By Marchant H.B. No. 2140 Line and page numbers may not match official copy. Bill not drafted by TLC or Senate E&E. A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to municipal tax rate adjustments to compensate for 1-3 unfunded state and federal mandates. 1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-5 SECTION 1. Subtitle D, Chapter 26, Tax Code, is amended by 1-6 adding Section 26.046 to read as follows: 1-7 Sec. 26.046. MUNICIPAL TAX RATE ADJUSTMENT FOR STATE AND 1-8 FEDERAL MANDATES. (a) For each tax year in which a city adopts a 1-9 tax rate after this section takes effect, and in which one or more 1-10 state and federal mandates apply to the city, the effective tax 1-11 rate and the effective maintenance and operations rate for the city 1-12 are each increased by the rate calculated according to the 1-13 following formula: 1-14 (Current Tax Year's Total State and 1-15 Federal Mandates - Preceding Tax Year's 1-16 Total State and Federal Mandates) 1-17 Amount of Increase = _________________________ 1-18 (Current Total Value - New Property Value) 1-19 (b) The city shall include a notice of the increase in the 1-20 effective tax rate and the effective maintenance and operations 1-21 rate provided by this section, including a brief description and 1-22 amount of the state and federal mandates, in the information 2-1 published under Section 26.04(e) and, if applicable, Section 2-2 26.06(b) of this code. 2-3 (c) In this section, "state and federal mandate" for a tax 2-4 year means: 2-5 (1) an expenditure made by the city during the 12 2-6 months prior to adoption of the tax rate, which was required to be 2-7 made by the city in order to comply with a state or federal law, 2-8 regulation, or rule, and for which a tax rate adjustment is not 2-9 otherwise provided for by this chapter; and 2-10 (2) the amount of any reduction in revenue during the 2-11 12 months prior to adoption of the tax rate, as a result of a state 2-12 or federal law, regulation, or rule, to which the city would be 2-13 otherwise entitled in the absence of the law, regulation, or rule, 2-14 and for which a tax rate adjustment is not otherwise provided for 2-15 by this chapter. 2-16 (d) The amount of each state and federal mandate calculated 2-17 under Subsection (c) shall be reduced by the amount of any state or 2-18 federal funding or assistance received during the same prior 12 2-19 month period which was provided to the city as reimbursement for 2-20 that mandated expenditure or revenue reduction, and to which the 2-21 city was not otherwise entitled. 2-22 (e) In the first tax year in which the city makes rate 2-23 adjustments under this section, the city shall calculate the 2-24 preceding tax year's total state and federal mandates for purposes 2-25 of Subsection (a) in the same manner as if this section had been in 2-26 effect for the preceding tax year, provided that nothing in this 3-1 section shall entitle the city to any tax rate adjustments for any 3-2 such preceding tax year. 3-3 (f) In a tax year to which this section applies, a reference 3-4 in this chapter to the city's effective tax rate, effective 3-5 maintenance and operations rate, or rollback tax rate refers to 3-6 that rate as adjusted under, or as a result of, this section. 3-7 SECTION 2. This Act takes effect immediately if it receives 3-8 a vote of two-thirds of all the members elected to each house, as 3-9 provided by Section 39, Article III, Texas Constitution. If this 3-10 Act does not receive the vote necessary for immediate effect, this 3-11 Act takes effect September 1, 2001.