HBA-NLM, LCA C.S.H.B. 2075 76(R) BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 2075 By: Hochberg Public Education 5/4/1999 Committee Report (Substituted) BACKGROUND AND PURPOSE Under current law, school districts must publish notices informing the public of proposed property tax rates and school district budgets. However, some taxpayers and school districts argue that the notices are difficult to understand, do not give taxpayers enough advance notice of a budget hearing, and do not provide enough information on the school district's finances. C.S.H.B. 2075 requires a school district to publish one notice before the budget hearing, and specifies the size and format requirements for the notice. The bill requires the notice to include specific sections that provide a comparison between proposed and current tax rates, the rate necessary to maintain the current level of revenue and debt service, and specific information on fund balances. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the comptroller of public accounts in SECTION 1 (Section 44.004, Education Code) of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 44.004, Education Code, as follows: Sec. 44.004. New Title: NOTICE OF BUDGET AND TAX RATE MEETING; BUDGET ADOPTION. (a) Requires the president of a school board (board president) to call a meeting of the board of trustees for the purpose of adopting a budget for the succeeding fiscal year, when the budget has been prepared under Section 44.002 (Preparation of Budget), Education Code. (b) Requires the board president to provide for the publication of notice of the budget and proposed tax rate meeting. Deletes existing text authorizing the district to include the notice required under this subsection in a notice required under Section 26.06, Tax Code. (c) Prohibits the notice of public meeting to discuss and adopt the budget and the proposed tax rate from being smaller than one-quarter page of a standard-size or a tabloid-size newspaper, and requires the headline on the notice to be in 18-point or larger type. Sets forth the required content and format of the notice, and provides that the notice must contain the following sections setting forth specified information: _Comparison of Proposed Rates with Preceding Year's Adopted Rates; and _Comparison of Proposed Levy with Last Year's Levy on Average Residence Homestead. (d) Requires the comptroller of public accounts, by rule, to prescribe the language and format for the part of the notice required by Subsection (c), and provides that a notice not substantially conforming to those standards is invalid. (e)-(f) Makes conforming changes. SECTION 2. Amends Section 26.05(d), Tax Code, to prohibit the governing body of a taxing entity from adopting a tax rate that if applied to the total taxable value would impose an amount of taxes that exceeds last years levy until it has held a public hearing on the proposed tax rate and: _if the taxing unit is not a school district, has otherwise complied with Section 26.06; or _if the taxing unit is a school district, has complied with Section 44.004, Education Code. SECTION 3. Amends Section 26.06, Tax Code, by adding Subsection (g) to provide that this section does not apply to a school district. Requires a school district to provide notice of a public hearing on a tax increase as required by Section 44.004, Education Code. SECTION 4. Effective date: September 1, 1999. SECTION 5. Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.H.B. 2075 modifies the original in the caption, by providing that this Act relates to the public notice required to be provided by a school district before adopting a proposed budget and tax rate, rather than publication of school district budget and tax rate notices. C.S.H.B. 2075 modifies the original in SECTION 1 (Section 44.004, Education Code) by changing the section heading to read "Notice of Budget and Tax Rate Meeting; Budget Adoption," rather than "Notice, Hearing and Vote on Budget Meeting; Budget Adoption and Tax Rate." In addition, the substitute amends Subsection (a) to require the president of the school board of trustees to call a meeting of the board for the purpose of adopting a budget for the succeeding fiscal year, when the budget has been prepared under Section 44.002, and makes nonsubstantive changes. The original bill did not address Subsection (a). C.S.H.B. 2075 modifies the original in SECTION 1 (Section 44.004, Education Code), by redesignating proposed text relating to the notice of public hearing to a new Subsection (c) in the substitute. The substitute further amends the existing text to prohibit the notice of public meeting to discuss and adopt the budget and the proposed tax rate, rather than the notice of public hearing, from being smaller than one-quarter page of a standard-size or a tabloid-size newspaper, and requires the headline on the notice to be in 18-point or larger type. The substitute provides that the notice must contain specified information in the manner provided, relating to the school district, rather than the taxing unit, and the purpose of the meeting, rather than hearing. The substitute modifies the original in Subdivision (2) to provide that the notice must contain a section entitled "Comparison of Proposed Rates with Preceding Year's Adopted Rates," rather than "Comparison of Proposed Rates with Current Year's Adopted Rates." The substitute modifies the original in Subdivision (3) to provide that the notice must contain a section entitled "Comparison of Proposed Levy with Last Year's Levy on Average Residence Homestead," rather than "Comparison of Proposed Levy with Last Year's Levy on Average Residence." The substitute redesignates proposed Subdivision (5) of the original to Subdivision (4) in the substitute. The substitute clarifies the proposed text by prohibiting the dollar amount of school taxes imposed on the residence homestead of a person 65 years of age or older or of the surviving spouse of such a person, if the surviving spouse was 55 years of age or older when the person died, from increasing above the amount paid in the first year after the person turned 65, regardless of changes in the tax rate. The substitute redesignates proposed Subdivision (8) in the original to Subdivision (5) in the substitute. The substitute provides that the notice must contain a statement relating to the school district rollback rate determined under Section 26.08, Tax Code, rather than the product of effective maintenance and operations tax rate multiplied by 1.08 added to the current debt rate, as defined in Section 26.04, Tax Rate. The substitute redesignates proposed Subdivision (9) of the original to Subdivision (6) in the substitute. The substitute provides that this section must include the estimated total fund balances that are not encumbered by a corresponding debt obligation and that will be left in the district's property tax accounts at the end of the fiscal year, or the estimated fund balances in certain categories that cumulatively equal the aforementioned amount. The substitute redesignates proposed Subsection (c) in the original to Subsection (d) in the substitute. In addition, the substitute further amends other subsections in Section 44.004 to make conforming changes. C.S.H.B. 2075 modifies the original by adding a new SECTION 2 (Section 26.05(d), Tax Code), to prohibit the governing body from adopting a tax rate that if applied to the total taxable value would impose an amount of taxes that exceeds last year's levy until it has held a public hearing on the proposed tax rate and: _if the taxing unit is not a school district, has otherwise complied with Section 26.06; or _if the taxing unit is a school district, has complied with Section 44.004, Education Code. C.S.H.B. 2075 redesignates SECTION 2 (Section 26.06, Tax Code) of the original to SECTION 3 in the substitute. The substitute removes proposed amendments to existing Subsections (b)-(f) making conforming changes and requiring all taxing units, except school districts which shall follow the requirements in Section 44.004, to post a notice. The substitute adds a new Subsection (g) to provide that this section does not apply to a school district and to require a school district to provide notice of a public hearing on a tax increase as required by Section 44.004, Education Code. C.S.H.B. 2075 redesignates SECTION 3 (effective date) of the original to SECTION 4 in the substitute and changes the effective date from August 31, 1999, to September 1, 1999. C.S.H.B. 2075 redesignates SECTION 4 (emergency clause) of the original to SECTION 5 in the substitute. The substitute provides a short, rather than long, emergency clause.