AN ACT 1-1 relating to the calculation of the rollback tax rate of a taxing 1-2 unit in certain circumstances. 1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-4 SECTION 1. Section 26.04, Tax Code, is amended by adding 1-5 Subsections (k), (l), (m), (n), (o), (p), and (q) to read as 1-6 follows: 1-7 (k) This subsection applies to a taxing unit that has agreed 1-8 by written contract to transfer all or part of the responsibility 1-9 for funding a distinct department, function, or activity to another 1-10 taxing unit and that reduces its taxation for the purpose of 1-11 funding that distinct department, function, or activity if that 1-12 reduced portion of the funding of that department, function, or 1-13 activity in all or a majority of the territory of the taxing unit 1-14 is continued by another existing taxing unit or by a new taxing 1-15 unit. The rollback tax rate of a taxing unit to which this 1-16 subsection applies in the first tax year in which a budget is 1-17 adopted that reduces the funding of the department, function, or 1-18 activity is calculated as otherwise provided by this section, 1-19 except that last year's levy used to calculate the effective 1-20 maintenance and operations rate of the unit is reduced by the 1-21 decrease in the amount of maintenance and operations tax revenue 1-22 spent by the taxing unit on the department, function, or activity 1-23 compared to the amount of maintenance and operations tax revenue 1-24 spent in the 12 months preceding the month in which the 2-1 calculations required by this chapter are made. If the taxing unit 2-2 did not fund all or part of that department, function, or activity 2-3 for the full 12 months preceding the month in which the 2-4 calculations required by this chapter are made, the taxing unit 2-5 shall reduce last year's levy used for calculating the effective 2-6 maintenance and operations rate of the taxing unit by the amount of 2-7 the decrease in the amount of maintenance and operations tax 2-8 compared to the amount of revenue spent in the last full fiscal 2-9 year in which the taxing unit funded all or part of the department, 2-10 function, or activity. 2-11 (l) This subsection applies to a taxing unit that has agreed 2-12 by written contract to accept the transfer of all or part of the 2-13 responsibility for funding a distinct department, function, or 2-14 activity from another taxing unit and that funds all or part of 2-15 that distinct department, function, or activity if the funding for 2-16 a substantially similar department, function, or activity in all or 2-17 a majority of the territory of the taxing unit has been reduced by 2-18 another taxing unit, including a dissolved taxing unit. The 2-19 rollback tax rate of a taxing unit to which this subsection applies 2-20 in the first tax year after the other taxing unit reduced the 2-21 funding of the substantially similar department, function, or 2-22 activity in which a budget is adopted that allocates revenue to the 2-23 department, function, or activity is calculated as otherwise 2-24 provided by this section, except that last year's levy used to 2-25 calculate the effective maintenance and operations rate of the 2-26 taxing unit is increased by the amount of the decrease of 3-1 maintenance and operations tax revenue spent by the taxing unit 3-2 that reduced funding for the substantially similar department, 3-3 function, or activity compared to the amount of maintenance and 3-4 operations tax revenue spent on that department, function, or 3-5 activity in the 12 months preceding the month in which the 3-6 calculations required by this chapter are made. If the taxing unit 3-7 did not fund the department, function, or activity for the full 12 3-8 months preceding the month in which the calculations required by 3-9 this chapter are made, the taxing unit may increase last year's 3-10 levy used to calculate the effective maintenance and operations 3-11 rate by an amount not to exceed the decrease in the amount of 3-12 property tax revenue spent by the other taxing unit to fund the 3-13 department, function, or activity compared to the amount of 3-14 maintenance and operations tax revenue spent in the last full 3-15 fiscal year before the other taxing unit reduced funding for the 3-16 department, function, or activity. 3-17 (m) In Subsections (k) and (l), "funding" includes a payment 3-18 made to another taxing unit in accordance with a written contract 3-19 for the operation of the department, function, or activity. The 3-20 term does not include a payment made by a taxing unit from funds 3-21 received from another taxing unit in accordance with a written 3-22 contract to operate the department, function, or activity. 3-23 (n) Notwithstanding any other provision of this section, for 3-24 purposes of calculating the rollback tax rate of a taxing unit 3-25 under Subsection (k) or (l), the effective maintenance and 3-26 operations rate of the taxing unit is increased or reduced only by 4-1 the rate that would generate the amount of ad valorem tax revenue 4-2 spent by the taxing unit on that part of the funding of the 4-3 department, function, or activity that is assumed or discontinued 4-4 by the taxing unit. If the department, function, or activity has 4-5 been funded by revenue sources other than ad valorem taxes, the 4-6 taxing unit may use any reasonable method to calculate the amount 4-7 of ad valorem tax revenue that is or has been spent to fund the 4-8 department, function, or activity. 4-9 (o) In a year in which a taxing unit calculates an 4-10 adjustment under Subsection (k) or (l), the taxing unit shall 4-11 publish in the manner provided by Subsection (e) a schedule that 4-12 includes the following elements: 4-13 (1) the name of the taxing unit transferring 4-14 responsibility for funding of the department, function, or 4-15 activity; 4-16 (2) the amount of property tax revenue spent by that 4-17 taxing unit to operate the department, function, or activity in the 4-18 12 months preceding the month in which the calculations required by 4-19 this chapter are made; and 4-20 (3) the name of the taxing unit that accepted funding 4-21 responsibility for a distinct department, function, or activity in 4-22 all or a majority of the territory of the taxing unit that 4-23 transferred responsibility for funding of the distinct department, 4-24 function, or activity. 4-25 (p) In the year immediately following a year in which the 4-26 rollback tax rate of a taxing unit is increased under Subsection 5-1 (l), the taxing unit shall publish in the manner provided by 5-2 Subsection (e) a schedule that includes the following elements: 5-3 (1) the amount of property tax revenue spent by the 5-4 taxing unit to fund the department, function, or activity for which 5-5 the taxing unit's rollback tax rate was increased under Subsection 5-6 (l) for the 12 months preceding the month in which the calculations 5-7 required by this chapter are made; and 5-8 (2) the amount published by the taxing unit in the 5-9 preceding tax year under Subsection (o)(2). 5-10 (q) This subsection and Subsections (k), (l), (m), (n), (o), 5-11 and (p) expire January 1, 2001. 5-12 SECTION 2. The importance of this legislation and the 5-13 crowded condition of the calendars in both houses create an 5-14 emergency and an imperative public necessity that the 5-15 constitutional rule requiring bills to be read on three several 5-16 days in each house be suspended, and this rule is hereby suspended, 5-17 and that this Act take effect and be in force from and after its 5-18 passage, and it is so enacted. _______________________________ _______________________________ President of the Senate Speaker of the House I hereby certify that S.B. No. 1804 passed the Senate on May 3, 1999, by a viva-voce vote; and that the Senate concurred in House amendment on May 28, 1999, by a viva-voce vote. _______________________________ Secretary of the Senate I hereby certify that S.B. No. 1804 passed the House, with amendment, on May 25, 1999, by the following vote: Yeas 145, Nays 0, two present not voting. _______________________________ Chief Clerk of the House Approved: _______________________________ Date _______________________________ Governor