HBA-JRA C.S.S.B. 693 76(R)BILL ANALYSIS Office of House Bill AnalysisC.S.S.B. 693 By: Cain Ways & Means 5/21/1999 Committee Report (Substituted) BACKGROUND AND PURPOSE Currently, a taxing entity is required to hold a public hearing before the adoption of a tax rate which exceeds the preceding year's rate. However, while the Texas Constitution allows taxing entities to exclude new or annexed property from the calculation of the preceding year's levy, the Tax Code prohibits the consideration of new or annexed property. C.S.S.B. 693 requires a taxing entity to notify each property owner in the taxing unit that the adoption of the effective tax rate would change the total property taxes levied in the taxing unit in comparison with the previous year's levy. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 26.04, Tax Code, by amending Subsection (e) and adding Subsection (e-1), as follows: (e) Deletes the requirement that estimated funds necessary for the operation of a school district prior to the receipt of the first state education aid payment in the succeeding school year be subtracted from the estimated fund balances. Requires the designated officer to notify each property owner in the taxing unit that the adoption of the effective tax rate would change the amount of taxes levied in the taxing unit in comparison with the previous year's levy, and the amount of the increase or decrease. Makes conforming changes. (e-1) Provides that the notice requirements imposed by Subsections (e)(1)-(7) do not apply to the designated officer or employee of a school district. SECTION 2. Amends Section 26.05(d), Tax Code, to prohibit a governing body of a taxing unit other than a school district from adopting a tax rate which exceeds the lower of the rollback tax rate or 103 percent of the effective tax rate calculated as provided by this chapter, rather than one which exceeds last year's levy, until the governing body has completed certain actions. Requires the governing body of a taxing unit other than a school district to reduce a tax rate set by law or by vote of the electorate to the lower of the rollback tax rate or 103 percent of the effective tax rate and prohibits it from adopting a higher rate unless it first complies with Section 26.06 (Notice, Hearing, and Vote on Tax Increase). SECTION 3. Amends Sections 26.06, Tax Code, by amending Subsections (a), (b), (d), and (e) and adding Subsection (g), as follows: (a) Makes conforming changes. (b) Makes conforming changes. (d) Makes conforming changes. (e) Makes conforming changes. (g) Provides 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. Amends Section 25.19(b), Tax Code, to require the chief appraiser to include a statement that the governing body is prohibited from adopting a tax revenue rate increase for operating purposes from properties taxed in, rather than above tax revenues for, the preceding year without previous public notification. SECTION 5. Amends Section 44.004, Education Code, as follows: Sec. 44.004. New title: NOTICE OF BUDGET AND TAX RATE MEETING; BUDGET ADOPTION. (a) Makes conforming changes. (b) Deletes the provision that notice published under this subsection is in addition to notice required by other law. Deletes the authorization of a district to include the notice required under this subsection in a notice required under Section 26.06, Tax Code. Makes conforming changes. (c) Sets forth the size requirements for and the information that must be included in a notice of public meeting to discuss and adopt the budget and the proposed tax rate. (d) Requires the comptroller to prescribe the language and format to be used in the notice and provides that a notice is not valid if it does not substantially conform to these prescriptions. (e) Entitles a person who owns taxable property in a school district to an injunction restraining the collection of taxes by the district if the district has not complied with these requirements and the failure to comply was not in good faith. Provides that an action to enjoin the collection of taxes must be filed before the date the school district delivers substantially all of its tax bills. (f) Redesignated from existing Subsection (c). Makes conforming changes. (g) Redesignated from existing Subsection (d). Makes conforming changes. SECTION 6. (a) Effective date: September 1, 1999. (b) Provides that this Act applies only to an ad valorem tax rate beginning on or after January 1, 2000, except as provided by Subsection (c). (c) Provides that this Act applies to an ad valorem tax rate adopted by a taxing unit for the 1999 tax year, unless the taxing unit has given notice under Section 26.06(a), Tax Code, as that subsection existed when the notice was given, of the taxing unit's proposed tax rate as required by Section 26.05(d), as that subsection existed when the notice was given; or has adopted its ad valorem tax rate for the 1999 tax year under Section 26.05(a), Tax Code. SECTION 7. Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE The substitute modifies the original in SECTION 1 (Section 26.04, Tax Code) to delete the requirement that estimated funds necessary for the operation of a school district prior to the receipt of the first state education aid payment in the succeeding school year be subtracted from the estimated fund balances. The substitute also adds Subsection (e-1) to provide that the notice requirements imposed by Subsections (e)(1)-(7) do not apply to the designated officer or employee of a school district. The substitute modifies the original in SECTION 2 (Section 26.05(d), Tax Code) to provide that the governing body is the governing body of a taxing unit other than a school district. The substitute also prohibits a governing body of a taxing unit other than a school district from adopting a tax rate which exceeds the lower of the rollback tax rate or 103 percent of the effective tax rate, rather than the effective tax rate, calculated as provided by this chapter, rather than Section 26.04. In addition, the substitute requires the governing body of a taxing unit other than a school district to reduce a tax rate set by law or by vote of the electorate to the lower of the rollback tax rate or 103 percent of the effective tax rate and prohibits it from adopting a higher rate unless it first complies with Section 26.06 (Notice, Hearing, and Vote on Tax Increase). The substitute modifies the original in SECTION 3 (Section 26.06, Tax Code), by adding 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. The substitute adds a new SECTION 5, which amends Section 44.004, Education Code. The substitute changes the section title to "Notice of Budget And Tax Rate Meeting; Budget Adoption." The substitute deletes the provision that notice published under Subsection (b) is in addition to notice required by other law. The substitute deletes the authorization of a district to include the notice required under Subsection (b) in a notice required under Section 26.06, Tax Code. Sets forth the size requirements for and the information that must be included in a notice of public meeting to discuss and adopt the budget and the proposed tax rate. Requires the comptroller to prescribe the language and format to be used in the notice and provides that a notice is not valid if it does not substantially conform to these prescriptions. Entitles a person who owns taxable property in a school district to an injunction restraining the collection of taxes by the district if the district has not complied with these requirement and the failure to comply was not in good faith. Provides that an action to enjoin the collection of taxes must be filed before the date the school district delivers substantially all of its tax bills. Makes conforming and nonsubstantive changes. The substitute redesignates SECTIONS 5 (effective date) and 6 (emergency clause) to SECTIONS 6 and 7.