SRC-SLL, DBM S.B. 1804 76(R)BILL ANALYSIS Senate Research CenterS.B. 1804 By: Barrientos Finance 8/23/1999 Enrolled DIGEST Currently, the property tax rollback rate can be adjusted when one governmental unit transfers a department or function to another governmental unit; these are usually transfers of departments between cities and counties. The language in the law assumes complete transfers of functions or departments and does not allow one governmental unit to assume a greater financial responsibility for simultaneous functions conducted by both governmental units through separate departments. Travis County and the city of Austin both operate EMS departments. The city of Austin serves areas outside its corporate boundaries, which Travis County would like to serve, including other incorporated cities in Travis County; however, because of the rollback tax rate law, neither Travis County nor the city of Austin can transfer a portion of the EMS function without subjecting themselves to a greater risk of exceeding the rollback tax rate in the next fiscal year. In addition, a governmental unit giving up all or part of a function has its property tax rollback decreased dollar for dollar in property taxes, even though property taxes may comprise only a portion of the general fund budget spent on the function. S.B. 1804 sets forth provisions for the calculation of a tax rollback rate. PURPOSE As enrolled, S.B. 1804 sets forth provisions for the calculation of a tax rollback rate. RULEMAKING AUTHORITY This bill does not grant any additional rulemaking authority to a state officer, institution, or agency. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 26.04, Tax Code, by adding Subsections (k), (l), (m), (n), (o), (p), and (q), as follows: (k) Provides that this subsection applies to certain taxing units. Sets forth the formula for determining the rollback tax rate of a taxing unit to which this subsection applies. Sets forth the formula for reducing the tax levied on a department, function, or activity if the taxing unit did not fund all or part of the department, function, or activity for the full 12 months preceding the month in which the calculations required by this chapter are made. (l) Provides that this subsection applies to certain taxing units. Sets forth the formula for determining the rollback tax rate of a taxing unit to which this subsection applies. Sets forth the formula for reducing the tax levied on a department, function, or activity if the taxing unit did not fund all or part of the department, function, or activity for the full 12 months preceding the month in which the calculations required by this chapter are made. (m) Defines "funding." (n) Provides that, notwithstanding any other provision of this section, for purposes of calculating the rollback tax rate under Subsection (k) or (l), the effective maintenance and operations rate of the taxing unit is increased or reduced only by the rate that would generate the amount of ad valorem tax revenue spent by the taxing unit on that part of the funding of the department, function, or activity that is assumed or discontinued by the taxing authority. Authorizes the taxing unit to use any reasonable method to calculate the amount of ad valorem tax revenue that is or has been spent to fund the department, function, or activity, if the department, function, or activity has been funded by revenue sources other than ad valorem taxes. (o) Requires the taxing unit to publish a schedule including certain elements in a year in which a taxing unit calculates an adjustment under Subsection (k) or (l). (p) Requires the taxing unit to publish a schedule including certain elements in the year immediately following a year in which the rollback tax rate of a taxing unit is increased under Subsection (l). (q) Provides that this subsection and Subsections (k) - (p), expire January 1, 2001. SECTION 2.Emergency clause. Effective date: upon passage.