1-1     By:  Duncan                                            S.B. No. 460
 1-2           (In the Senate - Filed January 30, 2001; January 31, 2001,
 1-3     read first time and referred to Committee on Education;
 1-4     March 29, 2001, reported favorably by the following vote:  Yeas 6,
 1-5     Nays 0; March 29, 2001, sent to printer.)
 1-6                            A BILL TO BE ENTITLED
 1-7                                   AN ACT
 1-8     relating to the inclusion of certain contractual obligations in the
 1-9     debt of a school district for property tax purposes.
1-10           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-11           SECTION 1.  Subdivision (7), Section 26.012, Tax Code, is
1-12     amended to read as follows:
1-13                 (7)  "Debt" means a bond, warrant, certificate of
1-14     obligation, or other evidence of indebtedness owed by a taxing unit
1-15     that is payable solely from property taxes in installments over a
1-16     period of more than one year, not budgeted for payment from
1-17     maintenance and operations funds, and secured by a pledge of
1-18     property taxes, or a payment made under contract to secure
1-19     indebtedness of a similar nature issued by another political
1-20     subdivision on behalf of the taxing unit.  For a school district
1-21     that complies with Section 26.03, the term also includes all or
1-22     part of a contractual obligation entered into by the district that
1-23     has a term of more than one year, is payable from property taxes,
1-24     is budgeted for payment from maintenance and operations funds, and
1-25     is secured by a pledge of property taxes.
1-26           SECTION 2.  Chapter 26, Tax Code, is amended by adding
1-27     Section 26.03 to read as follows:
1-28           Sec. 26.03.  NOTICE OF INTENTION TO INCLUDE CONTRACTUAL
1-29     OBLIGATION IN DEBT OF SCHOOL DISTRICT.  (a)  The board of trustees
1-30     of a school district may include a contractual obligation budgeted
1-31     for payment from maintenance and operations funds as described by
1-32     Section 26.012(7) in the debt of the district only in compliance
1-33     with this section.
1-34           (b)  The board of trustees may include a contractual
1-35     obligation described by Subsection (a) in the district's debt only
1-36     to the extent that the district's debt rate imposed for payment of
1-37     all such contractual obligations does not exceed $0.05 per $100 of
1-38     valuation.
1-39           (c)  Before the board of trustees may act to include the
1-40     contractual obligation in the debt of the district, the board of
1-41     trustees must provide public notice of the board's intention.
1-42           (d)  The notice required by Subsection (c) must:
1-43                 (1)  be published in a newspaper of general circulation
1-44     in the district not later than the 15th day before the date set for
1-45     the board meeting at which a tax rate is to be adopted for the
1-46     district; and
1-47                 (2)  contain a statement in the following form:
1-48                "NOTICE OF INTENTION TO INCLUDE ONE OR MORE SCHOOL
1-49               DISTRICT CONTRACTUAL OBLIGATIONS IN DEBT OF DISTRICT
1-50           "The board of trustees of (name of school district), in
1-51     adopting a tax rate for the district, will consider a proposal to
1-52     include one or more contractual obligations in the debt of the
1-53     district.  If approved, inclusion of those obligations in the
1-54     district's debt will have the effect of increasing the amount of
1-55     the district's debt service and raising the district's rollback tax
1-56     rate.  The rollback tax rate is the limit on the amount of a tax
1-57     rate increase over the previous year's rate that the district may
1-58     adopt without holding an election."
1-59           (e)  At the meeting, the board of trustees shall specify
1-60     whether all or part of the contractual obligation will be included
1-61     in the debt of the district.
1-62           SECTION 3.  This Act takes effect immediately if it receives
1-63     a vote of two-thirds of all the members elected to each house, as
1-64     provided by Section 39, Article III, Texas Constitution.  If this
 2-1     Act does not receive the vote necessary for immediate effect, this
 2-2     Act takes effect September 1, 2001.
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