Substitute the following for CSHB 1:
A BILL TO BE ENTITLED AN ACT RELATING TO PUBLIC SCHOOL FINANCE
ARTICLE 1: EDUCATION FINANCE REFORM
SECTION 1. SHORT TITLE. This Act may be cited as the Texas
Great Classroom Fund Act.
SECTION 2. REPEALER. Chapter 41, Education Code, is
repealed in its entirety as of September 1, _________.
SECTION 3. REPEALER. Chapter 42, Education Code, is
repealed in its entirety as of September 1, _________.
SECTION 4. REPEALER. Chapter 46, Education Code, is
repealed in its entirety as of September 1, _________.
SECTION 5. A new Chapter 47, Education Code, shall read as
follows:
Chapter 47. Texas Great Classroom Program
SUBCHAPTER A: GENERAL PROVISIONS
Sec. 47.001. State Policy
It is the policy of this state that the provision of public
education is a state responsibility and that a thorough and
efficient system be provided and substantially financed through
state revenue sources so that each student enrolled in the public
school system shall have access to programs and services that are
appropriate to the student's educational needs and that are
substantially equal to those available to any similar student,
notwithstanding varying local economic factors.
Sec. 47.002. Purpose of the Texas Great Classroom Program
(a) The purpose of the Texas Great Classroom Program as set
forth in this Chapter is to guarantee that each school district in
the state has:
(1) adequate resources to provide each eligible
student a basic instructional program and education facilities
suitable to the student's educational needs; and
(2) access to a substantially equalized program of
financing for teacher compensation, instructional spending, and
educational facilities.
(b) The Texas Great Classroom Program consists of two
components:
(1) a teaching and instruction component, set forth in
subchapter B, sufficient to provide a basic program of education
that is rated academically acceptable or higher under section
39.072 and meets other applicable legal standards; and
(2) an instructional facilities component, set forth
in subchapter C, that provides each district with adequate funding
for instructional facilities.
Sec. 47.003. Definitions
In this Chapter "commissioner" means the Commissioner of
Education.
Sec. 47.004. Rules
The commissioner may adopt rules for the administration of
this Chapter.
SUBCHAPTER B: TEACHING AND INSTRUCTION
Sec. 47.101. Teaching and Instruction Allotment
(a) Each school district in this state is entitled to
receive, for each pupil in refined average daily attendance, a
Texas Great Classroom "Teaching and Instruction Allotment" in the
amount given by the following formula:
[(Target Amount) x (Poverty Factor) x (Sparsity
Factor)] –[District's TIA Ability to Pay]
(b) "Target Amount" means the 60th percentile compensation
for a full-time employee, working in the state of Texas, with a
college degree, divided by 14.4, with that quotient then multiplied
by 1.. For any given year, the "60th percentile compensation," is
the annual compensation amount, including salary and benefits, for
the preceding year,expressed in current year U.S. dollars, as that
amount is periodically reported by the United States Department of
Labor, Bureau of Labor Statistics.
(c) The "Poverty Factor" is based on the child poverty rate
for the preceding year, for each given school district, as that rate
is calculated annually by the United States Department of
Education. The Poverty Factor equals one plus [2 X (child poverty
rate for the district - 0.11)2].
(d) The "Sparsity Factor" is based on the Sparsity of the
school district. "Sparsity" is calculated by dividing the
geographic area of the school district, expressed in square miles,
by the number students in refined average daily attendance in that
district for the current year. The "Sparsity Factor" equals one
plus 2 X {(Sparsity –0.10) /–by 100}].
(e) The "District's TIA Ability to Pay" is based on the
Aggregate Household Incomes, which is the sum of the income of all
people who live in the district, as reported by the Census of
Population and intercensal income estimates reported periodically
by the U.S. Government. It is also based on the Aggregate
Non-Residential Property Tax Base, which is the sum of the
appraised value of all non-residential property situated within the
school district. The "District's TIA Ability To Pay" is calculated
as the sum of (0.01125 X Aggregate Household Income) and (0.005 X
Aggregate Non-Residential Property Tax Base).
(f) The commissioner shall determine the Target Amount, and
each district's Poverty Factor, Sparsity Factor, and TIA Ability To
Pay, in accordance with the provisions of this chapter. All
districts shall be notified by the commissioner of its
determinations. The commissioner's determinations under this
subchapter are final and not appealable.
(g) A district that qualifies for an enhancement of its
Teaching and Instruction Allotment under both the Sparsity Factor
and the Poverty Factor is entitled to have both adjustments apply
for purposes of calculating its Teaching and Instruction Allotment.
(h) A district is entitled to a Teaching and Instruction
Allotment in the amount set forth in this section, or the Guaranteed
State Funds as provided in § 47.102 of this chapter, whichever is
greater.
Sec. 47.102. Guarantee of Historic Funding Levels
(a) For purposes of this subsection:
(1) A district's "Prior Education Funding" means the
funds the district was entitled to receive under Tier I and Tier II
of the former provisions of Chapter 42 of the Education Code for the
last full year before enactment of this Act;
(2) "Guaranteed State Funds Inflator" means one-half
(1/2) the percentage increase in the Texas Great Classroom Fund
Teaching and Instruction Allotment from the prior year, expressed
as a decimal, calculated according to the following formula:
0.5 x ((CTIA - PTIA) / PTIA)
where "CTIA" is the current year Teaching and
Instruction Allotment for the district, and "PTIA" is the prior
year Teaching and Instruction Allotment.
(3) For the five year period following the enactment
of this Act, a district's "Guaranteed State Funds" shall be
calculated according to the following formula:
GSF = PEF + (GSFI * PEF)
where "GSF" means a district's Guaranteed State Funds,
"PEF" means the district's Prior Education Funding, and "GSFI"
means the Guaranteed State Funds Inflator.
(4) After the five year period following the enactment
of this Act, a district's "Guaranteed State Funds" means the
district's Guaranteed State Funds as calculated for the fifth year
following the enactment of this Act.
(b) For each school district, the commissioner shall
determine the district's Prior Education Funding. All districts
shall be notified by the commissioner of the Prior Education
Funding determination.
(c) On an annual basis, the commissioner shall calculate and
publish the Guaranteed State Funds Inflator.
(d) If the Guaranteed State Funds for any school district
exceeds the district's Teaching and Instruction Allotment under
section 47.101, the district shall be entitled to the amount of its
Guaranteed State Funds in lieu of the teaching and instruction
allotment under section 47.101.
(e) The commissioner's determinations under this subchapter
are final and not appealable.
Sec. 47.103. Use of Teaching and Instruction Allotment
(a) A school district may use the teaching and instruction
allotment to which it is entitled under section 47.101 or section
47.102 only for purposes of teacher compensation and instructional
spending.
(b) Subject to the limitation imposed by subsection (a), a
school district is permitted to use its teaching and instruction
allotment for any purpose related to teacher compensation and/or
instructional spending, including, without limitation, to:
(1) increase teacher salaries;
(2) compensate selected teachers with merit pay;
(3) award select teachers with competitive grants;
(4) fund special programs to attract or retain
talented teachers;
(5) fund special programs to attract or retain
teachers with unique skills or abilities
(6) reduce average class size within the district;
(7) provide for remedial education
(8) provide special educational services to disabled
students
(9) provide for English language instruction
(c) A district may petition the commissioner for a
determination whether a proposed expenditure constitutes spending
on teacher compensation or instructional spending. The
commissioner's decision under this subsection is binding and not
appealable.
(d) A district shall set aside for future use any portion of
its teaching and instruction allotment not used during the current
academic year. Except as provided by section 47.104, such funds
shall not be used for any purpose other than teaching and
instruction.
(e) The commissioner shall adopt rules for the
administration of this section.
Sec. 47.104. Application for Waiver
(a) A district may apply to the commissioner for a waiver
permitting the district to spend a portion of its teaching and
instruction allotment for non-instructional purposes.
(b) The commissioner may grant a district a waiver for
non-instructional spending only if the district was receiving state
aid under former Chapter 42, Education Code.
SUBCHAPTER C: INSTRUCTIONAL FACILITIES
Sec. 47.201. Noninstructional Facilities
In adopting rules for the administration of this Chapter, the
commissioner's rules may limit the amount of an allotment under
this subchapter that is to be used to construct, acquire, renovate,
or improve an instructional facility that may also be used for
non-instructional or extracurricular activities.
Sec. 47.202. Basic Facilities Allotment
(a) For each academic year, a district is entitled to
receive, for each pupil in refined average daily attendance, a
basic instructional Facilities Allotment calculated according to
the following formula:
FA = [36 X (MPOP)] –[District's FA Ability To Pay]
where:
"FA" is the basic instructional Facilities Allotment to which
the district is entitled under this section;
"MPOP" is average market price for office space, expressed in
dollars per square foot and assuming a 10 year depreciation period,
in the relevant geographical area, as determined by the
commissioner using public or private cost estimates of the market
price for office space.
"District's FA Ability To Pay" is based on the Aggregate
Household Incomes andAggregate Non-Residential Property Tax Base
as those terms are defined in § 47.101 of this chapter. The
District's FA Ability To Pay is calculated as the sum of [0.0025 X
Aggregate Household Incomes] plus [0.001 X Aggregate
Non-Residential Property Tax Base].
Sec. 47.203. Adjustments to the Basic Facilities Allotment
(a) For purposes of this subsection:
(1) "Sparsity Factor" has the same definition in this
subsection as in § 47.101 of this chapter.
(2) "Enrollment Fluctuation Factor" equals one plus
[the "Percentage Enrollment Increase" - 0.10]. The "Percentage
Enrollment Increase" is calculated as the difference between the
district's enrollment in the current year, and the district's
enrollment five years ago, with that difference divided by the
district's enrollment five years ago, and expressed as a decimal.
(b) A district is entitled to an Enhanced Facilities
Allotment as calculated by the formula:
EFA =36 X (MPOP) X Sparsity Factor] –[District's FA
Ability To Pay]
or by the formula:
EFA = 36 X (MPOP) X Enrollment Fluctuation Factor] –
[District's FA Ability To Pay]
whichever is greater.
(c) No school district may apply both the Sparsity Factor
and the Enrollment Fluctuation Factor to enhance its Basic
Facilities Allotment. Any school district that has elected to apply
a Sparsity Factor to enhance its Basic Facilities Allotment in the
previous five years is not eligible to apply the Enrollment
Fluctuation Factor based on those same five years.
(d) Each year, the commissioner shall determine each
district's Enrollment Fluctuation Factor and Sparsity Factor in
accordance with the provisions of this act. All districts shall be
notified by the commissioner of its determinations. The
commissioner's determinations under this subchapter are final and
not appealable.
Sec. 47.204. New Instructional Facilities Allotment
(a) A school district is entitled to a new instructional
facilities allotment as provided by this section for operational
expenses associated with opening a new instructional facility.
(b) For the first school year in which students attend a new
instructional facility, a school district is entitled to an
allotment of $250 for each student in average daily attendance at
the facility. For the second school year in which students attend
that instructional facility, a school district is entitled to an
allotment of $250 for each additional student in average daily
attendance at the facility.
(c) For purposes of this section, the number of additional
students in average daily attendance at a facility is the
difference between the number of students in average daily
attendance in the current year at that facility and the number of
students in average daily attendance at that facility in the
preceding year.
(d) The total amount appropriated for allotments under this
section may not exceed $25 million in a school year. If the total
amount of allotments to which districts are entitled under this
section for a school year exceeds the amount appropriated for
allotments under this section, the commissioner shall reduce each
district's allotment under this section on a pro rata basis.
(e) The commissioner may adopt rules necessary to implement
this section.
Sec. 47.205. Use of Instructional Facilities Allotment
(a) Districts may use the instructional facilities
allotments awarded under this section only for the following
purposes:
(1) payments for construction, acquisition,
renovation, and improvement of an instructional facility;
(2) payments of principal and interest on bonds issued
solely to construct, acquire, renovate, or improve an instructional
facility; or
(3) payments under a lease-purchase agreement for an
instructional facility.
(b) A district shall set aside for future use any funds
allocated pursuant to sections 47.204 and 47.205 and not used
during the current academic year. Such funds shall not be used for
any purpose other than those specified in the previous subsection.
(c) The commissioner shall adopt rules for the
administration of this section.
Sec. 47.206. Standards
The commissioner shall establish standards for adequacy of
school facilities. The standards must include requirements related
to space, educational adequacy, and construction quality. All new
facilities constructed after September 1, 1998, must meet the
standards to be eligible to be financed with state or local tax
funds.
Sec. 47.207. Sale of Instructional Facility Financed With
State Funds
(a) If an instructional facility financed by bonds paid with
state and local funds under this subchapter is sold before the bonds
are fully paid, the school district shall send to the comptroller an
amount equal to the district's net proceeds from the sale
multiplied by a percentage determined by dividing the amount of
state funds used to pay the principal of and interest on the bonds
by the total amount of principal and interest paid on the bonds with
funds other than the proceeds of the sale.
(b) In this section:
(1) "net proceeds" means the difference between the
total amount received from the sale less:
(A) the amount necessary to fully pay the
outstanding principal of and interest on the bonds; and
(B) the school district's costs of the sale, as
approved by the commissioner;
(2) "state funds" includes facilities allotments made
pursuant to prior Chapter 46, Education Code, prior to the
effective date of this Act, and does not include funds allocated to
school districts pursuant to this Chapter after the effective date
of this Act.
Sec. 47.208. Applicability to Open-Enrollment Charter
Schools
An open-enrollment charter school is not entitled to an
allotment under this subchapter.
SUBCHAPTER D: DISTRIBUTION OF FUNDS BY THE COMMISSIONER
Sec. 47.301. Distribution of State Funds
(a) Each year the commissioner shall pay to each school
district:
(1) the teaching and instruction allotment to which
the district is entitled pursuant to section 47.101 or 47.102;
(2) the facilities allotment to which the district is
entitled pursuant to section 47.202 and 47.203; and
(3) the new instructional facilities allotment, if
any, to which the district is entitled pursuant to section 47.204.
(b) The commissioner shall distribute the allotments set
forth in subsection (a) on a quarterly basis. From time to time the
commissioner shall request from the comptroller sufficient funds
from which to make quarterly distributions to the respective school
districts. Upon receiving such request, the comptroller shall make
the requested funds available to the commissioner from the Texas
Great Classroom Fund.
SUBCHAPTER E: SUPPLEMENTATION
Sec. 47.401 Property Tax Rollback
(a) For purposes of this section:
(1) "Expected State Aid" for a district means the sum
of:
(A) the teaching and instruction allotment to
which the district will be entitled pursuant to sections 47.101 or
47.102;
(B) the facilities allotment to which the
district will be entitled pursuant to section 47.202 and 47.203;
and
(C) the new instructional facilities allotment
to which the district will be entitled pursuant to section 47.204.
(2) "Prior Education Budget" means the funds the
district was entitled to receive under Tier I and Tier II of the
former provisions of Chapter 42 of the Education Code, plus funds
the district raised from local ad valorem taxes, minus payments
made to the state pursuant to prior Chapter 41, Subchapter D,
Education Code, for the last full year before enactment of this Act.
(b) The commissioner shall calculate each district's
Expected State Aid for the 2004-2005 academic year, and shall
report the calculated amount to each district no later than March
31, 2004.
(c) As a precondition to receiving any educational funds
pursuant to section 47.301 after January 1, 2005, each district
must reduce its ad valorem tax rate as follows:
(1) if a district's Expected State Aid for 2004-2005
exceeds the district's Prior Education Budget, the district's ad
valorem tax must be eliminated;
(2) if a district's Expected State Aid for 2004-2005 is
less than the district's Prior Education Budget, the district's ad
valorem tax must be reduced by an amount such that the new tax rate
will generate revenue approximately equivalent to the difference
between the district's Prior Education Budget and Expected State
Aid for 2004-2005.
(d) No later than December 31, 2004, each district shall
certify to the commissioner that it has complied with the
requirements of subsection (c).
(e) The commissioner shall verify that a district has
complied with this section before distributing any funds to the
district pursuant to section 47.301 after December 31, 2004.
Sec. 47.402. Local Supplementation
After a district has complied with the requirements of
section 47.401, the district may levy ad valorem taxes in
accordance with the provisions of section 45.003 in order to
supplement the state funds distributed pursuant to section 47.301,
provided, however, that 10% of any such supplemental amount is
remitted annually to the State of Texas. The State shall place such
funds to the credit of the Competitive Grant Fund. A school district
that is entitled, for any given year, to receive grants under the
Competitive Grant Fund, Section 47.504 of this Act, is not required
to remit 10% of its supplemental amount to the State.
SUBCHAPTER F: OTHER PROVISIONS
Sec. 47.501. Average Daily Attendance
(a) A district's average daily attendance is equal to the
quotient of the sum of attendance for each day of the minimum number
of days of instruction as described under section 25.081(a) divided
by the minimum number of days of instruction.
(b) A school district that experiences a decline of two
percent or more in average daily attendance shall be funded on the
basis of:
(1) the actual average daily attendance of the
preceding school year, if the decline is the result of the closing
or reduction in personnel of a military base; or
(2) subject to Subsection (e), an average daily
attendance not to exceed 98 percent of the actual average daily
attendance of the preceding school year, if the decline is not the
result of the closing or reduction in personnel of a military base.
(c) The commissioner shall adjust the average daily
attendance of a school district that has a significant percentage
of students who are migratory children as defined by 20 U.S.C.
section 6399.
(d) The commissioner may adjust the average daily
attendance of a school district in which a disaster, flood, extreme
weather condition, fuel curtailment, or other calamity has a
significant effect on the district's attendance.
(e) For each school year, the commissioner shall adjust the
average daily attendance of school districts that are entitled to
funding on the basis of an adjusted average daily attendance under
Subsection (b)(2) so that:
(1) all districts are funded on the basis of the same
percentage of the preceding year's actual average daily attendance;
and
(2) the total cost to the state does not exceed the
amount specifically appropriated for that year for purposes of
Subsection (b)(2).
Sec. 47.502. Public Education Information Management
System (PEIMS)
(a) Each school district shall participate in the Public
Education Information Management System (PEIMS) and shall provide
through that system information required for the administration of
this Act and of other appropriate provisions of this code.
(b) Each school district shall use a uniform accounting
system adopted by the commissioner for the data required to be
reported for the Public Education Information Management System.
(c) Annually, the commissioner shall review the Public
Education Information Management System and shall repeal or amend
rules that require school districts to provide information through
the Public Education Information Management System that is not
necessary. In reviewing and revising the Public Education
Information Management System, the commissioner shall develop
rules to ensure that the system:
(1) provides useful, accurate, and timely information
on student demographics and academic performance, personnel, and
school district finances;
(2) contains only the data necessary for the
legislature and the agency to perform their legally authorized
functions in overseeing the public education system; and
(3) does not contain any information related to
instructional methods, except as required by federal law.
Sec. 47.503. Limit on Administrative Costs
(a) The commissioner by rule shall determine annually:
(1) an administrative cost ratio for school districts
with fewer than 500 students in average daily attendance;
(2) an administrative cost ratio for school districts
with 500 to 999 students in average daily attendance;
(3) an administrative cost ratio for school districts
with 1,000 to 4,999 students in average daily attendance;
(4) an administrative cost ratio for school districts
with 5,000 to 9,999 students in average daily attendance; and
(5) an administrative cost ratio for school districts
with more than 10,000 students in average daily attendance.
(b) The commissioner may adjust the administrative cost
ratio of a district to allow for additional administrative costs
required by:
(1) the sparsity of the district; or
(2) students with special needs.
(c) Not later than February 1 of each year, the commissioner
shall notify all districts of the requirements and standards for
determining administrative cost ratios for the following year. Not
later than May 1 of each year, agency staff shall conduct a desk
audit of prior-year expenditure data available through the Public
Education Information Management System (PEIMS) to identify those
districts whose administrative cost ratio in the preceding year
exceeded their adjusted group standard. Districts with an
administrative cost ratio in excess of their adjusted group
standard shall be notified not later than May 15 that they have
excessive administrative costs and that they are required to reduce
these costs to the level of the adjusted group standard for the
following school year. Not later than the 60th day after receiving
notification, a district shall respond to the commissioner by
submitting a description of the district's plan to comply with the
standard for the following year or request a waiver from the
commissioner explaining why the district cannot comply with the
standard. Not later than August 15, the commissioner shall notify
responding districts if further action is needed.
(d) If a school district fails to reduce administrative
costs to the level required by this section, the commissioner shall
deduct from a school district's teaching and instruction allotment
an amount equal to the amount by which the district's
administrative costs exceed the amount permitted by its
administrative cost ratio, unless the commissioner has granted a
waiver in response to the district's request.
(e) The commissioner may grant a waiver to a school district
that exceeds its administrative cost ratio if the excess is
justified by unusual circumstances.
(f) A school district shall include a statement of any
amount withheld under Subsection (d) in the district report
required by section 39.053.
(g) In this section:
(1) "Administrative cost ratio" means a school
district's administrative costs divided by its instructional
costs, expressed as a percentage.
(2) "Administrative costs" are defined as operating
expenses made from funds other than federal funds associated with
managing, planning, directing, coordinating, and evaluating a
school district in accordance with Accounting functions
21--Instructional Leadership, and 41--General Administration, as
described in the Financial Accountability Resource guide, Bulletin
679, Module 1: Financial Accounting and Reporting, First Edition,
published by the Texas Education Agency.
(3) "Instructional costs" are defined as operating
expenses made from funds other than federal funds associated with
teacher-student instruction in accordance with Accounting
functions 11--Instruction, 12--Instructional Resources and Media
Services, 13--Curriculum Development and Instructional Staff
Development, and 31--Guidance and Counseling Services, as
described in the Financial Accountability Resource guide, Bulletin
679, Module 1: Financial Accounting and Reporting, First Edition,
published by the Texas Education Agency.
(4) "Adjusted group standard" is the acceptable
administrative cost ratio for each district as determined in
accordance with Subsections (a) and (b).
Sec. 47.504 Competitive Grant Program
(a) School districts whose annual average household income
level falls within the lowest 25% of the annual average household
incomes of school districts within this State may be awarded
Competitive Grants under the Competitive Grant Program.
(b) All grants under this program must be used for the
benefit of disadvantaged students who (i) are currently enrolled in
the Texas public education system or (ii) have graduated from the
Texas public education system. A disadvantaged student who
graduated from a private institution with the assistance of monies
provided by any State-funded voucher program shall be considered to
have graduated from the Texas public education system for the
purposes of this provision.
(c) Such grants must be used for either the purchase of
education technology or for student scholarships.
(d) A five member Commission shall be established to
administer and oversee the Competitive Grant Program, and shall
have the power to develop all rules necessary to implement the
program in accordance with the guidelines specified in this
section. One commissioner shall be appointed by the Governor, one
commissioner shall be appointed by the Lieutenant Governor, one
commissioner shall be appointed by the Speaker of the House, one
commissioner shall be appointed by the Commissioner of Education,
and one commissioner shall be appointed by Chair of the State Board
of Education. The commissioners shall serve for a term of two years.
(e) The Competitive Grant Program shall be funded by the
Competitive Grant Fund created pursuant to section 403.1035,
Government Code.
Sec. 47.505. School Nutrition Program
(a) The Agriculture Commissioner and the Education
Commissioner shall together develop rules and guidelines to
establish and administer a program to ensure that students in the
public schools have access to foods meeting a minimal nutritional
level, to encourage students to eat a balanced and nutritious diet,
and to discourage students from consuming an excessive amount of
foods determined by the Commissioners to be of sub-standard
nutritional value. This program shall be referred to as the "School
Nutrition Program."
(b) Pursuant to eligibility rules established by the
Commissioner of Education and the Commissioner of Agriculture, each
school district shall be to eligible to receive funding from the
Texas Great Classroom Fund, pursuant to Section 403.1035(g) of the
Government Code, provided that this funding does not exceed $30 per
pupil in refined average daily attendance per year, for each year
that such district shall participate in the School Nutrition
Program.
SUBCHAPTER G: TEXAS TEACHERS SCHOLARSHIP PROGRAM
Sec. 47.601. Definitions
In this subchapter,
(a) "Board" means the Texas Teachers Accreditation Board or
such other board as shall be established by the Texas Teachers
Accreditation Board for the express purpose of establishing and
administering the Texas Teachers Scholarship Program established
in Section 47.602 of this code.
(b) "Board rules" means rules established by the Board in
accordance with this subchapter.
(c) "Graduate study" means full-time enrollment in a public
or private institution of higher education for the purpose of
obtaining a graduate degree in education.
(d) "Public or private institution of higher education"
means an institution of higher education or a private college or
university accredited by a recognized accrediting agency.
(e) "Undergraduate study" means full-time enrollment in a
public or private institution of higher education for the purpose
of obtaining an undergraduate degree in education.
Sec. 47.602. Scholarship Program
(a) The Board shall establish and administer, in accordance
with this subchapter and Board rules, a scholarship program known
as the Texas Teachers Scholarship Program, the purpose of which is
to provide financial assistance to persons desiring to become
teachers.
(b) The Texas Teachers Scholarship Program shall be
established and administered in a manner that the Board determines
best promotes the educational needs of this state.
(c) The Board shall adopt reasonable rules, consistent with
the purposes of this subchapter, to carry out and enforce the
requirements expressed by this subchapter.
Sec. 47.603. Award of Scholarship
(a) The Board shall award the following scholarships to
persons who meet the criteria established under this subchapter and
Board rules:
(1) a scholarship of $10,000 per year for four
academic years of full-time undergraduate study; and
(2) a scholarship of $10,000 per year for two academic
years of full-time graduate study.
(b) A scholarship awarded under this section may be used
only for payment of tuition, textbooks, and room and board.
Sec. 47.604. Eligibility
(a) The Board shall establish criteria for selecting
persons to receive the scholarships. The criteria may include:
(1) scholastic ability and performance;
(2) financial need;
(3) the geographical area in which the person is
likely to teach upon graduation;
(4) the type of certificate or academic degree held or
pursued; or
(5) any additional factors the Board considers
relevant to promoting the educational needs of the state.
(b) To be eligible to receive funds, a person must satisfy
the eligibility requirements established by the Board in accordance
with subsection (a) and
(1) apply for a scholarship each year on a form and in
the manner provided by Board rules;
(2) retain good academic standing, as required by
Board rules;
(3) commit to teaching full-time in a Texas public
school for a certain period of time in accordance with the terms of
Section 47.605; and
(4) meet any other reasonable requirements
established by Board rules.
Sec. 47.605. Repayment of Scholarship Funds
(a) Scholarship recipients must teach full-time in a Texas
public school for a period of
(1) five academic years, for those persons receiving
undergraduate scholarships; or
(2) three academic years, for those persons receiving
graduate scholarships.
(b) If a scholarship recipient fulfills his or her teaching
commitment under subsection (a), then such recipient will not be
required to repay any of the scholarship funds received.
(c) If scholarship recipient does not fulfill his or her
teaching commitment under subsection (a), then such recipient must
pay back to the Board part or all of the scholarship funds received
in accordance with Board rules.
Sec. 47.606. Appropriations and Funding
(a) Scholarships provided under this subchapter shall be
paid solely from funds received by the Board from funds
appropriated for the Texas Great Classroom Fund as provided in
chapter 47 of this code and from any gifts, grants, and donations
solicited and accepted by the Board for purposes of this
subchapter.
SUBCHAPTER H: THE TEXAS NATURE PROGRAM
Sec. 47.701. Definitions
In this subchapter,
(a) "Commissioner" means the Commissioner of Education.
(b) "Natural park" includes:
(1) Texas state parks;
(2) national parks in Texas; and
(3) other areas of natural preservation or natural
beauty in Texas.
(c) "Program" means the Texas Nature Program.
Sec. 47.702. Establishment
In order to foster an appreciation and respect for the
natural resources of Texas and to allow students who may not
otherwise be able to experience the natural beauty of Texas to see
it first-hand, the commissioner shall establish a program to
distribute appropriated funds to low-income schools and those
schools in the inner city for the purpose of allowing students to
visit natural parks.
Sec. 47.703. Application
(a) A low-income school may request funds for the purpose of
allowing students to visit a natural park.
(b) A request shall be made by application to the
commissioner. The commissioner shall determine the form of the
application.
(c) The commissioner shall determine by rule the definition
of a "low-income school" and an "inner city school " keeping in mind
the best interests of the students and the purpose and goals of the
program.
Sec. 47.704. Distribution
(a) The commissioner shall freely grant reasonable requests
for funds.
(b) In determining whether a request is reasonable, the
commissioner shall consider:
(1) the purpose and goals of the program;
(2) the amount of funds requested;
(3) the cost effectiveness of the planned visit;
(4) the needs of other low-income schools or inner
city schools;
(5) previous amounts distributed to the requesting
school; and
(6) the availability of funds.
Sec. 47.705 The Rules
The commissioner shall adopt rules for the administration of
this subchapter.
SUBCHAPTER I: EARLY CHILDHOOD DEVELOPMENT PROGRAM
Sec. 47.801.
For purposes of this subchapter, a "qualified provider" is a
public or private child care provider that:
(a) provides full-day child care to pre-kindergarten
children; and
(b) either:
(1) meets the Texas Rising Star Provider criteria as
described by Title 40, Part 20, Section 809.15(b) of the Texas
Administrative Code; or
(2) is accredited by the National Association for the
Education of Young Children.
Sec. 47.802.
The Commission of Education shall establish a program by
which qualified providers may apply for and receive a $4,500
voucher for each qualified participant enrolled in the qualified
provider's child care program.
Sec. 47.803.
For purposes of this Subchapter, a "qualified participant" is
a child whose household income is at or below 200% of the federal
poverty level.
SUBCHAPTER J: TEXAS NURSING SCHOLARSHIP PROGRAM
Sec. 47.901. Definitions.
In this subchapter,
(a) "Board" means the board that handles nursing licenses in
the State of Texas or as shall be established by that board for the
express purpose of establishing and administering the Texas Nursing
Scholarship Program established in Section 47.902 of this code.
(b) "Board rules" means rules established by the Board in
accordance with this subchapter.
(c) "Graduate study" means full-time enrollment in a public
or private institution of higher education for the purpose of
obtaining a graduate degree in education.
(d) "Public or private institution of higher education"
means an institution of higher education or a private college or
university accredited by a recognized accrediting agency.
(e) "Undergraduate study" means full-time enrollment in a
public or private institution of higher education for the purpose
of obtaining an undergraduate degree in education.
Sec. 47.902. Scholarship Program
(a) The Board shall establish and administer, in accordance
with this subchapter and Board rules, a scholarship program known
as the Texas Nursing Scholarship Program, the purpose of which is to
provide financial assistance to persons desiring to become nurses.
(b) The Texas Nursing Scholarship Program shall be
established and administered in a manner that the Board determines
best promotes the nursing needs of this state.
(c) The Board shall adopt reasonable rules, consistent with
the purposes of this subchapter, to carry out and enforce the
requirements expressed by this subchapter.
Sec. 47.903. Award of Scholarship
(a) The Board shall award the following scholarships to
persons who meet the criteria established under this subchapter and
Board rules:
(1) a scholarship of $10,000 per year for four
academic years of full-time undergraduate study towards an
accredited nursing degree
(b) A scholarship awarded under this section may be used
only for payment of tuition, textbooks, and room and board.
Sec. 47.904. Eligibility
(a) The Board shall establish criteria for selecting
persons to receive the scholarships. The criteria may include:
(1) scholastic ability and performance;
(2) financial need;
(3) the geographical area in which the person is
likely to nurse upon graduation;
(4) the type of certificate or academic degree held or
pursued; or
(5) any additional factors the Board considers
relevant to promoting the nursing needs of the state.
(b) To be eligible to receive funds, a person must satisfy
the eligibility requirements established by the Board in accordance
with subsection (a) and
(1) apply for a scholarship each year on a form and in
the manner provided by Board rules;
(2) retain good academic standing, as required by
Board rules;
(3) commit to nursing full-time in a Texas public or
county hospital for a certain period of time in accordance with the
terms of Section 47.605; and
(4) meet any other reasonable requirements
established by Board rules.
Sec. 47.905. Repayment of Scholarship Funds
(a) Scholarship recipients must nurse full-time in a Texas
public or county hospital for a period of five years.
(b) If a scholarship recipient fulfills his or her nursing
commitment under subsection (a), then such recipient will not be
required to repay any of the scholarship funds received.
(c) If scholarship recipient does not fulfill his or her
nursing commitment under subsection (a), then such recipient must
pay back to the Board part or all of the scholarship funds received
in accordance with Board rules.
Sec. 47.906. Appropriations and Funding
Scholarships provided under this subchapter shall be paid
solely from funds received by the Board from funds appropriated for
the Texas Great Classroom Fund as provided in chapter 47 of this
code and from any gifts, grants, and donations solicited and
accepted by the Board for purposes of this subchapter.
SUBCHAPTER K: INCENTIVES FOR SCHOOL CAMPUSES
[In conformity with the February 2004 Koret Task Force Report
on K-12 Education, with specific details to be included later, this
subchapter provides financial incentives to those school campuses
that are successful in raising student achievement. Such incentives
will be funded by $1.0 billion as provided in section _____ of this
Act. Fifty percent of such funds will be devoted to financial
incentives for these campuses.
Campuses will qualify for such incentives on the basis of
objective, quantitative information about student performance on
these campuses, including TAKS scores or other objective test
results. School campuses will qualify for such financial
incentives in one of two distinct ways. First, a campus may be
rewarded incentives for successfully achieving a high level of
student achievement. Second, a campus may qualify for incentives by
making significant improvements in overall student performance,
even if the aggregate level of student achievement is not as high as
the achievement level of other campuses.
The fundamental concept for evaluating and awarding
incentives is the "value-added" of the school campus. Value-added
refers to the contribution of that school campus to the educational
performance of its students over and above the educational
achievement that would be expected of the students given their
native language, family income, parents' education, and other
factors beyond the control of the school campus. In other words, the
"value added" metric will be designed to reward those school
campuses that succeed in making a relatively greater improvement
than another school campus, after adjusting for factors that are
beyond the school campus's control such as native language, family
income, and parents' education.
The rewards for campuses program will operate in conjunction
with the Professional Contract Program set forth in subchapter L.
Conforming amendments or changes may be made to
subchapter F §§ 47.504, 47.505 of this Act.]
SUBCHAPTER L: THE PROFESSIONAL CONTRACT FOR TEACHERS AND
PRINCIPALS, AND DEREGULATION OF LICENSING
[In conformity with the February 2004 Koret Task Force Report
on K-12 Education, with specific details to be included later,
teachers and principals will be eligible for generous
performance-based incentives if they agree to terminate their
current teacher contract and instead accept a new Professional
Contract. Such incentives will be funded by $1.0 billion as
provided in section _____ of this Act. Fifty percent of such funds
will be devoted to financial incentives to teachers and principals
who opt to work under a Professional Contract.
The incentives made available under the Professional
Contract will be based on the concept of "value-added," as measured
by objective, quantitative test information and in conformity with
subsection K of this Act. The incentives shall also be based on
input from supervisors and parents.
A school district may develop its own plan for rewarding
teachers and principals who opt to work under a Professional
Contract, subject to approval by the Commissioner of Education. The
State of Texaswill develop a default plan for those districts that
choose not to develop a custom plan. In general, 50% to 60% of the
incentives will be based on the quantitatively-measured
"value-added" performance of the teacher or principal, 10% to 25%
will be based on a supervisor's evaluation, and 5% to 15% will be
based on evaluations of the teacher or principal by parents.
The Professional Contract Program will be designed to reward
teachers and principals who succeed in either (i) creating a high
level of student achievement or (ii) those who succeed in achieving
a significant increase in average student achievement relative to
prior years (even if those achievement levels are not as high as
those in other schools or districts). Furthermore, in order to
reward superior teachers in substandard school districts, teachers
will be eligible for such incentives even if the school or district
in which they work is not eligible.
The Professional Contract that entitles a principal or
teacher to receive the performance incentives described in this
subchapter shall decouple pay from seniority, will eliminate job
protection based on seniority, and be an at-will employment
contract. School districts will be encouraged to customize their
Professional Contracts and use them as opportunities for
innovation. In addition to monetary incentives, those opting for
the Professional Contract will be eligible for an exemption from
ertain licensing or other educational regulations.
This subchapter shall also provide for changes in the current
statewide licensing and certification process so that it is based
on those criteria for which the empirical data shows a correlation
between the licensing or certification criteria and actual teacher
quality. The statewide training requirements may not necessarily be
uniform across the state. In general, this subsection will provide
districts with the ability to experiment with new ways of training
and certifying teachers and principals, as well as new ways of
assigning, compensating, and evaluating them. This subsection will
also provide for a more active recruitment of potential school
principals in fields other than education.]
SUBCHAPTER M: CHARTER SCHOOLS
[In conformity with the February 2004 Koret Task Force Report
on K-12 Education, with specific details to be included later, this
subsection will create a new system of charter schools for students
inTexas, especially those students located in urban areas. It will
eliminate the current cap on the number of charter schools in Texas
(currently 236). The cap will be eliminated in order to encourage
competition between the charter schools and the public schools,
based on the principle that such healthy competition between
conventional public schools and charter schools will improve
overall educational quality.
This subsection will be drafted to encourage the formation of
multi-campus charter schools, and also to encourage the formation
of charter school "franchisers." A multi-charter school will permit
efficiency gains because it may be run by a single board and set of
managers that operate multiple charter school campuses. Likewise,
efficiency is promoted by encouraging the creation of franchisers
that have responsibility for centralized management tasks (real
estate acquisition; facilities maintenance; repair and
construction; purchasing; budgeting; student recordkeeping;
fulfilling state reporting requirements; development of curricula
and purchasing of educational materials; selection of curriculum
and textbooks; evaluation; staff development; private fundraising;
special and bilingual educational services; compliance with laws,
safety codes, and payroll regulations; marketing and public
relations; testing and accountability; data management; and
contracting).
Such charter school franchisers may be modeled on the Chicago
International Charter School in Illinois, which supervises three
educational management organizations operating seven campuses.
This subsection will impose no limits on the number of campuses that
may be operated by a multi-campus charter school or charter
franchiser, so long as its schools demonstrate success and meet
otherwise applicable legal, financial or other requirements.]
SUBCHAPTER N: SCHOOL BOARD ELECTIONS
[In conformity with the February 2004 Koret Task Force Report
on K-12 Education, with specific details to be included later, this
subsection shall enact certain amendments or additions to the Texas
Election Code to provide that school board elections, and school
bond elections, shall be held at the same time as general elections
(i.e. in November of even numbered years). This subsection will
provide that Texas school board members shall serve for four-year
terms, staggered in such a way that one-half of school board seats
shall be filled during each general election. This subsection will
also require school board candidates to declare their party
affiliation and incumbency status on the ballot, and prohibits
school district employees from serving on school boards in the
districts where they work.]
SUBCHAPTER O: THE TESTING OF READING
[In conformity with the February 2004 Koret Task Force Report
on K-12 Education, with specific details to be included later, this
subsection directs the Commissioner of Education to structure the
TAKS reading test so that it will be based on the vocabulary and
content of the school's curriculum for the appropriate grade level.
The TAKS test requirement will be designed to facilitate a
student's comprehension of the school's curriculum for that grade
level, rather than being based on the reading of arbitrary passages
(which promotes an excessive emphasis on the teaching of formal
reading strategies). The Commissioner is directed to design a TAKS
reading test that refers to grade level content in history,
science, art, and literature as specified by the TEKS content
standards.]
SUBCHAPTER P: ACCOUNTABILITY
[In conformity with the February 2004 Koret Task Force Report
on K-12 Education, with specific details to be included later, this
subsection directs the Commissioner to gradually raise various
objective standards used to assess educational quality within Texas
public schools. In general, the Commissioner is directed to raise
the proficiency bar for TAKS to ensure rigorous testing standards
for 2004, 2005 and beyond; to accelerate the Annual Measurable
Objectives under the federal No Child Left Behind Act; to account
for student achievement growth in various assessment standards (in
order to identify and reward schools that are successfully raising
the achievement level of their students); to exempt successful
schools from certain otherwise applicable regulations; to design a
program of campus recognition and rewards that are tied to
individual students; to phase in computer-assisted testing where
possible (to eliminate "ceiling" problems for gifted individual
students) and to make it more difficult to "teach to the test."]
SECTION 6. Section 11.202, Education Code, is amended to
read as follows:
(a) The principal of a school is the instructional leader of
the school and shall be provided with adequate training and
personnel assistance to assume that role.
(b) Each principal shall:
(1) except as provided by Subsection (d), approve all
teacher and staff appointments for that principal's campus from a
pool of applicants selected by the district or of applicants who
meet the hiring requirements established by the district, based on
criteria developed by the principal after informal consultation
with the faculty;
(2) set specific education objectives for the
principal's campus, through the planning process under Section
11.253;
(3) develop budgets for the principal's campus;
(4) assume the administrative responsibility and
instructional leadership, under the supervision of the
superintendent, for discipline at the campus;
(5) assign, evaluate, promote, and demote personnel
assigned to the campus;
(6) determine and communicate to the superintendent on
the termination or suspension of an employee assigned to the campus
or the nonrenewal of the term contract of an employee assigned to
the campus which can only be overruled by a 2/3 majority vote of the
board of trustees; and
(7) perform other duties assigned by the
superintendent pursuant to the policy of the board of trustees.
(c) The board of trustees of a school district shall adopt a
policy for the selection of a campus
principal that includes qualifications required for that position.
(d) The superintendent or the person designated by the
superintendent has the final placement authority for a teacher
transferred because of enrollment shifts or program changes in the
district.
SECTION 7. Section 45.003, Education Code, is amended to
read as follows:
45.003. Bond and Tax Elections
(a) Bonds described by Section 45.001 may not be issued and
taxes described by Section 45.001, [or] 45.002, or 47.402 may not be
levied unless authorized by [a majority of the qualified voters of
the district] the percentage of qualified voters of the district
specified in subsection (e), voting at an election held for that
purpose, at the expense of the district, in accordance with the
Election Code, except as provided by this section. Each election
must be called by resolution or order of the governing board or
commissioners court. The resolution or order must state the date of
the election, the proposition or propositions to be submitted and
voted on, the polling place or places, and any other matters
considered necessary or advisable by the governing board or
commissioners court.
(b) A proposition submitted to authorize the issuance of
bonds must include the question of whether the governing board or
commissioners court may levy, pledge, assess, and collect annual ad
valorem taxes, on all taxable property in the district, either:
(1) sufficient, without limit as to rate or amount, to
pay the principal of and interest on the bonds; or
(2) sufficient to pay the principal of and interest on
the bonds, provided that the annual aggregate bond taxes in the
district may never be more than the rate stated in the proposition.
(c) If bonds are ever voted in a district pursuant to
Subsection (b)(1), then all bonds thereafter proposed must be
submitted pursuant to that subsection, and Subsection (b)(2) does
not apply to the district.
(d) A proposition submitted to authorize the levy of
maintenance taxes must include the question of whether the
governing board or commissioners court may levy, assess, and
collect annual ad valorem taxes for the further maintenance of
public schools, at a rate not to exceed the rate, which may be not
more than [$1.50] $1.25 on the $100 valuation of taxable property in
the district, stated in the proposition.
(e) A proposition put to the district's voters pursuant to
subsection (a) shall be deemed approved:
(1) for propositions relating to the issuance of bonds
pursuant to section 45.001(a)(1), only if the proposition is
authorized by a majority of those actually voting in the election;
(2) for propositions to authorize an ad valorem tax of
not more than $1.25 on the $100 valuation of taxable property in the
district, only if approved by a majority of those actually voting in
the election;
(3) no district may propose an ad valorem tax of more
than $1.25 on the $100 valuation of taxable property in the
district.
SECTION 8. Amend the following sections of the Education
Code for conformity: Sections 12.029, 29.001, 29.014, 29.203,
37.011, and 56.208.
SECTION 9. Amend the following sections of the Government
Code for conformity: Sections 317.005, 322.008, 403.302, 403.303,
404.121, 466.355, 825.405, 1371.001, 1402.143, 1431.001, and
2175.304.
SECTION 10. Amend the following sections of the Tax Code for
conformity: 6.02, 6.03, 21.01, 21.02, 25.25, 26.08, 312.002,
312.210, and 313.026.
SECTION 11. Amend the following section of the Utilities
Code for conformity: 39.901.
ARTICLE 2: TEXAS GREAT CLASSROOM FUND
SECTION 1. Section 403.1035, Chapter 403, Subtitle A, Title
4, Government Code is added to read as follows:
403.1035. Permanent Fund for Texas Great Classroom Program
(a) A permanent fund for the implementation of the Texas
Great Classroom Program is established as a dedicated account in
the general revenue fund. The fund shall be referred to as the
"Texas Great Classroom Fund". The fund is composed of:
(1) the balance of the foundation school fund at the
time the Texas Great Classroom Fund is established;
(2) subsequent transfers to the foundation school
fund;
(3) money transferred to the fund at the direction of
the legislature;
(4) gifts and grants contributed to the fund;
(5) collections of fees, taxes, and other amounts
designated as amounts to be transferred to the fund;
(6) transfers from special accounts or other funds as
amounts designated for the funding of the Texas Great Classroom
Program;
(7) the available earnings of the fund determined in
accordance with Section 403.1068.
(b) Money in the fund may not be appropriated for any
purpose other than to fund the Texas Great Classroom Program as
provided in Chapter 47, Education Code.
(c) The available earnings of the fund may be appropriated
to the Commissioner of Education in amounts necessary to fund the
Texas Great Classroom Program as provided by Chapter 47, Education
Code.
(d) The comptroller may solicit and accept gifts and grants
to the fund. A gift or grant to the fund may be appropriated in the
same manner as available earnings of the fund, subject to any
limitation or requirement placed on the gift or grant by the donor
or granting entity.
(e) Sections 403.095 and 404.071 do not apply to the fund.
(f) The following special accounts shall be established
within the Texas Great Classroom Fund, as follows:
(1) Early Childhood Development Fund, provided such
fund is dedicated to funding the Texas Early Childhood Program
created pursuant to section 47.802, Subchapter I, Chapter 47,
Education Code;
(2) Texas Teachers Scholarship Fund, provided such
fund is dedicated to funding the Texas Teacher Scholarship Program
created pursuant to section 47.602, Subchapter G, Chapter 47,
Education Code;
(3) Texas Nursing Scholarship Fund, provided such fund
is dedicated to funding the Texas Nursing Scholarship Program
created pursuant to section 47.902, Subchapter J, Chapter 47,
Education Code;
(4) Education Reserve Account;
(5) Competitive Grant Fund;
(6) Texas Nature Fund, provided such fund is dedicated
to funding the Texas Nature Program created pursuant to section
47.701, Subchapter H, Chapter 47, Education Code; and the
(7) Education Rewards and Incentives Fund, provided
such fund is dedicated to funding the Education Rewards and
Incentives Program created pursuant to section 47.___, Subchapter
K, Chapter 47, Education Code.
(g) On an annual basis, the comptroller shall distribute all
surplus education funds as provided in this section. For purposes
of this section "surplus education funds," means any revenue
dedicated to the Texas Great Classroom Fund during the previous
year and not spent during such previous year to meet the
requirements of the Texas Great Classroom Program. Such surplus
education funds shall be allocated and distributed in the following
order of priority such that items of higher priority shall be fully
funded up to the specified level before items of lower priority are
funded:
(1) An amount not to exceed $1 billion to the Education
Rewards and Incentives Fund;
(2) An amount necessary to fund the School Nutrition
Program created and administered pursuant to section 47.506,
Subchapter F, Chapter 47, Education Code
(3) An amount not to exceed $500 million to the Early
Childhood Development Fund;
(4) An amount not to exceed $250 million to the
Children's Health Insurance Program; ("CHIP"), authorized by
Chapters 62 & 63, Subtitle C, Title 2, Health & Safety Code and
Chapter 370, Part 15, Title 1, Administrative Code at Title 1, Part
15, Chapter 370;
(5) An amount not to exceed $12 million to be
distributed equally among the following:
(A) the Master Reading Program created pursuant
to section 21.410, Subchapter I, Chapter 21, Subtitle D, Title 2,
Education Code;
(B) the Master Mathematics Program created
pursuant to section 21.411, Subchapter I, Chapter 21, Subtitle D,
Title 2, Education Code;
(C) the Master Technology Program created
pursuant to section 21.411, Subchapter I Chapter 21, Subtitle D,
Title 2, Education Code; and
(D) the Master Science Teacher Program created
pursuant to section 21.413, Subchapter I, Chapter 21, Subtitle D,
Title 2, Education Code.
(6) Equal amounts to the Texas Student Ambassador
Program and the Texas Nature Fund, provided the combined amounts do
not exceed $2 million;
(7) An amount not to exceed $50 million to the Texas
Teachers Scholarship Fund;
(8) An amount not to exceed $50 million to the Texas
Nursing Scholarship Fund;
(9) All remaining surplus education funds to be added
to the Education Reserve Account.
(h) At no time may the balance of the Education Reserve
Account exceed ten percent (10%) of the revenue dedicated to the
Texas Great Classroom Fund during the previous year. The
comptroller shall distribute one-half of any excess funds of the
Education Reserve Account to the Competitive Grant Fund and the
remainder to the Economic Stabilization Fund created pursuant to
Article III, Section 49-g of the Constitution.
(i) At no time may the Competitive Grant Fund exceed an
amount equal five percent (5%) of the revenue dedicated to the Texas
Great Classroom Fund during the previous year. The comptroller
shall distribute any excess funds to the principal amount of the
Permanent School Fund.
(j) In the event the Texas Great Classroom Fund is
insufficient to make available the funds requested by the
Commissioner of Education pursuant to section 47.301(b), Education
Code, to fund the Texas Great Classroom Program for any year, the
comptroller shall make the requested funds available, to the extent
such funds are available from the following accounts in the order
specified:
(1) the Foundation School Fund,
(2) the Education Reserve Account,
(3) the Available School Fund, and
(4) the Permanent School Fund.
SECTION 2. Section 403.1068(a), Chapter 403, Subtitle A,
Title 4, Government Code is amended to read as follows:
403.1068. Management of Certain Funds
(a) This section applies only to management of the permanent
funds established under Sections 403.1035, 403.105, 403.1055,
403.106, 403.1065, and 403.1066.
SECTION 3. Subsection (d) of Section 403.093, Subchapter F,
Chapter 403, Subtitle A, Title 4, Government Code are amended as
follows:
403.093. Allocations From General Revenue Fund
(d) To the extent not specifically transferred to the Texas
Great Classroom Fund upon receipt, all net revenues allocated or
specifically dedicated to the Texas Great Classroom Fund from taxes
imposed by Chapters 150, 151, 152, and 172, Tax Code, shall be
deposited to the credit of the general revenue fund. The
comptroller, as a ministerial duty on the 10th day of each month and
on the last day of each fiscal year, shall transfer from the general
revenue fund to the [foundation school fund] Texas Great Classroom
Fund amounts computed by the comptroller equal to the amounts
required by each such chapter and the amount of any additional money
necessary to fund the [foundation school program] Texas Great
Classroom Program as provided by Chapter [42] 47, Education Code.
[The comptroller shall make the transfers in installments as
necessary to comply with Section 42.259, Education Code. An
installment must be made not earlier than two days before the date
an installment to school districts is required by Section 42.259,
Education Code, and must not exceed the amount necessary for that
payment.]
SECTION 4. Subsections (a) and (b), Section 1402.143,
Subchapter H, Chapter 1402, Subtitle G, Title 9, Government Code,
are amended to read as follows:
1402.143. Deduction From Foundation School Fund Payments
(a) Except as provided by Section 1402.144, if a school
district fails to make a timely payment of principal and interest
due on a loan made to the district under this chapter, the agency
shall:
(1) deduct the total amount due the board or the fund,
including interest and any applicable late payment charge as of the
date of notification, from the [foundation school fund] Texas Great
Classroom Fund payment next due the district, including any
allocation to the district under Chapter [42] 47, Education Code;
and
(2) continue making the deductions from subsequent
[foundation school fund] Texas Great Classroom Fund payments until
the total amount then due has been deducted.
(b) The agency shall credit the full amount of a [foundation
school fund] Texas Great Classroom Fund entitlement to a school
district before making the deduction. The amount of the deduction
shall then be paid to the credit of the school facilities aid fund
or to an account in that fund as the board may direct, on behalf of
the district.
ARTICLE 3: PROPERTY TAX REFORM
SECTION 1. LEGISLATIVE FINDINGS. The Legislature finds that
a substantial amount of taxes which could be used for the benefit of
the citizens of Texas cannot be collected because of the failure of
persons and entities to completely render their personal property
for taxation. The Legislature further finds that such failure would
be deterred through imposition of a penalty.
SECTION 2. OBJECTIVE. It is the intent of the Legislature to
increase compliance with the provisions of the Tax Code with regard
to rendering for taxation of all personal property by amending
Section 22.01, Subchapter A, Chapter 22, to add subparagraphs (k)
and (l) imposing penalties for failing to comply with Sections
22.01(a) - (e)(3) of such Subchapter.
(k) A person or entity who violates this section shall be
subject to a civil penalty.
(l) A person or entity who knowingly violates this section
shall, in addition to the penalty imposed in subsection (k) above,
be subject to a civil penalty of $2,000 per day for each day
following the filing date specified in section 22.23 of this
Subchapter until the requirements of this section are met.
SECTION 3. It is in the public interest that State and local
taxing authorities efficiently and inexpensively determine the
value of real property for imposition of appropriate taxes. Section
12.001, Chapter 12, Property Code is hereby amended to read as
follows:
12.001 Instruments Concerning Property
(a) [remains the same]
(b) An instrument conveying residential or commercial
property may not be recorded unless:
(1) [it] It is signed and acknowledged or sworn to by
the grantor in the presence of two or more credible subscribing
witnesses or acknowledged or sworn to before and certified by an
officer authorized to take acknowledgments or oaths, as applicable:
and
(2) The sales price of the conveyed property is
disclosed therein.
(c) [remains the same]
(d) [remains the same]
(e) The provisions of (b) above shall only apply to sales
transactions, and shall not be applicable to conveyances of
property by gift, devise, or descent.
SECTION 4. It is in the public interest that the Comptroller
of Public Accounts assist local appraisal districts in appraising
certain properties so that the various taxing units served by such
appraisal districts can assess and collect all of the ad valorem tax
revenue to which they are entitled.
SUBCHAPTER A: CHAPTER 23, SECTION 23.03 OF THE TEXAS PROPERTY
TAX CODE IS HEREBY AMENDED TO READ AS FOLLOWS:
23.03 Compilation of Large Properties and Properties Subject
to Limitation on Appraised Value
By January 10 of each [Each] year, the chief appraiser shall
compile and send [to the Texas Department of Economic Development]
lists of properties in the appraisal district which disclose for
the preceding year [a list of properties in the appraisal district
that in that tax year:]
[(1) have a market value of $100 million or more; or
(2) are subject to a limitation on appraised value
under Chapter 313.]
(a) a list to be sent to the Texas Department of Economic
Development which includes all properties having an appraised value
of $100 million or more, the amount of each such appraised value,
and all properties which are subject to a limitation on appraised
value under Chapter 313, and
(b) a list to be sent to the Comptroller of Public Accounts
which includes all industrial properties having an appraised value
of $50 million or more and the amount of each such appraised value.
SUBCHAPTER B: CHAPTER 25 OF THE TEXAS PROPERTY TAX CODE IS
HEREBY AMENDED TO ADD A NEW SECTION 25.012 WHICH READS AS FOLLOWS:
25.012 Special Appraisals on Industrial Property
(a) By May 1 of each year, the Comptroller of Public
Accounts will complete and forward to each chief appraiser an
appraisal of all industrial properties within each appraisal
district having an appraised value of $50 million or more. Such
appraisals shall be prepared in accordance with the appraisal
methods and techniques set out in Chapter 23 of this Code.
(b) The chief appraiser may adopt any of such appraisals as
if they were the appraisals of a private appraisal firm. The chief
appraiser shall adopt any of such appraisals that exceed the amount
of the prior year's appraisal by ten percent. Such appraisals as may
be adopted by the chief appraiser shall become part of the appraisal
records of each district.
(c) Upon request, the Comptroller shall make available to
the chief appraiser the records and personnel necessary to support
such appraisals during any process or proceeding under Chapters 25,
41 or 42 of this Code.
SUBCHAPTER C: CHAPTER 403 OF THE TEXAS GOVERNMENT CODE IS
HEREBY AMENDED TO ADD A NEW SECTION 403.3021 AS FOLLOWS:
403.3021 Special Appraisals
(a) The comptroller shall perform the duties and
responsibilities set out in Section 23.03 and Section 25.012 of the
Property Tax Code.
(b) In performing such duties and responsibilities, the
comptroller may contract with a private appraisal firm to perform
appraisal services. A contract for private appraisal services is
void if the amount of compensation to be paid the private appraisal
firm is contingent on the amount of or increase in appraised,
assessed, or taxable value of property appraised by the appraisal
firm. A contract for private appraisal services is void if it does
not provide that copies of the appraisals, together with supporting
data, shall be made available to the comptroller as public records.
SECTION 5. Amend Sections 11.13(a) and (b), Chapter 11,
Subtitle C, Title 1, Property Tax Code, as follows:
11.13 Residence Homestead
(a) A family or single adult is entitled to an exemption
from taxation:
(1) for the county purposes authorized in Article
VIII, Section 1-a, of the Texas Constitution of $3,000 of the
assessed value of his residence homestead;
(2) for the county purposes authorized in Article
VIII, Section 1-a, of the Texas Constitution and from taxation by a
school district of a portion of the assessed value of his or her
residence homestead, provided such family or single adult
(A) is a full year, full time school teacher in a
school district in the State of Texas in the school year during
which such exemption is sought, such exemption shall be an amount
equal to .05 (5%) of $100,000 of the full assessed value of his or
her residence homestead for multiplied by the number of years such
individual has been a full year, full time school teacher in any
school district in the State of, up to 20 years;
(B) has been a full year, full time school
teacher in any school district in the State of Texas for twenty-five
(25) years, such exemption shall be an amount equal to $100,000 of
the full assessed value of his or her residence homestead for each
year thereafter;
(b) An adult, not entitled to the exemption provided in
subsection (a)(2)(A), is entitled to further exemption from
taxation by a school district of $15,000 of the appraised value of
the adult's residence homestead, except that $10,000 of the
exemption does not apply to an entity operating under former
Chapter 17, 18, 25, 26, 27, or 28, Education Code, as those chapters
existed on May 1, 1995, as permitted by Section 11.301, Education
Code.
SECTION 6. Early Sunset for the Texas Economic Development
Act.
SUBCHAPTER A: SECTION 313.007, TAX CODE, IS AMENDED TO READ
AS FOLLOWS:
313.007. EXPIRATION.
Subchapters B, C, and D expire January 1, 2005.
SUBCHAPTER B: EFFECTIVE DATE.
Notwithstanding any language to the contrary, Subchapter A
shall take effect immediately if this Act receives a vote of
two-thirds of all the members elected to each house, as provided by
Section 39, Article III, Texas Constitution. If this Act does not
receive the vote necessary for immediate effect, Subchapter A takes
effect on _________________________.
ARTICLE 4: ELIMINATION OF THE FRANCHISE TAX
SECTION 1. REPEALER. Chapter 171, Subtitle F, Title 2, of
the Tax Code, is repealed except for the following:
(a) Chapter 171, Tax Code, is repealed January 1, 2005.
(b) Chapter 171, Tax Code, and Subtitle B, Title 2, Tax
Code, shall continue to apply to audits, deficiencies,
re-determinations, and refunds of any tax due or collected under
Chapter 171 until barred by limitations.
(c) Any corporation that is subject to the franchise tax
imposed by Chapter 171, Tax Code, before the date of its repeal
shall pay an additional tax equal to 4.5 percent of the
corporation's net taxable earned surplus computed on the period
beginning on the day after the last day for which the tax imposed on
net taxable earned surplus was computed under Section 171.1532, Tax
Code, and ending on December 31, 2003. The comptroller by rule shall
provide for the payment of tax due for an initial or second period
that does not expire before January 1, 2005. A franchise tax return
is not required for any initial or second period as described by
Chapter 171, Tax Code, that begins on or after January 1, 2005.
(d) The repeal of Chapter 171, Tax Code, does not affect:
(1) the status of a corporation that has had its
corporate privileges, certificate of authority, or corporate
charter revoked, suit filed against it, or a receiver appointed
under Subchapter F, G, or H of that chapter;
(2) the ability of the comptroller, secretary of
state, or attorney general to take action against a corporation
under Subchapter F, G, or H for actions that took place before the
repeal; or
(3) the right of a corporation to contest a
forfeiture, revocation, lawsuit, or appointment of a receiver under
Subchapter F, G, or H.
ARTICLE 5: TENANT'S PROPERTY TAX RELIEF
SECTION 1. Title 1, Tax Code, is amended by adding Chapter
61 to read as follows:
CHAPTER 61. PROPERTY TAX RELIEF FOR TENANTS
Sec. 61.001. Purpose.
The purpose of this chapter is to ensure that rental tenants
receive direct and immediate benefit from reductions in local
school district ad valorem taxes and that every landlord gives a
monthly rent credit or rebate, at the landlord's option, to each
tenant in this state during the entire term of any lease in effect
as of January 1, 2005.
Sec. 61.002. Definitions.
In this chapter:
(a) "Landlord" means the owner, lessor, or sublessor of a
dwelling, commercial, or industrial unit, but does not include a
manager or agent of the landlord unless the manager or agent
purports to be the owner, lessor, or sublessor in a written or oral
lease.
(b) "Lease" means a written or oral agreement between a
landlord and tenant that establishes or modifies the terms,
conditions, rules, or other provisions regarding the use and
occupancy of a dwelling, commercial, or industrial unit.
(c) "Multifamily rental dwelling property" means a
multiunit residential property with two or more rental dwelling
units. The term includes a duplex, apartment building, dormitory,
manufactured housing community, retirement center or community,
and assisted living center and any other multiunit rental
residential property subject to local school district ad valorem
taxes.
(d) "Rent" includes the total amount charged by a landlord,
or by a person on the landlord's behalf, for the use and occupancy
of a dwelling, commercial, or industrial unit. The term does not
include a refundable security deposit.
(e) "Rental unit" means one or more rooms or offices rented
for use under a single lease to one or more tenants.
(f) "Tenant" means an individual, business, or other entity
who is authorized by a lease to occupy a rental unit to the
exclusion of others other than cotenants and who is obligated under
the lease to pay rent.
Sec. 61.003. Applicability.
(a) This chapter applies only to a rental unit or
multifamily rental dwelling property that is subject to ad valorem
taxation by a school district.
(b) This chapter does not apply to a temporary residential
tenancy created by a contract of sale under which the buyer is
entitled to occupy the property before closing or the seller is
entitled to occupy the property after closing for a term of not more
than 90 days.
Sec. 61.004. Credit Or Rebate To Tenant Of Landlord's
Property Tax Savings.
A landlord shall provide each of the landlord's tenants with
a monthly credit or rebate on the tenant's rent to reflect a portion
of the landlord's school district ad valorem tax savings for during
the entire term of any lease in effect as of January 1, 2005.
Sec. 61.005. Notice By Chief Appraisers.
(a) On or before October 1, 2004, or as soon as practicable
after that date, the chief appraiser of each appraisal district
shall send to all property owners a notice describing the
requirements of this chapter. The notice shall contain language
substantially similar to the following:
"Due to the property tax relief law approved by the voters in
November 2004, landlords are required to pass along school district
ad valorem tax savings to their tenants under all leases in effect
as of January 1, 2005. These savings must be provided to tenants by
giving a monthly rent credit or rebate that reflects a portion of
the property tax savings on school property taxes. Failure to
comply with this law could result in severe penalties, including a
civil penalty of $100, treble damages, and attorney's fees.
Information on complying with this law is available by contacting
the (name, address, and telephone number of appraisal district) or
by contacting the Texas Comptroller of Public Accounts by calling
1-800-252-5555."
(b) The notice required under Subsection (a) may be sent to
property owners as part of another communication sent by the
appraisal district under Section 31.01 and is not required to be
sent to property owners as a separate communication.
(c) In November and December 2004, each appraisal district
shall place at least one advertisement monthly in a newspaper of
general circulation in the county for which the appraisal district
is established. The advertisement shall be in 14-point or larger
type and contain language substantially similar to the language
prescribed by Subsection (a).
Sec. 61.006. Technical Assistance By Comptroller.
(a) Not later than September 1, 2004, the comptroller shall
develop materials in plain language to assist landlords in
complying with this chapter. The materials shall be printed in both
English and Spanish and copies shall be sent to each appraisal
district on or before September 15, 2004. A copy of the materials
shall be provided without cost to any property owner on request.
(b) The comptroller shall provide necessary technical
assistance to appraisal districts and landlords in complying with
this chapter.
Sec. 61.007. Tax Savings Calculations By Landlords.
(a) For each year to which this chapter applies, a landlord
shall determine the monthly school district ad valorem tax savings
payable to the landlord's tenants as follows:
(1) the monthly rent credit or rebate for each rental
unit is equal to 6.25 percent of the difference between the amount
of school district ad valorem taxes imposed on the rental unit for
the preceding year and the amount of the school district ad valorem
taxes that would have been imposed on that rental unit for that year
if the rental unit had been taxed at a school district maintenance
and operations tax rate of 75 cents plus the school district
enrichment tax rate in that tax year per $100 of taxable value; and
(2) the monthly rent credit or rebate for a rental unit
in a multifamily rental dwelling property is equal to 6.25 percent
of the difference between the amount of school district ad valorem
taxes imposed on the rental unit for the preceding year and the
amount of the school district ad valorem taxes that would have been
imposed on that rental unit for that year if the rental unit had
been taxed at a school district maintenance and operations tax rate
of $1.20 per $100 of taxable value, multiplied by the square footage
in the tenant's rental unit, and divided by the total net rentable
square footage of all rental units in the multifamily rental
dwelling property.
(b) The amount of the rent credit or rebate under Subsection
shall be calculated on a per-rental-unit basis and not on a
per-tenant basis.
(c) If the amount of the rent credit or rebate calculated
under Subsection (a) is less than zero, the rent credit or rebate is
zero.
Sec. 61.008. Date Of Required Credit Or Rebate.
(a) If a landlord gives a monthly credit to a tenant under
this chapter, the landlord shall give the credit on the due date for
each month's rent.
(b) If a landlord pays a monthly rent rebate to the tenant,
the landlord shall pay the rebate not later than the 10th day after
the date the tenant pays the entire rent due for the month. A
landlord is presumed to have timely paid a rebate if the rebate is
placed in the United States mail and postmarked on or before that
date.
(c) If the tenant's rent is payable weekly, the amount of
the weekly credit or rebate is equal to 1/52 of the credit or rebate
for the entire year.
Sec. 61.009. Landlord's Notice To Tenants.
(a) In connection with each lease agreement for a rental
unit entered into before January 1, 2005, that has not terminated or
expired as of that date, the landlord shall provide a notice to each
tenant on or before January 5, 2005, in boldface, 14-point or larger
type, that substantially states the following:
"NOTICE OF TAX SAVINGS ON RENT
"Your current monthly rent on (insert unit number or
street address) is $____ (insert amount of rent).
"Because of the property tax relief law approved by the
voters of this state in November 2004, the amount of school district
property taxes for your rental unit has been reduced by ____ (insert
percentage savings) percent for 2005. The property tax relief law
provides that the property owner must pass along tax savings to you
and other tenants during the remaining existing term under your
current lease agreement.
"Accordingly, you will receive a rent credit (or rebate
check) of $____ (insert monthly prorated amount) for the current
month of January and for each month thereafter until the date your
current lease expires. If the amount of taxes imposed on your
dwelling unit is not increased or decreased, the cumulative amount
of property tax savings that will be passed on to you during the
term of your lease as a result of the 2004 property tax relief
legislation is projected to be $____ (insert cumulative savings for
the unit for the term of the lease).
"This means the net rent you will be paying for this
month and each subsequent month under your current lease will be
$____ (insert net rent rate).
"If you have any questions about this new law, please
contact the ______ County Appraisal District at (insert address and
main phone number of the appraisal district established for the
county in which the rental dwelling unit is located)."
(b) The notice required by Subsection (a) shall be
translated and printed in English and Spanish. A notice provided by
a landlord under this section must be provided in both languages if
the rental unit is located in a county in which the Hispanic
population exceeds 25 percent of the total population of that
county according to the most recent federal census information
available.
Sec. 61.010. Credit Or Rebate For Multiple Tenants.
If two or more tenants are on a lease for the same rental
dwelling unit, the credit or rebate under this chapter shall be
provided jointly to all tenants renting the dwelling.
Sec. 61.011. Penalties.
(a) A landlord who fails to comply with this chapter is
liable to the affected tenant for a civil penalty of $100 and treble
the amount of any required rent credit or rebate that was not
provided to the tenant.
(b) In a suit involving the payment of a rent credit or
rebate, the prevailing party is entitled to recover reasonable
attorney's fees from the nonprevailing party.
Sec. 61.012. Tax Appraisals.
In tax years 2004-2007, a chief appraiser or an appraisal
district may not consider a reduction of school district ad valorem
taxes attributable to this chapter in any determination of the
appraised value of a rental unit, real property containing a rental
unit, or a multifamily rental dwelling property.
Sec. 61.013. Comptroller Study.
(a) The comptroller shall issue a preliminary report not
later than March 1, 2006, if sufficient data is available, and shall
issue a final report not later than December 1, 2007, to the
governor, the lieutenant governor, and the speaker of the house of
representatives on the implementation, administration, and effect
of this chapter, including findings as to the following:
(1) the impact of property tax relief on rental rates
throughout this state considering competitive market conditions,
new construction, operating expenses, and other relevant factors
impacting rental rates;
(2) the number of civil actions filed by tenants
against landlords to enforce the provisions of this chapter and the
type of properties owned by those landlords;
(3) the number and amount of civil penalties levied
against landlords for noncompliance with this chapter and the type
of properties owned by those landlords;
(4) the administrative costs associated with this
chapter incurred by the comptroller, appraisal districts, and
landlords; and
(5) any effect of reduced school district ad valorem
tax rates on increasing the supply of affordable housing for
purchase or rent by a person for use as a dwelling.
(b) In preparing the report, the comptroller shall consider
the need to recommend alternative methods for providing school
district ad valorem tax relief to persons who rent their homes and
business property.
Sec. 61.014. Expiration.
This chapter expires January 1, 2008.
SECTION 2. Chapter 1, Tax Code, is amended by adding Section
1.16 to read as follows:
Sec. 1.16. Expiration.
The expiration of Chapter 61 does not affect the liability of
a landlord or other person for any amount arising under Chapter 61
before the expiration, and the law governing that liability remains
in effect notwithstanding the expiration for purposes of enforcing
or satisfying the liability.
SECTION 3. Chapter 61, Tax Code, as added by this article,
applies only to a tax year that begins on or after January 1, 2005.
SECTION 4. Except as otherwise provided by this Act, this
article takes effect January 1, 2005.
ARTICLE 6: IMPOSITION OF A REFORMED FRANCHISE TAX BASED ON
COMPENSATION AND NET EARNINGS FROM SELF EMPLOYMENT
SECTION 1. Amend Subtitle F, Title 2, Tax Code to read as
follows:
SUBTITLE F –REFORMED FRANCHISE TAX
SECTION 2. Add a new chapter, Chapter 172: Reformed
Franchise Tax, Subtitle F, Tax Code to provide for the creation of a
flat tax on employee compensation and net earnings from
self-employment to fund the Texas Great Classroom Program, as
follows:
CHAPTER 172. REFORMED FRANCHISE TAX
SUBCHAPTER A: TAX IMPOSED
Sec. 172.001. Tax Imposed
There shall be levied, collected, and paid for each taxable
year a tax on employers that shall be based upon their adjusted tax
base. The tax imposed by this Chapter may be referred to as the
"Reformed Franchise Tax."
Sec. 172.002. Rate of tax
The tax to be assessed, levied, collected and paid upon the
adjusted tax base of an employer shall be computed at the rate of
3.60 percent (3.60 %) of the adjusted tax base.
Sec. 172.003. Purpose
A tax on all employers based on the amount of compensation
paid to employees and officers for services rendered in the state
and on net earnings from self employment for each trade or business
conducted by the employer in the state which shall be dedicated to
funding the Texas Great Classroom Program pursuant to Chapter 47,
Education Code. All monies collected by the comptroller under this
Chapter, and all interest and penalties thereon, shall be
transferred to the Texas Great Classroom Fund as provided in
Section 403.093, Government Fund.
Sec. 172.004. Federal Tax Elections
Elections by employers for federal income tax purposes shall
be binding upon such employer for the determination of taxes to be
made pursuant to this Chapter.
Sec. 172.005. Rules
The comptroller may adopt rules to implement and administer
this Chapter.
(Sections 172.006 to 172.009 are reserved for expansion)
SUBCHAPTER B: DEFINITIONS
Sec. 172.010. Definitions
(a) Adjusted tax base. The "adjusted tax base" shall include
the following:
(1) the compensation paid to employees for services
rendered in the state; plus
(2) the amount of the net earnings from self
employment for each trade or business conducted by the employer in
the state.
(b) Compensation. For purposes of this Subchapter the term
"compensation" means remuneration for services performed by an
employee for his or her employer, including wages, salaries, fees,
bonuses, commissions and the cash value of all remuneration paid in
any medium other than cash. Distributions and other payments by an S
corporation to a corporate officer must be also be treated as
compensation to the extent the amounts are reasonable compensation
for services rendered to the corporation.
(c) Employee. For purposes of this Subchapter the term
"employee" means an individual, whether resident or nonresident of
this State, employed by an employer, including an individual
subject to the civil service laws of this state or a political
subdivision of this state. The word "employee," as used in this
Subchapter, is intended to include officers of corporations and any
individual elected to public office in this state or a political
subdivision of this state to the full extent allowed by the Texas
Constitution.
(d) Employer. For purposes of this Subchapter the term
"employer" means a person, state, or any political subdivision
thereof, of the United States, or any agency or instrumentality of
any one or more of the foregoing, to the full extent allowed by the
Texas Constitution, for whom an individual performs or performed
any service of whatever nature as an employee, except that if the
person for whom the individual performs or performed the services
does not have control of the payment of the wages for such services,
the term "employer" means the person having control of the payment
of such compensation. The term "employer" also means a partnership,
even if no individual performs or performed services for the
partnership as an employee, and an individual who has "net earnings
from self employment" as that term is defined in Section 172.020(b)
of this Chapter;
(e) Person. For purposes of this Subchapter the term
"person" means any individual, corporation, limited liability
company, partnership, limited partnership, limited liability
partnership, company, association (whether incorporated or
unincorporated), banking corporation, savings and loan
association, trust, estate, sole proprietorship, not-for-profit
organization, or governmental entity (including this state and
other states, and agencies, political subdivisions, and
enterprises of the United States, this state, and other states
provided such inclusion shall be only to the full extent
permissible pursuant to the Constitution of the United States and
of this state).
Sec. 172.011. Federal Income Tax Terms.
A term used in this chapter, and not defined differently, has
the same meaning as the term when used in a comparable context in
the Internal Revenue Code or other federal law relating to federal
income taxes.
Sec. 172.012. Internal Revenue Code.
"Internal Revenue Code" means the Internal Revenue Code of
1986 in effect on January 1, 2004, as amended from time to time.
Sec. 172.013. State.
"State" means any state of the United States, the District of
Columbia, the Commonwealth of Puerto Rico, any territory or
possession of the United States, or a political subdivision of any
of those entities.
Sec. 172.014. Tax.
"Tax" includes interest and penalties unless the intention to
give it a more limited meaning is indicated by its context.
Sec. 172.015. Taxpayer.
"Taxpayer" means an employer liable for a tax, interest, or
penalty under this chapter. Sec. 172.016. Tax Year.
(a) "Tax year" means the calendar year or the fiscal year
ending during the calendar year for which the tax base is computed
under this chapter.
(b) If a return is made for a fractional part of a year, the
term means the period for which the return is made.
(c) Except for the first return required by this chapter, a
taxpayer's tax year is the same period as that covered by the
taxpayer's federal income tax return.
(Sections 172.017 to 172.019 are reserved for expansion.)
SUBCHAPTER C: COMPUTATION OF NET EARNINGS FROM SELF
EMPLOYMENT
Sec. 172.020. Net Earnings from Self Employment
(a) Partnerships. For purposes of this Subchapter the "net
earnings from self employment" of an employer that is a partnership
is the aggregate amount of net earnings (loss) from self employment
calculated and required to be reported as partners' distributive
share items under the Internal Revenue Code of 1986, as amended,
such that the Internal Revenue Code is adopted in all aspects
necessary to calculate such amount.
(b) Individuals. For purposes of this Subchapter the "net
earnings from self employment" of an employer that is an
individual:
(1) includes net income (loss) of any farm or non-farm
trade or business conducted by the individual in the state; but
(2) excludes an individual partner's distributive
share of net earnings from self employment of a partnership that is
included in subparagraph (a) of this Section 172.020.
(c) For purposes of determining net earnings from self
employment in subparagraphs (a) and (b) of this Section 172.020, a
deduction shall be allowed against such income in calculating the
adjusted tax base for:
(1) The amount of Section 179 expense, as defined in
the Internal Revenue Code up to the amount of net earnings from self
employment for the current tax year.
(2) To allow a deduction in the current tax year for
any net earnings from self employment for a prior year that resulted
in a loss for such year.
(d) Section 179 expense in excess of the net earnings from
self employment for the current year may be carried over to
subsequent tax years.
(e) Net earnings from self employment that results in a loss
for the current year shall be available to offset net earnings from
self employment for three prior tax years and shall also be allowed
to carryover to subsequent tax years.
Sec. 172.021. Payment of tax
The total amount of tax imposed shall be paid on the earlier
of the date the return is actually filed or the date the return is
required by law to be filed determined without regard to any
extension of time for filing the return. The full amount of tax
disclosed by the return as filed shall constitute an assessment at
that time, and shall be recorded as an assessment in the records of
the secretary.
(Sections 172.022 to 172.099 are reserved for expansion.)
SUBCHAPTER D: QUARTERLY REPORTING OF TAX ON COMPENSATION, AND
DECLARATION OF TAX BY INDIVIDUALS AND PARTNERSHIPS
Sec. 172.101. Returns and payment of tax of Employers
Reporting Employee Compensation
(a) Quarterly returns. Except as otherwise provided in this
Section, every employer who pays compensation to employees for
services rendered in this state shall be required to make a calendar
quarterly return to the comptroller on a form prescribed by him or
her and shall remit therewith the tax imposed on such compensation
as required to be paid under this Subchapter for each calendar
quarter, on or before the last day of the month immediately
following each calendar quarter.
(b) Declarations. Each return shall specifically state the
amount of compensation and include written declarations signed by
the taxpayer and preparer (if any) stating: "I declare that I have
examined this return and to the best of my knowledge it is true and
complete. Declaration of preparer is based on all available
information."
(c) Rules. Except as provided elsewhere herein, the returns
and payments of tax are to be prepared and such taxes paid in
accordance with the rules and regulations prescribed by the
secretary of the Comptroller of Public Accounts.
(1) All funds not timely remitted shall bear interest
at the rate of interest applicable per Section 111.060, Tax Code,
from the due date for filing until paid.
(2) The comptroller shall prescribe the forms to be
used in compliance with the provisions of this Subchapter.
(d) Governmental employers. If the employer is the United
States, a state, territory, or political subdivision thereof, or
any agency or instrumentality of any one or more of the foregoing,
the return of the amount due upon any compensation paid to employees
may be made by any officer or employee of the United States, or of
such state, territory, or political subdivision, or of such agency
or instrumentality, as the case may be, having control of the
payment of such wages or appropriately designated for that purpose.
Sec. 172.102. Declarations of estimated tax by Individuals
and Partnerships on Net Earnings From Self Employment
(a) Requirement of declaration. Every partnership and
individual whose tax liability on net earnings from self employment
can reasonably be expected to exceed one thousand dollars for tax
years starting on and after January 1, 2005 shall be liable for the
filing of a declaration of estimated tax.
(b) Estimated tax. For purposes of this Chapter the term
"estimated tax" means the amount which the partnership or
individual estimates as the amount of the tax imposed by this
Chapter for the taxable year on its net earnings from self
employment on its net earnings from self employment.
(c) Contents of declaration. The declaration shall contain
such pertinent information as the comptroller may require.
Sec. 172.103. Time for filing declarations and payment of
installments of estimated tax by individuals and partnerships
(a) For the purpose of reporting and remitting taxes imposed
by this Chapter on net earnings from self employment each
partnership or individual whose tax year is the calendar year shall
file quarterly declarations of estimated tax on net earnings from
self employment and remit the amount of tax due based on such
declaration on or before April 15, June 15, September 15, and
December 15. A taxpayer whose tax year is not the calendar year
shall file quarterly reports and make estimated payments on or
before the due dates that in the taxpayer's fiscal year correspond
to the date required by the Internal Revenue Service, or if that
date does not apply to such taxpayer, to the calendar year dates
provided by this subsection.
(b) The estimated tax payment made with each quarterly
declaration of each tax year is for the estimated tax base for the
quarter or one-fourth of the estimated annual liability. The
second, third, and fourth estimated tax payments in each tax year
shall include adjustments, if necessary, to correct underpayments
or overpayments from previous quarterly payments in the tax year to
a revised estimate of the annual tax liability.
(c) The comptroller may not assess interest for tax that is
delinquent if:
(1) the sum of the estimated payments equals at least
90 percent of the liability for the tax year and the amount of each
estimated payment reasonably approximates the tax liability
incurred during the quarter for which the estimated payment was
made; or
(2) the preceding year's tax liability was submitted
by the taxpayer in four equal installments the sum of which equals
the previous year's tax liability.
(d) A taxpayer shall make each estimated report on a form
prescribed by the comptroller and shall include an estimate of the
annual tax liability and other information required by the
comptroller. The form may be combined with any other tax reporting
form prescribed by the comptroller.
(e) Payments made under this section are a credit against
the payment required with the annual tax report.
(f) The comptroller may require filing of the reports and
payment of the tax for other than quarterly or annual periods if the
comptroller considers it necessary to ensure payment of the tax or
to provide a more efficient administration of the tax.
(g) A taxpayer who elects under the Internal Revenue Code to
file an annual federal income tax return by March 1 in the year
following the taxpayer's tax year and does not make a quarterly
estimate or payment, or does not make a quarterly estimate or
payment and files a tentative annual return with a tentative
payment by January 15 in the year following the taxpayer's tax year
and a final return by April 15 in the year following the taxpayer's
tax year, has the same option in filing the estimated and annual
reports required by this chapter.
Sec. 172.104. Report For First Tax Year.
A taxpayer may elect to compute the tax for the first taxable
year, if less than 12 months by determining the amount of the tax as
if this chapter were effective on the first day of the taxpayer's
annual accounting period and multiply the amount by a fraction, the
numerator of which is the number of months in the taxpayer's first
taxable year, and the denominator of which is 12.
Sec. 172.105. Failure by individual or partnership to pay
installments of estimated tax; penalty
(a) Addition to the tax. In the case of any underpayment of
estimated tax by an individual or partnership, required by Sections
172.102 and 172.103, except as provided in Subsection (d), there
shall be added to the tax due under this Chapter for the taxable
year a penalty of 5 percent per annum upon the amount of the
underpayment determined under Subsection (b), for the period of the
underpayment determined under Subsection (c)
(b) Amount of underpayment.
(1) For purposes of Subsection (a), the amount of the
underpayment shall be the excess of:
(A) The amount of the installment which would be
required to be paid if the estimated tax were equal to ninety
percent of the tax shown on the return for the taxable year or, if no
return was filed, ninety percent of the tax for such year, over
(B) The amount, if any, of the installment paid
on or before the last date prescribed for such payment.
(2) For the purposes of determining the amount of
underpayment, the amount of the required installment shall be:
(A) Twenty-five percent of the required annual
payment.
(B) For purposes of Subparagraph (A), the term
"required annual payment" means the lesser of:
(i) Ninety percent of the tax shown on the
return for the taxable year (or, if no return is filed, ninety
percent of the tax for such year), or
(ii) One hundred percent of the tax shown on
the return of the individual for the preceding taxable year.
(c) Period of underpayment. The period of the underpayment
shall run from the date the installment was required to be paid to
whichever of the following dates is earlier:
(1) The 15th day of the fourth month following the
close of the taxable year;
(2) The date on which any portion of the underpayment
is paid but limited to the amount of such payment. For purposes of
this paragraph a payment of estimated tax on any installment date
shall be considered a payment of any previous underpayment only to
the extent such payment exceeds the amount of the installment
determined under Subsection (b)(1) for such installment date.
(d) Exception. Notwithstanding the provisions of the
preceding Subsections, the penalty imposed with respect to any
underpayment of any installment shall not be imposed if no
declaration of estimated tax is required to be filed under the
provisions of Section 172.102, or if the total amount of all
payments of estimated tax made on or before the last date prescribed
for the payment of such installment equals or exceeds whichever of
the following is the lesser:
(1) The tax shown on the return of the individual or
partnership for the preceding taxable year, if a return showing a
liability for tax was filed by the individual or partnership for the
preceding taxable year and such preceding year was a taxable year of
twelve months, or
(2) An amount equal to ninety percent of the tax
computed, at the rates applicable to the taxable year, on the basis
of the actual taxable income for the months in the taxable year
ending before the month in which the installment is required to be
paid.
Sec. 172.106. Criminal penalties
(e) Any person required under the provisions of this Chapter
to furnish a statement who willfully furnishes a false or
fraudulent statement or who willfully fails to furnish a statement
in the manner, at the time, and showing the information required
under this Subchapter D, or regulations prescribed thereunder,
shall, for each such offense, upon conviction thereof, be fined not
more than $1,000, or imprisoned not more than 1 year, or both.
Sec. 172.107. Annual Tax Report.
(a) Each partnership shall file an annual report with the
comptroller, in the form and content prescribed by the comptroller,
on or before the date the taxpayer's federal income tax return is
due, or if that date does not apply to a taxpayer, the last day of
the fourth month after the end of the taxpayer's tax year.
(b) Each individual who has net earnings from self
employment shall file an annual report with the comptroller, in the
form and content prescribed by the comptroller, on or before the
date the taxpayer's federal income tax return is due, or if that
date does not apply to a taxpayer, the last day of the fourth month
after the end of the taxpayer's tax year.
(c) Each partnership and individual required to file an
annual report shall pay any final tax liability with the annual
report.
(d) When a taxpayer is granted an extension of time to file
the taxpayer's federal income tax return for a taxable year, the
filing of a copy of the request for the federal extension with a
preliminary report and payment of the estimated tax with the
comptroller by the due date provided in Subsection (a)
automatically extends the due date for the filing of a final report
under this chapter for a period equivalent to the federal extension
plus 60 days. Interest at the rate that applies to delinquent taxes
under Section 111.060 shall be added to the amount of the tax unpaid
for the period of the extension.
Sec. 172.108. Filing Of Federal Tax Returns.
(a) A taxpayer required to file a report under this Chapter
may be required to furnish a copy of any return or portion of any
return that the taxpayer has filed under the Internal Revenue Code.
(b) A taxpayer shall file an amended report with the
comptroller showing any alteration in or modification of the
taxpayer's federal income tax return that affects the taxpayer's
tax base under this chapter not later than 120 days after the date
of the final determination by the Internal Revenue Service.
(c) At the request of the comptroller, a person required by
the Internal Revenue Code to file or submit an information return of
income paid to others shall, to the extent the information is
applicable to residents of this state, at the same time file or
submit information required by the comptroller in the form
prescribed by the comptroller.
(Sections 172.109-172.500 reserved for expansion)
SUBCHAPTER E: ALLOCATION AND APPORTIONMENT OF TAX BASE
The Comptroller shall prescribe rules to provide for the
allocation and apportionment of the adjusted tax base based on
average of gross receipts plus gross compensation in this State
compared to the total of all gross receipts and gross compensation.
SUBCHAPTER F: ADMINISTRATION, COLLECTION, AND ENFORCEMENT
The Comptroller shall prescribe rules regarding the
administration, collection and enforcement of this Chapter.
SUBCHAPTER G: DISPOSITION OF REVENUE
Sec. 172.501. Texas Great Classroom Fund.
The revenue from the tax imposed by this Chapter shall be
deposited to the credit of the Texas Great Classroom Fund.
SECTION 3. Section 101.003(8), Tax Code, as amended by
Section 1.01, Chapter 486, and Section 3.27, Chapter 685, Acts of
the 73rd Legislature, Regular Session, 1993, is amended to read as
follows:
(8) "Taxpayer" means a person liable for a tax, fee,
assessment, or other amount imposed by a statute or under the
authority of a statutory function administered by the comptroller.
The term includes a person subject to the tax under Chapter 172, Tax
Code.
SECTION 4. Miscellaneous Provisions.
(a) Chapter 172, Tax Code, as added by this article, applies
effective on or after January 1, 2005.
(b) In the first year in which the Reformed Franchise Tax is
imposed, the comptroller may by rule extend the deadline for
estimated tax payments of the tax under Chapter 172, Tax Code, as
added by this article. Subject to Sections 3 and 4 of this article,
this article takes effect when this Act takes effect.
ARTICLE 7: DEDICATION OF REVENUE, COLLECTIONS, TAXES; IMPOSITION
OF ADDITIONAL TAXES ON CERTAIN SALES AND USES
SECTION 1. Section 205.02(a), Chapter 205, Title 5,
Alcoholic Beverage Code, is amended to replace the foundation
school fund with the Texas Great Classroom Fund, as follows:
205.02. Disposition of Receipts
< Text of (a) as amended by Acts 1984, 68th Leg., 2nd C.S.,
Chapter. 28, art. II, part B, s12>
(a) After allocation of funds to defray administrative
expenses as provided in the current departmental appropriations
act, receipts from the sale of tax stamps and funds derived from
taxes on distilled spirits, wine, beer, and ale and malt liquor
shall be deposited in the general revenue fund. An amount equal to
one-fourth of the net revenue shall be transferred to the
[foundation school fund] Texas Great Classroom Fund, and an amount
equal to three-fourths of the net revenue shall be credited to the
general revenue fund.
< Text of (a) as amended by Acts 1984, 68th Leg., 2nd C.S.,
Chapter. 31, art. 2, s 22 >
(a) After allocation of funds to defray administrative
expenses as provided in the current departmental appropriations
act, receipts from the sale of tax stamps and funds derived from
taxes on distilled spirits, wine, beer, and ale and malt liquor
shall be deposited in the general revenue fund. An amount equal to
5/24ths of the net revenue shall be transferred to the available
school fund, an amount equal to 1/24th of the net revenue shall be
transferred to the [foundation school fund] Texas Great Classroom
Fund, and an amount equal to three-fourths of the net revenue shall
be credited to the general revenue fund.
SECTION 2. Article 4.12, Subchapter A, Chapter Four, Title
1, Insurance Code, is amended to read as follows:
Art. 4.12. Disposition of Certain Revenue
Receipts from the taxes imposed by Articles 4.10, 4.11, and
4.11B and Sections 11 and 12 of Article 1.14-1 of this code shall be
deposited in the general revenue fund. An amount equal to
one-fourth (1/4) of this revenue shall be transferred to the
[foundation school fund] Texas Great Classroom Fund, and an amount
equal to three-fourths (3/4) of this revenue shall be credited to
the general revenue fund.
SECTION 3. Subtitle E, Title 2, Tax Code is amended to
increase the amount of sales and use tax to 6.50% and to dedicate a
specific portion of the collections of such taxes to the funding of
the Texas Great Classroom Program and credited to the Texas Great
Classroom Fund, and to provide relief to specified individuals, as
follows:
SUBCHAPTER A: SUBCHAPTER C, CHAPTER 151, TAX CODE IS AMENDED
TO INCREASE THE AMOUNT OF SALES AND USE TAX TO 6.50%, AS FOLLOWS:
151.051. Sales Tax Imposed
(a) A tax is imposed on each sale of a taxable item in this
state.
(b) The sales tax rate is [6 1/4] 6.50 percent of the sales
price of the taxable item sold.
SUBCHAPTER B: SUBCHAPTER H, CHAPTER 151, TAX CODE, IS AMENDED
TO PROVIDE FOR CERTAIN EXEMPTIONS FROM TAXES IMPOSED BY CHAPTER 151
BY ADDING SECTION 151.3145 TO READ AS FOLLOWS:
Sec. 151.3145. Certain Financial Assistance And Food Stamp
Recipients.
(a) This section applies to a person who receives financial
assistance under Chapter 31, Human Resources Code, or nutritional
assistance under Chapter 33, Human Resources Code, through the use
of an electronic benefits transfer system.
(b) There is exempted from the taxes imposed by this chapter
40 percent of the value of a taxable item sold, leased, or rented to
a person to which this section applies.
(c) The comptroller by rule shall prescribe procedures
relating to the exemption provided by this section. The rules must
require that a person to whom this section applies present a
government-issued identification card bearing the picture of the
person to qualify for the exemption.
SUBCHAPTER C: SUBCHAPTER M, CHAPTER 151, TAX CODE, SECTION
151.801(A), IS AMENDED TO READ AS FOLLOWS:
151.801. Disposition of Proceeds
(a) Except for the amounts allocated under Subsections (b)
and (c), all proceeds from the collection of the taxes imposed by
this chapter shall be deposited to the credit of the general revenue
fund. Provided however, the collections of the tax imposed by
Section 151.051 and 151.101 shall be allocated as such that:
(1) An amount equal to 2.25 percent (2.25%) of the
sales price of each item currently taxable pursuant to Sections
151.051 and 151.101, shall be allocated and dedicated to the Texas
Great Classroom Fund;
(2) The remainder of the 6.50 percent (6.50%) of the
sales price of each item currently taxable pursuant to Sections
151.051 and 151.101, shall be allocated to general revenue fund
SUBCHAPTER D: SUBCHAPTER B, CHAPTER 152, TAX CODE, SECTION
152.021 IS AMENDED TO INCREASE THE RATE OF TAX TO 7.75%, AS FOLLOWS:
152.021. Retail Sales Tax
(a) A tax is imposed on every retail sale of every motor
vehicle sold in this state. Except as provided by this chapter, the
tax is an obligation of and shall be paid by the purchaser of the
motor vehicle.
(b) The tax rate is [6 1/4] 7.75 percent of the total
consideration.
SUBCHAPTER E: SUBCHAPTER B, CHAPTER 152, TAX CODE, SECTION
152.022 IS AMENDED TO INCREASE THE RATE OF TAX TO 7.75%. AS FOLLOWS:
152.022. Tax on Motor Vehicle Purchased Outside This State
(a) A use tax is imposed on a motor vehicle purchased at
retail sale outside this state and used on the public highways of
this state by a Texas resident or other person who is domiciled or
doing business in this state.
(b) The tax rate is [6 1/4] 7.75 percent of the total
consideration.
SUBCHAPTER F: SUBCHAPTER B, CHAPTER 152, TAX CODE, SECTION
152.026 IS AMENDED TO READ AS FOLLOWS:
152.026. Tax on Gross Rental Receipts
(a) A tax is imposed on the gross rental receipts from the
rental of a rented motor vehicle.
(b) The tax rate is [10] 11 percent of the gross rental
receipts from the rental of a rented motor vehicle for 30 days or
less and [6 1/4] 7.75 percent of the gross rental receipts from the
rental of a rented motor vehicle for longer than 30 days.
(c) Except for a destroyed motor vehicle or an unrecovered
stolen motor vehicle, the total amount of gross rental receipts tax
paid by the owner, as defined by Section 152.001(9)(A) of this code,
on a motor vehicle registered under Section 152.061 of this code may
not be less than an amount equal to the tax that would be imposed by
Section 152.021 or 152.022 of this code but for Subsection (d) of
this section.
(d) The taxes imposed by Sections 152.021 and 152.022 of
this code are not due on a motor vehicle as long as it is registered
as a rental vehicle under Section 152.061 of this code.
SUBCHAPTER G: SUBCHAPTER B, CHAPTER 152, TAX CODE SECTION
152.028 IS AMENDED TO READ AS FOLLOWS:
152.028. Use Tax on Motor Vehicle Brought Back Into State
(a) A use tax is imposed on the operator of a motor vehicle
that was purchased tax-free under Section 152.092 of this code and
that is brought back into this state for use on the public highways
of this state. The tax is imposed at the time the motor vehicle is
brought back into this state.
(b) The tax rate is [6 1/4] 7.75 percent of the total
consideration.
SUBCHAPTER H: SUBCHAPTER G, CHAPTER 152, TAX CODE, SECTION
152.122, IS AMENDED TO READ AS FOLLOWS:
152.122. Allocation of Tax
The comptroller shall deposit the funds received under
Section 152.121 of this code as follows:
(1) collections of the taxes imposed by Chapter 152
shall be divided such that the amount equal to tax at the rate of
2.25 percent (2.25%) of total consideration or gross rental
receipts on items taxable under this chapter shall be dedicated and
credited to the Texas Great Classroom Fund; provided such
collections are transferred to the Texas Great Classroom Fund
within the time prescribed in Section 403.093, Government Code;
[1/4 to the credit of the foundation school fund]; and
(2) the remaining funds to the credit of the general
revenue fund.
ARTICLE 8: DEDICATION OF REVENUE, COLLECTIONS, TAXES; IMPOSITION
OF ADDITIONAL TAXES ON SALES OF CIGARETTES, CIGARS AND TOBACCO
PRODUCTS
SECTION 1. Section 154.021, Subchapter J, Chapter 154
relating to Cigarette tax is amended to increase the rate of tax as
follows:
154.021. Imposition and Rate of Tax
(a) A tax is imposed on a person who uses or disposes of
cigarettes in this state.
(b) The tax rates are:
(1) $[20.50] 83.00 per thousand on cigarettes weighing
three pounds or less per thousand; and
(2) the rate provided by Subdivision (1) plus $2.10
per thousand on cigarettes weighing more than three pounds per
thousand.
SECTION 2. Section 154.603, Subchapter J, Chapter 154
relating to Cigarette tax is amended to read as follows:
154.603. Disposition of Revenue
(a) After the deductions for the purposes provided by
Section 154.602 of this code, the revenue remaining shall be
divided and distributed as follows:
(1) of the first $62.50 of tax received per 1,000
cigarettes is allocated and shall be distributed to the Texas Great
Classroom Fund;
(2) $2 of tax received per 1,000 cigarettes for
cigarettes weighing three pounds or less per thousand and the first
$4.10 per 1,000 cigarettes of the tax received for cigarettes
weighing more than three pounds per thousand is allocated:
(A) 18.75 percent to the [foundation school fund]
Texas Great Classroom Fund; and
(B) 81.25 percent to the general revenue fund.
(b) The revenue remaining after the deductions for the
purposes provided by Section 154.602 of this code and allocation
under Subsection (a) of this section is allocated to the general
revenue fund.
(c),(d) Repealed by Acts 1993, 73rd Leg., Chapter. 679, Sec.
68, eff. September 1, 1993.
SECTION 3. Section 155.021(b), Subchapter B, Chapter 155
relating to Cigars and Tobacco Products Tax is amended to increase
the rate of tax as follows:
155.021. Tax Imposed on Cigars
(b) The tax rates are:
(1) 3.44 cents [one cent] per 10 or fraction of 10 on
cigars weighing three pounds or less per thousand;
(2) $25.80 [$7.50] per thousand on cigars that:
(A) weigh more than three pounds per thousand;
and
(B) sell at factory list price, exclusive of any
trade discount, special discount, or deal, for 3.3 cents or less
each;
(3) $37.84 [$11] per thousand on cigars that:
(A) weigh more than three pounds per thousand;
(B) sell at factory list price, exclusive of any
trade discount, special discount, or deal, for more than 3.3 cents
each; and
(C) contain no substantial amount of nontobacco
ingredients; and
(4) $51.60 [$15] per thousand on cigars that:
(A) weigh more than three pounds per thousand;
(B) sell at factory list price, exclusive of any
trade discount, special discount, or deal, for more than 3.3 cents
each; and
(C) contain a substantial amount of nontobacco
ingredients.
SECTION 4. Section 155.0211(b), Subchapter B, Chapter 155
relating to Cigars and Tobacco Products Tax is amended to increase
the rate of tax as follows:
155.0211. Tax Imposed on Tobacco Products Other Than Cigars
(b) The tax rate for tobacco products other than cigars is
40 [35.213] percent of the manufacturer's list price, exclusive of
any trade discount, special discount, or deal.
SECTION 5. Section 155.241, Subchapter H, Chapter 155
relating to Allocation of Tax is amended to redirect the revenue
from the general revenue fund to the Texas Great Classroom Fund as
follows
155.241. Allocation of Tax
Revenue collected under this chapter shall be deposited to
the credit of the [general revenue fund] Texas Great Classroom
Fund.
ARTICLE 9: REPEAL OF CERTAIN OIL AND UTILITY OCCUPATION TAXES
SECTION 1. REPEALER. Chapter 181, Subtitle G, Tax Code,
imposing a Cement Production Tax is repealed in its entirety as of
______________________.
SECTION 2. REPEALER. Chapter 182, Subtitle G, Tax Code,
imposing a tax on Gas, Electric, & Water Utility is repealed in its
entirety as of ______________________.
SECTION 3. REPEALER. Sections 16.001, 16.002, 16.003, and
16.004, Subchapter A, Chapter 16, Subtitle A, Title 2, Utilities
Code, imposing a tax on Public Utility Companies are repealed in
their entirety as of ______________________.
SECTION 4. REPEALER. Subchapter E, Chapter 191, Subtitle H,
Tax Code, imposing a tax on Oil Well Service is repealed in its
entirety as of ______________________.
SECTION 5. Section 26.3574(b), Subchapter I, Chapter 26,
Subtitle D, Title 2, Water Code, imposing a fee on the delivery of
certain petroleum products is amended to eliminate the fee as
follows:
(b) Until further action is taken by the legislature, the
fee imposed on the delivery of certain petroleum products pursuant
to this Section 26.3574 is eliminated. [A fee is imposed on the
delivery of a petroleum product on withdrawal from bulk of that
product as provided by this subsection. Each operator of a bulk
facility on withdrawal from bulk of a petroleum product shall
collect from the person who orders the withdrawal a fee in an amount
determined as follows:
(1) $12.50 for each delivery into a cargo tank having a
capacity of less than 2,500 gallons for FY 02 and FY 03; $10.00 for
each delivery into a cargo tank having a capacity of less than 2,500
gallons for FY 04 and FY 05; $5.00 for each delivery into a cargo
tank having a capacity of less than 2,500 gallons for FY 06; and
$2.00 for each delivery into a cargo tank having a capacity of less
than 2,500 gallons for FY 07;
(2) $25.00 for each delivery into a cargo tank having a
capacity of 2,500 gallons or more but less than 5,000 gallons for FY
02 and FY 03; $20.00 for each delivery into a cargo tank having a
capacity of 2,500 gallons or more but less than 5,000 gallons for FY
04 and FY 05; $10.00 for each delivery into a cargo tank having a
capacity of 2,500 gallons or more but less than 5,000 gallons for FY
06; and $4.00 for each delivery into a cargo tank having a capacity
of 2,500 gallons or more but less than 5,000 gallons for FY 07;
(3) $37.50 for each delivery into a cargo tank having a
capacity of 5,000 gallons or more but less than 8,000 gallons for FY
02 and FY 03; $30.00 for each delivery into a cargo tank having a
capacity of 5,000 gallons or more but less than 8,000 gallons for FY
04 and FY 05; $15.00 for each delivery into a cargo tank having a
capacity of 5,000 gallons or more but less than 8,000 gallons for FY
06; and $6.00 for each delivery into a cargo tank having a capacity
of 5,000 gallons or more but less than 8,000 gallons for FY 07;
(4) $50.00 for each delivery into a cargo tank having a
capacity of 8,000 gallons or more but less than 10,000 gallons for
FY 02 and FY 03; $40.00 for each delivery into a cargo tank having a
capacity of 8,000 gallons or more but less than 10,000 gallons for
FY 04 and FY 05; $20. 00 for each delivery into a cargo tank having a
capacity of 8,000 gallons or more but less than 10,000 gallons for
FY 06; and $8.00 for each delivery into a cargo tank having a
capacity of 8,000 gallons or more but less than 10,000 gallons for
FY 07; and
(5) a $25.00 fee for each increment of 5,000 gallons or
any part thereof delivered into a cargo tank having a capacity of
10,000 gallons or more for FY 02 and FY 03; $20.00 for each
increment of 5,000 gallons or any part thereof delivered into a
cargo tank having a capacity of 10,000 gallons or more for FY 04 and
FY 05; $10.00 for each increment of 5,000 gallons or any part
thereof delivered into a cargo tank having a capacity of 10,000
gallons or more for FY 06; and $4.00 for each increment of 5,000
gallons or any part thereof delivered into a cargo tank having a
capacity of 10,000 gallons or more for FY]
SECTION 6. REPEALER. Section 81.111, Subchapter E, Chapter
81, Subtitle A, Title 3, Natural Resources Code, imposing a tax on
crude oil produced in this state repealed in its entirety as of
______________________.
ARTICLE 10: DEDICATION OF CERTAIN TAXES TO THE GENERAL REVENUE FUND
SECTION 1. Section 191.145, Subchapter H, Chapter 191
relating to Attorneys is amended to reallocate revenues from the
foundation school fund to the general revenue fund as follows:
191.145. Distribution of Tax
The supreme court shall forward tax received under this
subchapter to the state for deposit[:]
[(1) twenty-five percent of the taxes shall be
deposited to the credit of the foundation school fund; and]
[(2) seventy-five percent of the taxes shall be
deposited] to the credit of the general revenue fund.
SECTION 2. Section 2153.058, Subchapter B, Chapter 2153
relating to Coin Operated Machines is amended to reallocate
revenues from the foundation school fund to the general revenue
fund as follows:
2153.58. Deposit of Revenue.
Except as provided by Section 2153.257, the comptroller shall
deposit [one-fourth of] the revenue received under this chapter [in
the foundation school fund and three-fourths of the revenue
received under this chapter] in the general revenue fund.
ARTICLE 11: DEDICATION OF MOTOR FUEL TAXES TO STATE HIGHWAY FUND
SECTION 1. Section 162.502(b), Subchapter F, Chapter 162
relating to Motor Fuel Taxes is amended to reallocate revenues from
the available school fund to the state highway fund as follows.
162.502. Allocation of Unclaimed Refundable Gasoline Taxes
(b) The comptroller shall allocate and deposit these
unclaimed refunds as follows:
(1) 25 percent of the revenues based on unclaimed
refunds of taxes paid on motor fuel used in motorboats shall be
deposited to the credit of the [available school fund] state
highway fund; and
(2) the remaining 75 percent of the revenue shall be
deposited to the credit of the general revenue fund.
SECTION 2. Section 162.503, Subchapter F, Chapter 162
relating to Motor Fuel Taxes is amended to reallocate revenues from
the available school fund to the state highway fund as follows.
162.503. Allocation of Gasoline Tax
On or before the fifth workday after the end of each month,
the comptroller, after making all deductions for refund purposes
and for the amounts allocated under Sections 162.502 and 162.5025,
shall allocate the net remainder of the taxes collected under
Subchapter B as follows:
(1) one-fourth of the tax shall be deposited to the
credit of the [available school fund] state highway fund;
(2) one-half of the tax shall be deposited to the
credit of the state highway fund for the construction and
maintenance of the state road system under existing law; and
(3) from the remaining one-fourth of the tax the
comptroller shall:
(A) deposit to the credit of the county and road
district highway fund all the remaining tax receipts until a total
of $7,300,000 has been credited to the fund each fiscal year; and
(B) after the amount required to be deposited to
the county and road district highway fund has been deposited,
deposit to the credit of the state highway fund the remainder of the
one-fourth of the tax, the amount to be provided on the basis of
allocations made each month of the fiscal year, which sum shall be
used by the Texas Department of Transportation for the
construction, improvement, and maintenance of farm-to-market
roads.
SECTION 3. Section 162.504, Subchapter F, Chapter 162
relating to Motor Fuel Taxes is amended to reallocate revenues from
the available school fund to the state highway fund as follows.
162.504. Allocation of Diesel Fuel Tax
On or before the fifth workday after the end of each month,
the comptroller, after making deductions for refund purposes, for
the administration and enforcement of this chapter, and for the
amounts allocated under Section 162.5025, shall [allocate] deposit
the remainder of the taxes collected under Subchapter C [as
follows:]
[(1) one-fourth of the taxes shall be deposited to the
credit of the available school fund; and]
[(2) three-fourths of the taxes shall be deposited] to the
credit of the state highway fund.
SECTION 4. Section 162.505, Subchapter F, Chapter 162
relating to Motor Fuel Taxes is amended to reallocate revenues from
the available school fund to the state highway fund as follows.
162.505. Allocation of Liquefied Gas Tax
On or before the fifth workday after the end of each month,
the comptroller, after making deductions for refund purposes and
for the administration and enforcement of this chapter, shall
[allocate] deposit the remainder of the taxes collected under
Subchapter D [as follows:]
[(1) one-fourth of the taxes shall be deposited to the
credit of the available school fund; and]
[(2) three-fourths of the taxes shall be deposited] to
the credit of the state highway fund.
ARTICLE 12: REPEAL OF PRODUCTION TAXES ON OIL , NATURAL GAS AND
SULPHUR
SECTION 1. REPEALER. Chapter 201, Tax Code, is repealed in
its entirety as of Sept. 1, _______.
SECTION 2. REPEALER. Chapter 202, Tax Code, is repealed in
its entirety as of Sept. 1, _______.
SECTION 3. REPEALER. Chapter 203, Tax Code, is repealed in
its entirety as of Sept. 1, _______.
ARTICLE 13: PROVISIONS FOR THE MAINTENANCE AND DISTRIBUTIONOF
FUNDS IN THE STATE LOTTERY ACCOUNT
SECTION 1. Subsections (b) and (c), Section 466.355,
Subchapter H, Chapter 466, Subtitle E, Title 4, Government Code,
are amended to read as follows:
466.355. State Lottery Account
(b) Money in the state lottery account may be used only for
the following purposes and shall be distributed as follows:
(1) the payment of prizes to the holders of winning
tickets;
(2) the payment of costs incurred in the operation and
administration of the lottery, including any fees received by a
lottery operator, provided that the costs incurred in a fiscal
biennium may not exceed an amount equal to 12 percent of the gross
revenue accruing from the sale of tickets in that biennium;
(3) the establishment of a pooled bond fund, lottery
prize reserve fund, unclaimed prize fund, and prize payment
account; and
(4) the balance, after creation of a reserve
sufficient to pay the amounts needed or estimated to be needed under
Subdivisions (1) through (3), to be [dedicated and] transferred to
the [foundation school fund] general revenue fund, on or before the
15th day of each month.
(c) Each August the comptroller shall:
(1) estimate the amount to be transferred to the
[foundation school fund] general revenue fund on or before
September 15; and
(2) notwithstanding Subsection (b)(4), transfer the
amount estimated in Subdivision (1) to the [foundation school fund]
general revenue fund before August installment payments are made
under [Section 42.259] Chapter 47, Education Code.
ARTICLE 14: MISCELLANEOUS REVISIONS TO REPLACE THE FOUNDATION
SCHOOL FUND WITH THE TEXAS GREAT CLASSROOM FUND
SECTION 1. Subsections (6) and (35), Section 7.055(b),
Subchapter C, Chapter 7, Subtitle B, Title 2, Education Code, are
amended to read as follows:
Section 7.055(b) Commissioner of Education Powers and Duties
(6) The commissioner shall adopt an annual budget for
operating the [Foundation School Program] Texas Great Classroom
Program as prescribed by Subsection (c).
(35) The commissioner shall perform duties in
connection with the [Foundation School] Texas Great Classroom
Program as prescribed by Chapter [42] 47.
SECTION 2. Section 7.055(c), Subchapter C, Chapter 7,
Subtitle B, Title 2, Education Code, is amended to read as follows:
Section 7.055(c) Commissioner of Education Powers and Duties
(c) The budget the commissioner adopts under Subsection (b)
for operating the [Foundation School] Texas Great Classroom Program
must be in accordance with legislative appropriations and provide
funds for the administration and operation of the agency and any
other necessary expense. The budget must designate any expense of
operating the agency or operating a program for which the board has
responsibility that is paid from the [Foundation School] Texas
Great Classroom Program. The budget must designate program expenses
that may be paid out of the [foundation school fund] Texas Great
Classroom Fund, other state funds, fees, federal funds, or funds
earned under interagency contract. Before adopting the budget, the
commissioner must submit the budget to the board for review and,
after receiving any comments of the board, present the operating
budget to the governor and the Legislative Budget Board. The
commissioner shall provide appropriate information on proposed
budget expenditures to the comptroller to assure that all payments
are paid from the appropriate funds in a timely and efficient
manner.
SECTION 3. REPEALER. Section 8.123(a), Subchapter D,
Chapter 8, Subtitle B, Title 2, Education Code is repealed.
SECTION 4. Amend the following articles of the Texas Civil
Statutes to replace the foundation school fund with the Texas Great
Classroom Fund: Art. 249a, 3271a, 581-41, 6573a.
SECTION 5. Amend the following sections of the Texas
Education Code to replace the foundation school fund with the Texas
Great Classroom Fund: Sections 8.122, 8.124, 13.285, 19.005,
19.007, 19.008, 26.65-App., 29.060, 29.062, 29.256, 29.257,
30.002, 30.003, 30.087, 30.102, 39.031, 43.010, 54.213, 56.208,
Table 1, Table 2.
SECTION 6. Amend Section 466.156 of the Texas Government
Code to replace the foundation school fund with the Texas Great
Classroom Fund.
SECTION 7. Amend the following sections of the Texas
Occupations Code to replace the foundation school fund with the
Texas Great Classroom Fund: Sections 153.053, 201.153, 254.004,
351.153, 501.153, 801.154, 901.406, 1001.206, 1051.205, 1101.153,
2153.058.
SECTION 8. Amend the following sections of the Texas
Property Code to replace the foundation school fund with the Texas
Great Classroom Fund: Sections 71.202, 74.602.
SECTION 9. Amend Section 39.901 of the Texas Utilities Code
to replace the foundation school fund with the Texas Great
Classroom Fund.
SECTION 10. Section 181.202, Subchapter E, Chapter 181,
Subtitle G, Title 2, Tax Code, is amended to read as follows:
181.202. Allocation of Tax Revenue
One-fourth of the revenue from the tax imposed by this
chapter shall be deposited to the credit of the [foundation school
fund] Texas Great Classroom Fund and three-fourths to the general
revenue fund.
SECTION 11. Section 191.122, Subchapter G, Chapter 191,
Subtitle H, Title 2, Tax Code is amended to read as follows:
191.122. Allocation of Tax
One-fourth of the revenue collected under this chapter shall
be deposited to the credit of the [foundation school fund] Texas
Great Classroom Fund and three-fourths to the credit of the general
revenue fund.
SECTION 12. Section 191.145, Subchapter H, Chapter 191,
Subtitle H, Title 2, Tax Code, is amended to read as follows:
191.145. Distribution of Tax
The supreme court shall forward tax received under this
subchapter to the state for deposit:
(1) twenty-five percent of the taxes shall be
deposited to the credit of the [foundation school fund] Texas Great
Classroom Fund; and
(2) seventy-five percent of the taxes shall be
deposited to the credit of the general revenue fund.
ARTICLE 15: AMENDMENTS TO CONFORM THE FOUNDATION SCHOOL PROGRAM TO
THE TEXAS GREAT CLASSROOM PROGRAM
SECTION 1. Amend the following sections of the Texas
Education Code to implement the Texas Great Classroom Program:
7.102, 8.121, 11.201, 11.351, 21.402, 21.410, 21.411, 25.037,
25.089, 28.006, 28.0211, 29.087, 34.009, 37.0061, 37.011.
ARTICLE 16: AMENDMENTS TO CONFORM THE AVAILABLE SCHOOL FUND FOR THE
IMPLEMENTATION OF THE TEXAS GREAT CLASSROOM PROGRAM
SECTION 1. Amendments to require that the Available School
Fund be distributed to the Texas Great Classroom Fund as necessary
to fund the Texas Great Classroom Program.
SECTION 2. Amend the following sections of the Texas
Agriculture Code to conform the Available School Fund for the
implementation of the Texas Great Classroom Program: Section
148.042.
SECTION 3. Amend the following articles of the Texas Civil
Statutes to conform the Available School Fund for the
implementation of the Texas Great Classroom Program: Sections
2685a, 2685b, 2685b-1, 2687d, 2688h, 2700a, 2700d-4, 2700d-11,
2700d-17, 2700d-18, 2700d-22, 2700d-23, 2700d-28, 2700d-32,
2700d-35, 2700d-37.
SECTION 4. Amend the following sections of the Texas
Education Code to conform the Available School Fund for the
implementation of the Texas Great Classroom Program: Sections
7.102, 11.351, 17.09-App., 17.72-App., 17.83-App., 19.124-App.,
25.001, 25.037, 25.040, 29.153, 29.203, 29.901, 30.003, 30.004,
30.025, 30.056, 30.101, 30.102, 31.021, 37.0061, 43.001, 43.002,
43.003, 43.0031, 43.0032, 43.0033, 43.0034, 43.004, 43.005,
43.007, 43.009, 43.010, 43.011, 43.012, 43.013, 43.014, 43.015,
43.016, 43.017, 43.018, 43.019, 45.004, 45.105, 45.106, Table 1,
Table 2.
SECTION 5. Amend Section 403.035 of the Texas Government
Code to conform the Available School Fund for the implementation of
the Texas Great Classroom Program.
SECTION 6. Amend section 533.001 of the Texas Health &
Safety Code to conform the Available School Fund for the
implementation of the Texas Great Classroom Program.
SECTION 7. Amend the following sections of the Texas Local
Government Code to conform the Available School Fund for the
implementation of the Texas Great Classroom Program: Sections
71.035, 115.001, 153.001.
SECTION 8. Amend the following sections of the Texas Tax
Code to conform the Available School Fund for the implementation of
the Texas Great Classroom Program: Sections 101.009, and 154.601.
ARTICLE 17: EFFECTIVE DATE
SECTION 1. This Act takes effect _______________, 2005.