SRC-DBM S.B. 1804 76(R)   BILL ANALYSIS


Senate Research Center   S.B. 1804
By: Barrientos
Finance
4/26/1999
As Filed


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 would  
set forth provisions for the calculation of a tax rollback rate.

PURPOSE

As proposed, 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 amending Subsections (i) and
(j), and adding Subsections (k) and (l), as follows: 

(i)  Provides that this subsection applies to a taxing unit that has agreed
by written contract to transfer all or a part of the responsibility for
funding a distinct department, function, or activity to another taxing unit
and reduces its taxation for the purpose of funding, rather than
discontinues operating, that distinct department, function or activity if
that reduced portion of the funding, rather than operation, to that
department, function, or activity in all or a majority of the territory of
the taxing unit is continued by another existing taxing unit or by a new
taxing unit.  Provides that the rollback tax rate of a taxing unit to which
this subsection applies in the first tax year in which a budget is adopted
that reduces the funding of the department, function, or activity is
calculated as otherwise provided by this section, except that last year's
levy used to calculate the effective maintenance and operations rate of the
unit is reduced by the decrease in the amount of maintenance and operations
tax revenue spent by the taxing unit on the department, function, or
activity compared to the amount of maintenance and operations tax revenue
spent in the 12 months preceding the month in which the calculations
required by this chapter are made.  Requires the unit to reduce last year's
levy used for calculating the effective maintenance and operations rate of
the unit by the amount of the decrease in the amount of maintenance and
operations tax compared to the amount of revenue spent in the last full
fiscal year in which the unit funded all of part of the department,
function, or activity.  Deletes text providing that the rollback tax rate
of a taxing unit to which this subsection applies in the first tax year in
which a budget is adopted that does not allocate revenue to the
discontinued department, function, or activity is calculated as otherwise
provided by this section, except for the 12 months preceding the month in
which the calculations required by this chapter are made and in which the
unit operated the discontinued department, function, or activity.  
 
(j)  Makes conforming changes.

 (k)  Defines "funding."   

(l)  Provides that, notwithstanding any other provision of this section,
the rollback tax rate of a taxing unit is increased or reduced under
Subsection (i) or (j) only in 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. 

SECTION 2.Effective date: September 1, 1999.

SECTION 3.Emergency clause.