SECTION 4. Amends Section 23.53, Tax Code, as follows:

     Sec. 23.53. CAPITALIZATION RATE. Provides that the
     capitalization rate to be used in determining the appraised
     value of qualified open-space land as provided by this
     subchapter is 10 percent or the interest rate specified by the
     Farm Credit Bank of Texas or its successor, rather than the
     Federal Land Bank of Houston, on December 31 of the preceding
     year plus 2 1/2 percentage points, whichever percentage is
     greater.
SECTION 5. Amends Section 23.74, Tax Code, to make a conforming
change.

SECTION 6. Amends Section 23.75(j), Tax Code, to require the chief
appraiser, if the chief appraiser discovers that appraisal has been
erroneously allowed in any one of the five preceding years because
the person whose land was allowed appraisal failed to give notice
that its eligibility had ended, to add the difference between the
appraised value of the land and the market value of the land to the
appraisal roll.

SECTION 7. Amends Section 23.84(e), Tax Code, to make conforming
changes.

SECTION 8. Amends Section 23.94(e), Tax Code, to make conforming
changes.

SECTION 9. Amends Section 25.06, Tax Code, to delete the exception
provided by Section 25.15 of this code, from the requirement that
property encumbered by a leasehold or other possessory interest or
by a mortgage, deed of trust, or other interest securing payment or
performance of an obligation be listed in the name of the owner of
the property so encumbered.

SECTION 10.    Amends Section 32.07(b), Tax Code, to make a
conforming change.

SECTION 11.    Amends Section 31.015, Tax Code, which is
transferred to Section 33.011, Tax Code, as Subsections (b)-(g) of
that section, as follows:

     Sec. 33.011. WAIVER OF PENALTIES AND INTEREST. (a) Deletes the
     requirement of a request for a waiver of penalties under this
     section to be made within six months of the delinquency date.
     
     (b) Redesignates existing Section 31.015, regarding certain
       tax bills: penalty and interest excluded. Requires the
       governing body of a taxing unit, if a tax bill is returned
       undelivered to the taxing unit by the U.S. Postal Service,
       to waive penalties and interest if the taxing unit does not
       send another tax bill on the property in question at least
       21 days before the delinquency date to the current mailing
       address furnished by the taxpayer, rather than the property
       owner. Makes conforming changes.
       
       (c) Makes a conforming change.
       
       (d) Requires a request for a waiver of penalties and
       interest under this section to be made before 181 days
       after, rather than within six months of, the delinquency
       date.
       
       (e) Redesignates existing Subsection (d).
       
       (f) Redesignates existing Subsection (e). Makes
       nonsubstantive and conforming changes.
       
       (g) Makes conforming changes.
       
       SECTION 12.  Makes application of this Section 1 of this Act
prospective.

SECTION 13.    Effective date: January 1, 1996.

SECTION 14.    Emergency clause.