By Armbrister S.B. No. 1389
77R7774 ESH-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the treatment under the public school finance system of
1-3 declining property values and taxes levied on property subject to
1-4 bankruptcy proceedings or an appeal by a property owner.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Section 41.002(b), Education Code, is amended to
1-7 read as follows:
1-8 (b) For purposes of this chapter, the commissioner shall
1-9 adjust, in accordance with Section 42.2521, the taxable values of a
1-10 school district that, due to factors beyond the control of the
1-11 board of trustees, experiences a [rapid] decline in the tax base
1-12 used in calculating taxable values.
1-13 SECTION 2. Subchapter D, Chapter 41, Education Code, is
1-14 amended by adding Section 41.0981 to read as follows:
1-15 Sec. 41.0981. CREDIT FOR TAXES LEVIED ON PROPERTY SUBJECT TO
1-16 BANKRUPTCY PROCEEDINGS OR APPEAL BY PROPERTY OWNER. (a) For any
1-17 school year, the total amount required under Section 41.093 for a
1-18 school district to purchase attendance credits is reduced by an
1-19 amount, as determined by the commissioner, equal to the amount of
1-20 district ad valorem taxes levied for that year on property that
1-21 cannot be collected in that year because:
1-22 (1) the property owner is a debtor in a bankruptcy
1-23 proceeding under Title 11, United States Code; or
1-24 (2) an appeal by the property owner under Chapter 42,
2-1 Tax Code, is pending before a district or appellate court.
2-2 (b) If a school district that receives a credit under this
2-3 section subsequently collects taxes for which the district received
2-4 credit, the commissioner shall reduce the state aid under Chapters
2-5 42 and 46 to which the district is entitled for the year in which
2-6 the taxes are collected, except that if the state aid to which the
2-7 district is entitled is less than the amount of the taxes
2-8 collected, the commissioner shall require the district to pay to
2-9 the commissioner the difference between the amount of the taxes
2-10 collected and the state aid.
2-11 (c) If a school district does not pay an amount required by
2-12 the commissioner under Subsection (b), the commissioner may take
2-13 any action permitted under Section 42.258 for recovery of an
2-14 overallocation of state funds under Chapter 42.
2-15 (d) A decision of the commissioner under this section is
2-16 final and may not be appealed.
2-17 SECTION 3. Section 42.001, Education Code, is amended by
2-18 adding Subsection (c) to read as follows:
2-19 (c) It is the policy of this state that the amount of
2-20 taxable property used to compute a school district's local share of
2-21 allotments under this chapter and Chapter 46 or to compute a
2-22 district's obligation to reduce its wealth per student to the
2-23 equalized wealth level under Chapter 41 may not exceed the value of
2-24 taxable property on which the district may effectively impose and
2-25 collect ad valorem taxes for the current year. In accordance with
2-26 this policy:
2-27 (1) a school district's taxable value of property for
3-1 purposes of this chapter and Chapters 41 and 46 shall be adjusted
3-2 as provided by Section 42.2521 to reflect declining property
3-3 values; and
3-4 (2) a school district is entitled to additional state
3-5 aid as provided by Section 42.2513 or credit against the cost of
3-6 purchasing attendance credits as provided by Section 41.0981 to
3-7 reflect the value of property on which taxes may not be collected
3-8 because of bankruptcy or an appeal by a property owner.
3-9 SECTION 4. Subchapter E, Chapter 42, Education Code, is
3-10 amended by adding Section 42.2513 to read as follows:
3-11 Sec. 42.2513. ADDITIONAL STATE AID FOR TAXES LEVIED ON
3-12 PROPERTY SUBJECT TO BANKRUPTCY PROCEEDINGS OR APPEAL BY PROPERTY
3-13 OWNER. (a) For any school year, a school district is entitled to
3-14 state aid in an amount, as determined by the commissioner, equal to
3-15 the amount of district ad valorem taxes levied for that year on
3-16 property that cannot be collected in that year because:
3-17 (1) the property owner is a debtor in a bankruptcy
3-18 proceeding under Title 11, United States Code; or
3-19 (2) an appeal by the property owner under Chapter 42,
3-20 Tax Code, is pending before a district or appellate court.
3-21 (b) If a school district that receives state aid under this
3-22 section subsequently collects taxes for which the district received
3-23 state aid, the commissioner shall reduce the state aid under this
3-24 chapter or Chapter 46 to which the district is entitled for the
3-25 year in which the taxes are collected, except that if the state aid
3-26 to which the district is entitled is less than the amount of the
3-27 taxes collected, the commissioner shall require the district to pay
4-1 to the commissioner the difference between the amount of the taxes
4-2 collected and the state aid.
4-3 (c) A decision of the commissioner under this section is
4-4 final and may not be appealed.
4-5 SECTION 5. Section 42.2521, Education Code, is amended to
4-6 read as follows:
4-7 Sec. 42.2521. ADJUSTMENT FOR [RAPID] DECLINE IN TAXABLE
4-8 VALUE OF PROPERTY. (a) For purposes of Chapters 41 and 46 and this
4-9 chapter, [and to the extent money specifically authorized to be
4-10 used under this section is available,] the commissioner shall
4-11 adjust the taxable value of property in a school district that, due
4-12 to factors beyond the control of the board of trustees, experiences
4-13 a [rapid] decline in the tax base used in calculating taxable
4-14 values to the taxable value of property for the current tax year
4-15 [in excess of four percent of the tax base used in the preceding
4-16 year].
4-17 (b) [To the extent that a sufficient amount of money is not
4-18 available to fund all adjustments under this section, the
4-19 commissioner shall reduce adjustments in the manner provided by
4-20 Section 42.253(h) so that the total amount of adjustments equals
4-21 the amount of money available to fund the adjustments.]
4-22 [(c)] A decision of the commissioner under this section is
4-23 final and may not be appealed.
4-24 SECTION 6. Sections 42.2522(b) and (c), Education Code, are
4-25 amended to read as follows:
4-26 (b) In making a determination under Subsection (a)(2), the
4-27 commissioner shall,[:]
5-1 [(1)] notwithstanding Section 42.253(b), reduce the
5-2 entitlement under this chapter of a school district whose final
5-3 taxable value of property is higher than the estimate under Section
5-4 42.254 and make payments to school districts accordingly[; and]
5-5 [(2) give priority to school districts that, due to
5-6 factors beyond the control of the board of trustees, experience a
5-7 rapid decline in the tax base used in calculating taxable values in
5-8 excess of four percent of the tax base used in the preceding year].
5-9 (c) In the first year of a state fiscal biennium, before
5-10 providing funding as provided by Subsection (a)(2), the
5-11 commissioner shall ensure that sufficient appropriated funds for
5-12 purposes of the Foundation School Program are available for the
5-13 second year of the biennium[, including funds to be used for
5-14 purposes of Section 42.2521].
5-15 SECTION 7. This Act takes effect September 1, 2001.