By Craddick, Junell H.J.R. No. 4
A JOINT RESOLUTION
1-1 proposing a constitutional amendment providing financial support
1-2 for elementary and secondary public education, dedicating revenue
1-3 and authorizing priority allocations of certain revenue,
1-4 authorizing a state property tax and certain taxes on entities,
1-5 providing property tax relief and reduced school taxes on
1-6 residential property, including certain homestead property, and
1-7 making implementation and conforming amendments.
1-8 BE IT RESOLVED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-9 SECTION 1. Section 1, Article VII, Texas Constitution, is
1-10 amended to read as follows:
1-11 Sec. 1. (a) A general diffusion of knowledge being
1-12 essential to the preservation of the liberties and rights of the
1-13 people, it shall be the duty of the Legislature of the State to
1-14 establish and make suitable provision for the support and
1-15 maintenance of an efficient system of public free schools.
1-16 (b) The financial support of elementary and secondary public
1-17 school education shall be the first priority among State spending
1-18 and appropriations, subject only to the dedication of revenue
1-19 otherwise provided by this Constitution and to the payment of
1-20 lawfully incurred State debt.
1-21 (c) It is the policy of this State that the provision of
1-22 public education is a state responsibility and that a thorough and
1-23 efficient system be provided and substantially financed through
1-24 State revenue sources so that each student enrolled in the public
2-1 school system shall have access to programs and services that are
2-2 appropriate to the student's educational needs and that are
2-3 substantially equal to those available to any similar student,
2-4 notwithstanding varying local economic factors.
2-5 (d) The public school finance system of this State shall
2-6 adhere to a standard of neutrality that provides for substantially
2-7 equal access to similar revenue per student at similar tax effort,
2-8 considering all State and local tax revenues of districts after
2-9 acknowledging all legitimate student and district cost differences.
2-10 (e) The Legislature may not appropriate, for any biennium,
2-11 an amount of State funds for the maintenance and operation of
2-12 public schools and for the erection and equipment of public school
2-13 buildings that is less than the amount appropriated for those
2-14 purposes in the prior biennium, adjusted for student population
2-15 growth.
2-16 SECTION 2. Section 1-e, Article VIII, Texas Constitution, is
2-17 amended to read as follows:
2-18 Sec. 1-e. 1. Except as provided by Subsection 2 of this
2-19 section, no [No] State ad valorem taxes shall be levied upon any
2-20 property within this State.
2-21 2. Ad valorem taxes may be imposed by the legislature at a
2-22 rate not to exceed $1.05 for each $100 of taxable value for
2-23 elementary and secondary public free schools purposes on property
2-24 not subject to taxation for maintenance and operations purposes by
2-25 a school district and not otherwise exempted by this constitution
2-26 or by the legislature under the authority of this constitution.
2-27 The legislature may provide for the appraisal of property subject
3-1 to State ad valorem taxes, for the equalization of the taxable
3-2 values of that property, and for the collection of the State ad
3-3 valorem taxes imposed on that property [All receipts from
3-4 previously authorized State ad valorem taxes that are collected on
3-5 or after the effective date of the 1982 amendment to this section
3-6 shall be deposited to the credit of the general fund of the county
3-7 collecting the taxes and may be expended for county purposes.
3-8 Receipts from taxes collected before that date shall be distributed
3-9 by the legislature among institutions eligible to receive
3-10 distributions under prior law. Those receipts and receipts
3-11 distributed under prior law may be expended for the purposes
3-12 provided under prior law or for repair and renovation of existing
3-13 permanent improvements].
3-14 3. The legislature by general law may exempt from ad valorem
3-15 taxes imposed under Subsection 2 of this section in any tax year
3-16 all or a portion of the value of property exempt in that tax year
3-17 from ad valorem taxation by a school district pursuant to a tax
3-18 abatement agreement entered into by the school district before
3-19 January 1, 1997, or in a reinvestment zone created by municipal
3-20 ordinance on or before April 1, 1997, for which a municipal tax
3-21 abatement agreement is entered into before July 1, 1997.
3-22 4. State ad valorem taxes shall be assessed on the valuation
3-23 of property subject to those taxes as determined by the appraisal
3-24 officials in the county in which the property is located. If an
3-25 appraisal official uses generally accepted appraisal standards and
3-26 practices to appraise property subject to the State ad valorem tax
3-27 and the valuation of the property subject to that tax conforms to
4-1 or is equalized by the local appraisal review process to conform to
4-2 the accepted standards and practices, the assessment of the State
4-3 ad valorem tax on that valuation is not invalid. This subsection
4-4 expires at the end of the 1999 ad valorem tax year.
4-5 5. The legislature by general law may authorize the State to
4-6 use increases in ad valorem tax revenues imposed on property in a
4-7 reinvestment zone to finance the development or redevelopment of
4-8 property in the zone if the zone was designated before February 1,
4-9 1997, or if a reinvestment zone existing on that date was expanded
4-10 before June 30, 1997, to include the site for a public school.
4-11 SECTION 3. Section 3, Article VII, Texas Constitution, is
4-12 amended to read as follows:
4-13 Sec. 3. (a) One-fourth of the revenue derived from the
4-14 State occupation taxes [and poll tax of one dollar on every
4-15 inhabitant of the State, between the ages of twenty-one and sixty
4-16 years,] shall be set apart annually for the benefit of the public
4-17 free schools; and in addition thereto, there shall be levied and
4-18 collected an annual ad valorem State tax as provided by Subsection
4-19 2, Section 1-e, Article VIII, of this constitution [of such an
4-20 amount not to exceed thirty-five cents on the one hundred
4-21 ($100.00) dollars valuation, as with the available school fund
4-22 arising from all other sources, will be sufficient] to maintain and
4-23 support the public schools of this State. Money received by the
4-24 State from the operation of lotteries authorized by Section 47(e),
4-25 Article III, of this constitution, less amounts paid for lottery
4-26 prizes and administrative costs, may be spent only for elementary
4-27 and secondary public free schools. The [for a period of not less
5-1 than six months in each year, and it shall be the duty of the]
5-2 State Board of Education shall [to] set aside a sufficient amount
5-3 of State funds [out of the said tax] to provide free text books for
5-4 the use of children attending the public free schools of this
5-5 State. If[; provided, however, that should the limit of] taxation
5-6 and revenue described by this subsection are [herein named be]
5-7 insufficient, the deficit may be met by appropriation from the
5-8 general funds of the State.
5-9 (b) The [and the] Legislature may [also] provide for the
5-10 formation of school districts [district] by general laws. All[;
5-11 and all] such school districts may embrace parts of two or more
5-12 counties. The[, and the] Legislature may by general law provide
5-13 [shall be authorized to pass laws for the assessment and collection
5-14 of taxes in all said districts and] for the management and control
5-15 of the public [school or] schools of such districts.
5-16 (c) The[, whether such districts are composed of territory
5-17 wholly within a county or in parts of two or more counties, and
5-18 the] Legislature may provide for school districts to impose
5-19 [authorize] an [additional] ad valorem tax on all residential
5-20 property as defined by general law [to be levied and collected
5-21 within all school districts heretofore formed or hereafter formed,]
5-22 for the further maintenance and operations of public free schools.
5-23 The Legislature may provide rate limitations by law, except that a
5-24 school district may not impose a tax for maintenance and operations
5-25 at a rate greater than $1.05 on the $100 valuation of taxable
5-26 property. The Legislature may provide for school districts to
5-27 impose an additional ad valorem tax on all property not otherwise
6-1 exempted by this constitution or by the Legislature under the
6-2 authority of this constitution[, and] for the erection and
6-3 equipment of school buildings if [therein; provided that] a
6-4 majority of the qualified [property taxpaying] voters of the
6-5 district voting at an election to be held for that purpose[,] shall
6-6 vote such tax [not to exceed in any one year one ($1.00) dollar on
6-7 the one hundred dollars valuation of the property subject to
6-8 taxation in such district, but the limitation upon the amount of
6-9 school district tax herein authorized shall not apply to
6-10 incorporated cities or towns constituting separate and independent
6-11 school districts, nor to independent or common school districts
6-12 created by general or special law].
6-13 SECTION 4. Section 1, Article VIII, Texas Constitution, is
6-14 amended by amending Subsection (c) and adding Subsections (c-1),
6-15 (i), and (j) to read as follows:
6-16 (c) The Legislature may provide for the taxation of
6-17 intangible property and may also impose occupation taxes, both upon
6-18 natural persons and upon corporations, other than municipal, doing
6-19 any business in this State. Subject to the restrictions of Section
6-20 24 of this article, it may also tax incomes of both natural persons
6-21 and corporations other than municipal. It may also impose
6-22 privilege or franchise taxes measured by the income or taxable
6-23 capital of a corporation, partnership, or business entity other
6-24 than a sole proprietorship. A sole proprietorship [Persons] engaged
6-25 in mechanical or [and] agricultural pursuits shall never be
6-26 required to pay an occupation tax. This subsection does not
6-27 prohibit the imposition of taxes on a gas, electric, or water
7-1 utility of a municipal corporation.
7-2 (c-1) The use of income earned or receipts after December
7-3 31, 1996, to measure or apportion to this State a privilege or
7-4 franchise tax authorized by Subsection (c) of this section is not
7-5 prohibited. This section expires January 1, 2000.
7-6 (i) Notwithstanding Subsections (a) and (b) of this section,
7-7 the Legislature by general law may limit the maximum annual
7-8 increase in the appraised value of residence homesteads for ad
7-9 valorem tax purposes in order to provide tax relief from the
7-10 effects of rapid increases in the market value of residence
7-11 homesteads. A limitation on appraisal increases authorized by this
7-12 subsection:
7-13 (1) takes effect as to a residence homestead on the
7-14 later of the effective date of the law imposing the limitation or
7-15 January 1 of the tax year following the first tax year the owner
7-16 qualifies the property for an exemption under Section 1-b of this
7-17 article; and
7-18 (2) expires on January 1 of the first tax year that
7-19 neither the owner of the property when the limitation took effect,
7-20 the owner's spouse or surviving spouse, nor a minor child of the
7-21 owner qualifies for an exemption under Section 1-b.
7-22 (j) Notwithstanding Subsections (a) and (b) of this section,
7-23 the Legislature by general law may limit the frequency with which
7-24 increases in the appraised value of real property for ad valorem
7-25 tax purposes may be recognized.
7-26 SECTION 5. Section 1-b(d), Article VIII, Texas Constitution,
7-27 is amended to read as follows:
8-1 (d) Except as otherwise provided by this subsection, if a
8-2 person receives the residence homestead exemption prescribed by
8-3 Subsection (c) of this section for homesteads of persons sixty-five
8-4 (65) years of age or older, the total amount of ad valorem taxes
8-5 imposed on that homestead for general elementary and secondary
8-6 public school purposes may not be increased while it remains the
8-7 residence homestead of that person or that person's spouse who
8-8 receives the exemption. If a person sixty-five (65) years of age
8-9 or older dies in a year in which the person received the exemption,
8-10 the total amount of ad valorem taxes imposed on the homestead for
8-11 general elementary and secondary public school purposes may not be
8-12 increased while it remains the residence homestead of that person's
8-13 surviving spouse if the spouse is fifty-five (55) years of age or
8-14 older at the time of the person's death, subject to any exceptions
8-15 provided by general law. The legislature, by general law, may
8-16 provide for the transfer of all or a proportionate amount of a
8-17 limitation provided by this subsection for a person who qualifies
8-18 for the limitation and establishes a different residence homestead.
8-19 However, taxes otherwise limited by this subsection may be
8-20 increased to the extent the value of the homestead is increased by
8-21 improvements other than repairs or improvements made to comply with
8-22 governmental requirements and except as may be consistent with the
8-23 transfer of a limitation under this subsection. If the total
8-24 amount of a school district's taxes imposed in the 1997 tax year
8-25 for elementary and secondary public school purposes on a residence
8-26 homestead subject to a limitation provided by this subsection is
8-27 less than the total amount of the school district's taxes on that
9-1 residence homestead for those purposes in the first year that the
9-2 residence homestead qualified for the limitation, in a subsequent
9-3 tax year the total amount of taxes the school district may impose
9-4 on the residence homestead for elementary and secondary public
9-5 school purposes while it remains the residence homestead of a
9-6 person entitled to the limitation may not exceed the amount of the
9-7 1997 school district taxes, except as otherwise provided by this
9-8 subsection.
9-9 SECTION 6. Article VIII, Texas Constitution, is amended by
9-10 adding Section 1-b-2 to read as follows:
9-11 Sec. 1-b-2. NOTICE OF PROPERTY TAX DECREASE. (a) If, on
9-12 September 1, 1997, an escrow account is required to be maintained
9-13 in connection with a loan secured by a mortgage in real property
9-14 consisting of a single place of residence from which ad valorem
9-15 taxes are paid, whether the residence is a separate structure or a
9-16 residential unit within a multiple-unit structure, the person who
9-17 controls the account, before October 1, 1997, shall deliver to the
9-18 person who pays money into the account the following notice:
9-19 NOTICE OF PROPERTY TAX DECREASE
9-20 Because of actions taken by the 75th Texas Legislature,
9-21 Regular Session, 1997, and approval by the voters of the
9-22 constitutional amendment providing property tax relief to owners of
9-23 residential property, in 1997 and subsequent years there will be a
9-24 substantial decrease in the tax rates of school districts on
9-25 residential property in this state. If your periodic mortgage
9-26 payment includes an amount for the payment of property taxes, the
9-27 decrease in the tax rate of your school district should result in a
10-1 decrease in the amount you are required to pay into your escrow
10-2 account. The decrease will be taken into account when your next
10-3 annual escrow account statement required by federal law is prepared
10-4 by (name of entity that controls escrow account). After you
10-5 receive that escrow account statement, if you have any questions
10-6 concerning the amount of your mortgage payments, you may direct
10-7 them to (name of entity that controls escrow account) at (address
10-8 and telephone number of entity).
10-9 (b) This section expires December 31, 1998.
10-10 SECTION 7. Article VIII, Texas Constitution, is amended by
10-11 adding Section 1-b-3 to read as follows:
10-12 Sec. 1-b-3. NOTICE OF PROPERTY TAX REDUCTION. (a) Not
10-13 later than October 1, 1997, the chief appraiser of each appraisal
10-14 district in this state shall send to each owner of a residence
10-15 homestead in the appraisal district the following written notice:
10-16 NOTICE OF PROPERTY TAX DECREASE
10-17 Members of the 75th Texas Legislature, Regular Session, 1997,
10-18 have enacted legislation that will significantly reduce your school
10-19 district property taxes for 1997 and subsequent years when compared
10-20 to your 1996 school taxes. The first tax bill reflecting this
10-21 reduction of your school district property taxes should be mailed
10-22 before October 1, 1997. Questions concerning your tax bill should
10-23 be directed to the local tax collector.
10-24 The amount of your school district property taxes for 1997 is
10-25 based on the value of your home on January 1, 1997, and any
10-26 residence homestead exemptions for which you qualify in 1997.
10-27 Questions concerning the appraised value of your home or about
11-1 residence homestead exemptions should be directed to the appraisal
11-2 district for your county.
11-3 If the property taxes on your home are paid by an entity that
11-4 holds a mortgage on your home, you should inform the entity that
11-5 holds the mortgage of the reduction in the property taxes on your
11-6 home for 1997. If an escrow account is maintained in connection
11-7 with the mortgage on your home, the entity that holds that mortgage
11-8 will adjust the amounts that you are required to pay into your
11-9 escrow account for 1998 property taxes.
11-10 (b) This section expires December 31, 1998.
11-11 SECTION 8. Section 1-j, Article VIII, Texas Constitution, is
11-12 amended by amending Subsection (a) and adding Subsection (a-1) to
11-13 read as follows:
11-14 (a) Except as provided by Subsections (a-1) and (b) of this
11-15 section, to [To] promote economic development in this [the] State,
11-16 goods, wares, merchandise, other tangible personal property, and
11-17 ores, other than oil, natural gas, and other petroleum products,
11-18 are exempt from ad valorem taxation if:
11-19 (1) the property is acquired in or imported into this
11-20 State to be forwarded outside this State, whether or not the
11-21 intention to forward the property outside this State is formed or
11-22 the destination to which the property is forwarded is specified
11-23 when the property is acquired in or imported into this State;
11-24 (2) the property is detained in this State for
11-25 assembling, storing, manufacturing, processing, or fabricating
11-26 purposes by the person who acquired or imported the property; and
11-27 (3) the property is transported outside of this State
12-1 not later than 175 days after the date the person acquired or
12-2 imported the property in this State.
12-3 (a-1) Property described by Subsection (a) of this section
12-4 is not exempt from ad valorem taxes imposed under Section 1-e of
12-5 this article if the property is located in a school district that
12-6 for the tax year taxes the property.
12-7 SECTION 9. Article VIII, Texas Constitution, is amended by
12-8 adding Section 1-m to read as follows:
12-9 Sec. 1-m. The legislature by general law may provide that
12-10 the owner of property consisting of a separate interest in oil or
12-11 gas, including condensate and liquefied petroleum gas, and from
12-12 which oil or gas is produced, in lieu of ad valorem taxes on the
12-13 property, may elect to pay a gross wellhead receipts tax. The law
12-14 must permit an annual election by the owner of the property for
12-15 payment of the gross receipts tax. The receipts from a gross
12-16 receipts tax imposed under the authority of this section shall be
12-17 used in the same manner and for the same purpose as receipts from
12-18 ad valorem taxes. This section does not affect the imposition and
12-19 use of revenue from gross receipts taxes not imposed under the
12-20 authority of this section.
12-21 SECTION 10. Article VIII, Texas Constitution, is amended by
12-22 adding Section 1-n to read as follows:
12-23 Sec. 1-n. The legislature by general law may make a river
12-24 authority that owns or operates one or more steam generating plants
12-25 subject to a franchise tax. The legislature may impose such
12-26 franchise taxes only upon that portion of the authority's business
12-27 that is directly related to the generation, transmission, or
13-1 distribution of electricity, and at a rate that is not in excess of
13-2 the rate imposed upon similarly situated private entities engaged
13-3 in the electric business.
13-4 SECTION 11. Section 22, Article VIII, Texas Constitution, is
13-5 amended by adding Subsection (d) to read as follows:
13-6 (d) Subsection (a) of this section does not apply, for the
13-7 biennium ending August 31, 2001, to appropriations to the extent
13-8 made from the amount of the increase in revenue as a result of the
13-9 changes in the law made by House Bill 4, Acts of the 75th
13-10 Legislature, Regular Session, 1997. This subsection expires
13-11 September 1, 2001.
13-12 SECTION 12. Section 24, Article VIII, Texas Constitution, is
13-13 amended by adding Subsection (k) to read as follows:
13-14 (k) This section does not apply to a privilege or franchise
13-15 tax measured by the income of a corporation, partnership, or other
13-16 taxable business entity, other than a sole proprietorship.
13-17 SECTION 13. Article III, Texas Constitution, is amended by
13-18 adding Section 31a to read as follows:
13-19 Sec. 31a. (a) The legislature by general law may create a
13-20 Texas Grace Commission to study state agencies, institutions, and
13-21 programs in the executive department of state government and
13-22 recommend that certain of those agencies, institutions, or programs
13-23 be abolished or reduced to a specified size or otherwise modified
13-24 to make them more cost-effective.
13-25 (b) Notwithstanding Sections 1, 11, and 31 of this article,
13-26 the legislature must accept or reject, but may not amend, each
13-27 substantive recommendation presented to the legislature by the
14-1 commission.
14-2 (c) This section is repealed on September 1, 1999.
14-3 SECTION 14. This proposed constitutional amendment shall be
14-4 submitted to the voters at an election to be held August 9, 1997.
14-5 The ballot shall be printed to permit voting for or against the
14-6 proposition: The constitutional amendment authorizing changes in
14-7 law to reduce local property taxes and increase the state's share
14-8 of public education funding, including:
14-9 (1) dedication of lottery revenue to public schools;
14-10 (2) authorizing a limited state property tax on
14-11 nonresidential property;
14-12 (3) authorizing a privilege or franchise tax on the
14-13 income and capital of business organizations other than sole
14-14 proprietorships;
14-15 (4) providing for the transfer to a different
14-16 homestead of the school property tax freeze on homesteads of the
14-17 elderly;
14-18 (5) providing a cap on the maintenance and operations
14-19 tax rate for schools;
14-20 (6) authorizing the legislature to limit the frequency
14-21 of appraisals and increases in value of residence homesteads for
14-22 property tax purposes;
14-23 (7) providing for the creation of a commission to
14-24 study and make recommendations on efficiency in state government;
14-25 (8) providing an equity standard for the public school
14-26 finance system;
14-27 (9) providing for alternative taxation of separate
15-1 interests in oil and gas;
15-2 (10) authorizing a franchise tax on certain river
15-3 authorities generating electricity; and
15-4 (11) establishing public schools as the first priority
15-5 in state spending and preserving the level of state funding of
15-6 public schools.