1-1     By:  Zbranek (Senate Sponsor - Bernsen)                H.B. No. 602
 1-2           (In the Senate - Received from the House April 30, 2001;
 1-3     May 1, 2001, read first time and referred to Committee on
 1-4     Intergovernmental Relations; May 10, 2001, reported favorably by
 1-5     the following vote:  Yeas 6, Nays 0; May 10, 2001, sent to
 1-6     printer.)
 1-7                            A BILL TO BE ENTITLED
 1-8                                   AN ACT
 1-9     relating to the creation and financing of hospital districts in
1-10     small counties.
1-11           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-12           SECTION 1. The heading to Subchapter E, Chapter 285, Health
1-13     and Safety Code, is amended to read as follows:
1-14            SUBCHAPTER E.  [HOSPITAL DISTRICT] SALES AND USE TAX
1-15                          TO LOWER AD VALOREM TAXES
1-16           SECTION 2. Section 285.061(a), Health and Safety Code, is
1-17     amended to read as follows:
1-18           (a)  A hospital district that is authorized to impose ad
1-19     valorem taxes may adopt a sales and use tax to lower the district's
1-20     ad valorem taxes at an election held as provided by this
1-21     subchapter. A district may[,] change the rate of the [its] sales
1-22     and use tax[,] or abolish the [its] sales and use tax at an
1-23     election held as provided by this subchapter. Subject to the
1-24     limitations provided by Subsections (c) and (d), the district may
1-25     impose the tax in increments of one-eighth of one percent, with a
1-26     minimum tax of one-eighth of one percent and a maximum tax of two
1-27     percent.
1-28           SECTION 3.  Section 285.062(c), Health and Safety Code, is
1-29     amended to read as follows:
1-30           (c)  At an election to adopt the tax, the ballot shall be
1-31     prepared to permit voting for or against the proposition: "The
1-32     adoption of a local sales and use tax in (name of district) at the
1-33     rate of (proposed tax rate) percent to be used to reduce the
1-34     district property taxes."
1-35           SECTION 4. Chapter 285, Health and Safety Code, is amended by
1-36     adding Subchapter L to read as follows:
1-37              SUBCHAPTER L.  SALES AND USE TAX TO RAISE REVENUE
1-38                       FOR DISTRICTS IN SMALL COUNTIES
1-39           Sec. 285.161.  TAX AUTHORIZED. (a)  A majority of voters in a
1-40     hospital district created under general or special law of which all
1-41     or a majority of the territory is located in a county or counties
1-42     each with a population of 75,000 or less may impose a sales and use
1-43     tax to raise revenue if the imposition is authorized at an election
1-44     under this subchapter.
1-45           (b)  A district may not adopt a tax under this subchapter or
1-46     increase the rate of the tax if as a result of the adoption or
1-47     increase the combined rate of all sales and use taxes imposed by
1-48     the district and other political subdivisions of this state having
1-49     territory in the district would exceed two percent at any location
1-50     in the district.
1-51           Sec. 285.162.  TAX RATE; CHANGE IN RATE. (a)  A district may
1-52     impose the tax in increments of one-eighth of one percent, with a
1-53     minimum rate of one-eighth of one percent and a maximum rate of two
1-54     percent.
1-55           (b)  A district may increase the rate of the tax to a maximum
1-56     of two percent or decrease the rate of the tax to a minimum of
1-57     one-eighth of one percent if the change is approved by a majority
1-58     of the voters of the district at an election called for that
1-59     purpose.
1-60           Sec. 285.163.  TAX ELECTION PROCEDURES. (a)  An election is
1-61     called by the adoption of a resolution by the governing body of the
1-62     district.  The governing body shall call an election if at least
1-63     five percent of the number of registered voters in the district
1-64     petition the governing body to call the election.
 2-1           (b)  At an election to adopt the tax, the ballot shall be
 2-2     prepared to permit voting for or against the proposition: "The
 2-3     adoption of a local sales and use tax to raise revenue in (name of
 2-4     district) at the rate of (proposed tax rate) percent."
 2-5           (c)  At an election to abolish the tax, the ballot shall be
 2-6     prepared to permit voting for or against the proposition: "The
 2-7     abolition of the local sales and use tax to raise revenue in (name
 2-8     of district)."
 2-9           (d)  At an election to change the rate of the tax, the ballot
2-10     shall be prepared to permit voting for or against the proposition:
2-11     "The (increase or decrease, as applicable) in the rate of the local
2-12     sales and use tax to raise revenue imposed by (name of district)
2-13     from (tax rate on election date) percent to (proposed tax rate)
2-14     percent."
2-15           Sec. 285.164.  ELECTION IN OTHER TAXING AUTHORITY. (a)  In
2-16     this section, "taxing authority" means any entity authorized to
2-17     impose a local sales and use tax.
2-18           (b)  If a district or proposed district is included within
2-19     the boundaries of another taxing authority and the adoption or
2-20     increase of the tax under this subchapter would result in a
2-21     combined tax rate by the district and other political subdivisions
2-22     of this state of more than two percent at any location in the
2-23     district, an election to approve or increase the tax under this
2-24     subchapter has no effect unless:
2-25                 (1)  one or more of the other taxing authorities holds
2-26     an election in accordance with the law governing that authority on
2-27     the same date as the election under this chapter to reduce the tax
2-28     rate of that authority to a rate that will result in a combined tax
2-29     rate by the district and other political subdivisions of not more
2-30     than two percent at any location in the district; and
2-31                 (2)  the combined tax rate is reduced to not more than
2-32     two percent as a result of that election.
2-33           (c)  This section does not permit a taxing authority to
2-34     impose taxes at differential tax rates within the territory of the
2-35     authority.
2-36           Sec. 286.165.  USE OF TAX. The taxes imposed may be used to
2-37     pay:
2-38                 (1)  the indebtedness issued or assumed by the
2-39     district; and
2-40                 (2)  the maintenance and operating expenses of the
2-41     district.
2-42           Sec. 285.166.  EFFECTIVE DATE. (a)  The adoption or abolition
2-43     of the tax or a change in the rate of the tax takes effect on the
2-44     first day of the first calendar quarter occurring after the
2-45     expiration of the first complete calendar quarter occurring after
2-46     the date the comptroller receives a notice of the results of the
2-47     election.
2-48           (b)  If the comptroller determines that an effective date
2-49     provided by Subsection (a) will occur before the comptroller can
2-50     reasonably take the action required to begin collecting the tax or
2-51     to implement the abolition of the tax or the change in the rate of
2-52     the tax, the effective date may be extended by the comptroller
2-53     until the first day of the next calendar quarter.
2-54           Sec. 285.167.  COUNTY SALES AND USE TAX ACT APPLICABLE.
2-55     Except to the extent that a provision of this chapter applies,
2-56     Chapter 323, Tax Code, applies to the tax authorized by this
2-57     chapter in the same manner as that chapter applies to the tax
2-58     authorized by that chapter.
2-59           SECTION 5. Section 286.022(a), Health and Safety Code, is
2-60     amended to read as follows:
2-61           (a)  The petition prescribed by Section 286.021 must show:
2-62                 (1)  that the district is to be created and is to
2-63     operate under Article IX, Section 9, of the Texas Constitution;
2-64                 (2)  the name of the proposed district;
2-65                 (3)  the district's boundaries as designated by metes
2-66     and bounds or other sufficient legal description;
2-67                 (4)  that none of the territory in the district is
2-68     included in another hospital district;
2-69                 (5)  the names of the temporary directors the
 3-1     commissioners court must appoint under Section 286.030 or a request
 3-2     that the commissioners court appoint temporary directors;
 3-3                 (6)  whether the district is to impose a property tax
 3-4     and the maximum tax rate to be voted on at the creation election,
 3-5     which may not exceed 75 cents on the $100 valuation of all taxable
 3-6     property in the district;
 3-7                 (7)  whether the district is to impose a sales and use
 3-8     tax under Subchapter I and the maximum tax rate to be voted on at
 3-9     the creation election, which may not exceed the rate allowed under
3-10     that subchapter;
3-11                 (8)  the method by which the permanent directors will
3-12     be elected, as provided by Subsection (c); and
3-13                 (9) [(8)]  the mailing address of each petitioner.
3-14           SECTION 6. Sections 286.023(d) and (e), Health and Safety
3-15     Code, are amended to read as follows:
3-16           (d)  At the time and place set for the hearing, the
3-17     commissioners court shall consider the petition.  The commissioners
3-18     court shall grant the petition if the court finds that the petition
3-19     is in proper form and contains the information required by Section
3-20     286.022.  The commissioners court may grant a petition proposing
3-21     creation of a hospital district that imposes a sales and use tax
3-22     under Subchapter I only if all or a majority of the territory of
3-23     the district is located in a county or counties each with a
3-24     population of 75,000 or less.
3-25           (e)  If a petition is granted, the commissioners court shall
3-26     order an election to confirm the district's creation and to
3-27     authorize the levy of a tax not to exceed the maximum tax rate
3-28     [amount] prescribed by the petition [on each $100 of the taxable
3-29     value of all taxable property in the district].
3-30           SECTION 7. Section 286.026, Health and Safety Code, is
3-31     amended to read as follows:
3-32           Sec. 286.026.  BALLOT PROPOSITION. (a)  The ballot for an
3-33     [the] election proposing to create a hospital district that imposes
3-34     a property tax shall be printed to permit voting for or against the
3-35     proposition:  "The creation of the __________ (name of district)
3-36     Hospital District and the levy of annual property taxes for
3-37     hospital purposes at a rate not to exceed __________ (insert the
3-38     amount prescribed by the petition, not to exceed 75 cents) cents on
3-39     each $100 valuation of all taxable property in the district."
3-40           (b)  The ballot for an election proposing to create a
3-41     hospital district that imposes a sales and use tax under Subchapter
3-42     I shall be printed to permit voting for or against the proposition:
3-43     "The creation of the __________ (name of district) Hospital
3-44     District and the levy of sales and use taxes for hospital purposes
3-45     at a rate not to exceed __________ (insert the amount prescribed by
3-46     the petition, not to exceed the amount allowed under Subchapter I)
3-47     percent."
3-48           (c)  If a bond proposition is submitted to the voters, the
3-49     ballot for the election shall contain the proposition prescribed by
3-50     Subsection (a) or (b) followed by [be printed to permit voting for
3-51     or against the proposition]:  "[The creation of the __________
3-52     (name of district) Hospital District, the levy of annual taxes for
3-53     hospital purposes at a rate not to exceed __________ (insert the
3-54     amount prescribed by the petition, not to exceed 75 cents) cents on
3-55     each $100 valuation of all taxable property in the district,] and
3-56     the issuance of bonds in an amount not to exceed __________ (insert
3-57     the amount prescribed by the petition or the commissioners court's
3-58     order) and to mature not later than __________ (insert the date
3-59     prescribed by the petition or the commissioners court's order)."
3-60           SECTION 8. Section 286.101, Health and Safety Code, is
3-61     amended by adding Subsection (g) to read as follows:
3-62           (g)  If a district imposes a sales and use tax under
3-63     Subchapter I, the territory added to the district must be located
3-64     in a county or counties each with a population of 75,000 or less,
3-65     and the addition of the territory may not result in a combined tax
3-66     rate by the hospital district and other political subdivisions of
3-67     this state of more than two percent at any location in the
3-68     district.
3-69           SECTION 9. Sections 286.104(b) and (c), Health and Safety
 4-1     Code, are amended to read as follows:
 4-2           (b)  After the board finds that the district is dissolved,
 4-3     the board shall[:]
 4-4                 [(1)]  determine the debt owed by the district[;] and:
 4-5                 (1)  if the district imposes a property tax,
 4-6     [(2)]  impose on the property included in the district's tax rolls
 4-7     a tax that is in proportion of the debt to the property value; or
 4-8                 (2)  if the district imposes a sales and use tax under
 4-9     Subchapter I, continue the tax until the debt is repaid.
4-10           (c)  The board may institute a suit to enforce payment of
4-11     taxes and to foreclose liens to secure the payment of property
4-12     taxes due the district.
4-13           SECTION 10. Section 286.105, Health and Safety Code, is
4-14     amended to read as follows:
4-15           Sec. 286.105.  RETURN OF SURPLUS PROPERTY TAX MONEY. (a)
4-16     When all outstanding debts and obligations of the district are
4-17     paid, the board shall order the secretary to return the pro rata
4-18     share of all unused property tax money to each district taxpayer.
4-19           (b)  A taxpayer may request that the taxpayer's share of
4-20     surplus property tax money be credited to the taxpayer's county
4-21     taxes. If a taxpayer requests the credit, the board shall direct
4-22     the secretary to transmit the funds to the county tax
4-23     assessor-collector.
4-24           SECTION 11. Section 286.124(b), Health and Safety Code, is
4-25     amended to read as follows:
4-26           (b)  The proposed budget must contain a complete financial
4-27     statement, including a statement of:
4-28                 (1)  the outstanding obligations of the district;
4-29                 (2)  the amount of cash on hand to the credit of each
4-30     fund of the district;
4-31                 (3)  the amount of money received by the district from
4-32     all sources during the previous year;
4-33                 (4)  the amount of money available to the district from
4-34     all sources during the ensuing year;
4-35                 (5)  the amount of the balances expected at the end of
4-36     the year in which the budget is being prepared;
4-37                 (6)  the estimated amount of revenues and balances
4-38     available to cover the proposed budget; and
4-39                 (7)  the estimated property tax rate that will be
4-40     required, if the district imposes a property tax.
4-41           SECTION 12. The heading to Subchapter H, Chapter 286, Health
4-42     and Safety Code, is amended to read as follows:
4-43                        SUBCHAPTER H.  PROPERTY TAXES
4-44           SECTION 13. Section 286.161, Health and Safety Code, is
4-45     amended to read as follows:
4-46           Sec. 286.161.  TAX AUTHORIZED [LEVY OF TAXES]. (a)  A
4-47     majority of voters in a district or proposed district may, at the
4-48     creation election under Subchapter B or in conjunction with any
4-49     other district election, authorize the district to impose a
4-50     property tax.
4-51           (b)  The board annually may impose property taxes in an
4-52     amount not to exceed the limit approved by the voters at the
4-53     election authorizing the levy of taxes.
4-54           (c) [(b)]  The tax rate for all purposes may not exceed 75
4-55     cents on each $100 valuation of all taxable property in the
4-56     district.
4-57           (d) [(c)]  The taxes may be used to pay:
4-58                 (1)  the indebtedness issued or assumed by the
4-59     district; and
4-60                 (2)  the maintenance and operating expenses of the
4-61     district.
4-62           (e) [(d)]  The district may not impose taxes to pay the
4-63     principal of or interest on revenue bonds issued under this
4-64     chapter.
4-65           SECTION 14. Chapter 286, Health and Safety Code, is amended
4-66     by amending Subchapter I and adding Subchapter X to read as
4-67     follows:
4-68              SUBCHAPTER I.  SALES AND USE TAXES FOR DISTRICTS
4-69                              IN SMALL COUNTIES
 5-1           Sec. 286.171.  TAX AUTHORIZED. (a)  A majority of voters in a
 5-2     proposed district of which all or a majority of the territory is
 5-3     located in a county or counties each with a population of 75,000 or
 5-4     less may impose a sales and use tax if the imposition is authorized
 5-5     at the creation election under Subchapter B.
 5-6           (b)  An election to authorize the imposition of a sales and
 5-7     use tax under this subchapter may be held only in conjunction with
 5-8     a creation election under Subchapter B.
 5-9           Sec. 286.172.  LIMITATION ON COMBINED TAX RATE; EFFECT ON
5-10     ELECTIONS. An election to create a hospital district and to
5-11     authorize the imposition of a sales and use tax under this
5-12     subchapter, or an election to change the tax rate under Section
5-13     286.174, has no effect if as a result of the adoption of the sales
5-14     and use tax or the change in the rate the combined rate of all
5-15     sales and use taxes imposed by the district and other political
5-16     subdivisions of this state having territory in the district would
5-17     exceed two percent at any location in the district.
5-18           Sec. 286.173.  ELECTION IN OTHER TAXING AUTHORITY. (a)  In
5-19     this section, "taxing authority" means any entity authorized to
5-20     impose a local sales and use tax.
5-21           (b)  If a district or proposed district is included within
5-22     the boundaries of another taxing authority and the adoption or
5-23     increase of the tax under this subchapter would result in a
5-24     combined tax rate by the district and other political subdivisions
5-25     of this state of more than two percent at any location in the
5-26     district, an election to approve or increase the tax under this
5-27     subchapter has no effect unless:
5-28                 (1)  one or more of the other taxing authorities holds
5-29     an election in accordance with the law governing that authority on
5-30     the same date as the election under this chapter to reduce the tax
5-31     rate of that authority to a rate that will result in a combined tax
5-32     rate by the district and other political subdivisions of not more
5-33     than two percent at any location in the district; and
5-34                 (2)  the combined tax rate is reduced to not more than
5-35     two percent as a result of that election.
5-36           (c)  This section does not permit a taxing authority to
5-37     impose taxes at differential tax rates within the territory of the
5-38     authority.
5-39           Sec. 286.174.  TAX RATE; CHANGE IN RATE. (a)  A district may
5-40     impose the tax in increments of one-eighth of one percent, with a
5-41     minimum rate of one-eighth of one percent and a maximum rate of two
5-42     percent.
5-43           (b)  Subject to Section 286.172, a district may increase the
5-44     rate of the tax to a maximum of two percent or decrease the rate of
5-45     the tax to a minimum of one-eighth of one percent if the change is
5-46     approved by a majority of the voters of the district at an election
5-47     called for that purpose.
5-48           Sec. 286.175.  USE OF TAX. The taxes imposed may be used to
5-49     pay:
5-50                 (1)  the indebtedness issued or assumed by the
5-51     district; and
5-52                 (2)  the maintenance and operating expenses of the
5-53     district.
5-54           Sec. 286.176.  EFFECTIVE DATE. (a)  The adoption or abolition
5-55     of the tax or a change in the rate of the tax takes effect on the
5-56     first day of the first calendar quarter occurring after the
5-57     expiration of the first complete calendar quarter occurring after
5-58     the date the comptroller receives a notice of the results of the
5-59     election.
5-60           (b)  If the comptroller determines that an effective date
5-61     provided by Subsection (a)  will occur before the comptroller can
5-62     reasonably take the action required to begin collecting the tax or
5-63     to implement the abolition of the tax or the change in the rate of
5-64     the tax, the effective date may be extended by the comptroller
5-65     until the first day of the next calendar quarter.
5-66           Sec. 286.177.  COUNTY SALES AND USE TAX ACT APPLICABLE.
5-67     Except to the extent that a provision of this chapter applies,
5-68     Chapter 323, Tax Code, applies to the tax authorized by this
5-69     chapter in the same manner as that chapter applies to the tax
 6-1     authorized by that chapter.
 6-2                        SUBCHAPTER X.  MISCELLANEOUS
 6-3           Sec. 286.951 [286.181].  LIMITATION ON STATE ASSISTANCE. The
 6-4     state may not become obligated for the support or maintenance of a
 6-5     hospital district created under this chapter, and the legislature
 6-6     may not make a direct appropriation for the construction,
 6-7     maintenance, or improvement of a facility of the district.
 6-8           SECTION 15. Section 26.012(1), Tax Code, is amended to read
 6-9     as follows:
6-10                 (1)  "Additional sales and use tax" means an additional
6-11     sales and use tax imposed by:
6-12                       (A)  a city under Section 321.101(b);
6-13                       (B)  [of this code, a sales and use tax imposed
6-14     by] a county under Chapter 323; [of this code,] or
6-15                       (C)  [a sales and use tax imposed by] a hospital
6-16     district, other than a hospital district created on or after
6-17     September 1, 2001, that:
6-18                             (i)  imposes the sales and use tax under
6-19     Subchapter I, Chapter 286, Health and Safety Code; or
6-20                             (ii)  imposes the sales and use tax under
6-21     Subchapter L, Chapter 285, Health and Safety Code.
6-22           SECTION 16. This Act takes effect September 1, 2001.
6-23                                  * * * * *