78S41013 JD-D
By: Isett H.B. No. 63
A BILL TO BE ENTITLED
AN ACT
relating to the adoption of ad valorem tax rates of certain taxing
units.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 26.04(c), Tax Code, is amended to read as
follows:
(c) An officer or employee designated by the governing body
shall calculate the effective tax rate and the rollback tax rate for
the unit, where:
(1) "Effective tax rate" means a rate expressed in
dollars per $100 of taxable value calculated according to the
following formula:
EFFECTIVE TAX RATE = (LAST YEAR'S LEVY - LOST PROPERTY LEVY) /
(CURRENT TOTAL VALUE - NEW PROPERTY VALUE)
; and
(2) "Rollback tax rate" means a rate expressed in
dollars per $100 of taxable value calculated according to the
following formula:
ROLLBACK TAX RATE = (EFFECTIVE MAINTENANCE AND OPERATIONS RATE x
1.05 [1.08]) + CURRENT DEBT RATE
SECTION 2. Sections 26.041(a), (b), and (c), Tax Code, are
amended to read as follows:
(a) In the first year in which an additional sales and use
tax is required to be collected, the effective tax rate and rollback
tax rate for the unit are calculated according to the following
formulas:
EFFECTIVE TAX RATE = [(LAST YEAR'S LEVY - LOST PROPERTY LEVY) /
(CURRENT TOTAL VALUE - NEW PROPERTY VALUE)] - SALES TAX GAIN RATE
and
ROLLBACK RATE = (EFFECTIVE MAINTENANCE AND OPERATIONS RATE x 1.05
[1.08]) + CURRENT DEBT RATE - SALES TAX GAIN RATE
where "sales tax gain rate" means a number expressed in dollars per
$100 of taxable value, calculated by dividing the revenue that will
be generated by the additional sales and use tax in the following
year as calculated under Subsection (d) [of this section] by the
current total value.
(b) Except as provided by Subsections (a) and (c) [of this
section], in a year in which a taxing unit imposes an additional
sales and use tax the rollback tax rate for the unit is calculated
according to the following formula, regardless of whether the unit
levied a property tax in the preceding year:
ROLLBACK RATE = [(LAST YEAR'S MAINTENANCE AND OPERATIONS EXPENSE X
1.05 [1.08]) / ([TOTAL] CURRENT TOTAL VALUE - NEW PROPERTY VALUE)] +
(CURRENT DEBT RATE - SALES TAX REVENUE RATE)
where "last year's maintenance and operations expense" means the
amount spent for maintenance and operations from property tax and
additional sales and use tax revenues in the preceding year, and
"sales tax revenue rate" means a number expressed in dollars per
$100 of taxable value, calculated by dividing the revenue that will
be generated by the additional sales and use tax in the current year
as calculated under Subsection (d) [of this section] by the current
total value.
(c) In a year in which a taxing unit that has been imposing
an additional sales and use tax ceases to impose an additional sales
and use tax the effective tax rate and rollback tax rate for the
unit are calculated according to the following formulas:
EFFECTIVE TAX RATE = [(LAST YEAR'S LEVY - LOST PROPERTY LEVY) /
(CURRENT TOTAL VALUE - NEW PROPERTY VALUE)] + SALES TAX LOSS RATE
and
ROLLBACK TAX RATE = [(LAST YEAR'S MAINTENANCE AND OPERATIONS
EXPENSE X 1.05 [1.08]) / ([TOTAL] CURRENT TOTAL VALUE - NEW PROPERTY
VALUE)] + CURRENT DEBT RATE
where "sales tax loss rate" means a number expressed in dollars per
$100 of taxable value, calculated by dividing the amount of sales
and use tax revenue generated in the last four quarters for which
the information is available by the current total value and "last
year's maintenance and operations expense" means the amount spent
for maintenance and operations from property tax and additional
sales and use tax revenues in the preceding year.
SECTION 3. Section 26.05, Tax Code, is amended by amending
Subsection (d) and adding Subsection (g) to read as follows:
(d) The governing body of a taxing unit [district] other
than a school district and other than a county or municipality to
which Subsection (g) applies may not adopt a tax rate that exceeds
the lower of the rollback tax rate or 103 percent of the effective
tax rate calculated as provided by this chapter until the governing
body has held a public hearing on the proposed tax rate and has
otherwise complied with Sections [Section] 26.06 and [Section]
26.065. The governing body of a taxing unit to which this
subsection applies shall reduce a tax rate set by law or by vote of
the electorate to the lower of the rollback tax rate or 103 percent
of the effective tax rate and may not adopt a higher rate unless it
first complies with Section 26.06.
(g) This subsection applies only to a county or municipality
for which the total tax rate proposed for the current tax year would
impose taxes in an amount of $5 million or more when applied to the
current total value for the county or municipality. The governing
body of the county or municipality may not adopt a tax rate that
exceeds the effective tax rate calculated as provided by this
chapter until the governing body has held a public hearing on the
proposed tax rate and has otherwise complied with Sections 26.06
and 26.065. The governing body of a county or municipality to which
this subsection applies shall reduce a tax rate set by law or by
vote of the electorate to the effective tax rate and may not adopt a
higher rate unless it first complies with Section 26.06.
SECTION 4. Section 26.06, Tax Code, is amended by amending
Subsections (b), (d), and (e) and adding Subsection (h) to read as
follows:
(b) The notice of a public hearing to be conducted by the
governing body of a taxing unit other than a county or a
municipality to which Section 26.05(g) applies may not be smaller
than one-quarter page of a standard-size or a tabloid-size
newspaper, and the headline on the notice must be in 18-point or
larger type. The notice must:
(1) contain a statement in the following form:
"NOTICE OF PUBLIC HEARING ON TAX INCREASE
"The (name of the taxing unit) will hold a public hearing on a
proposal to increase total tax revenues from properties on the tax
roll in the preceding year by (percentage by which proposed tax rate
exceeds lower of rollback tax rate or effective tax rate calculated
under this chapter) percent. Your individual taxes may increase at
a greater or lesser rate, or even decrease, depending on the change
in the taxable value of your property in relation to the change in
taxable value of all other property and the tax rate that is
adopted.
"The public hearing will be held on (date and time) at
(meeting place).
"(Names of all members of the governing body, showing how
each voted on the proposal to consider the tax increase or, if one
or more were absent, indicating the absences.)"; and
(2) contain the following information:
(A) the unit's adopted tax rate for the preceding
year and the proposed tax rate, expressed as an amount per $100;
(B) the difference, expressed as an amount per
$100 and as a percent increase or decrease, as applicable, in the
proposed tax rate compared to the adopted tax rate for the preceding
year;
(C) the average appraised value of a residence
homestead in the taxing unit in the preceding year and in the
current year; the unit's homestead exemption, other than an
exemption available only to disabled persons or persons 65 years of
age or older, applicable to that appraised value in each of those
years; and the average taxable value of a residence homestead in the
unit in each of those years, disregarding any homestead exemption
available only to disabled persons or persons 65 years of age or
older;
(D) the amount of tax that would have been
imposed by the unit in the preceding year on a residence homestead
appraised at the average appraised value of a residence homestead
in that year, disregarding any homestead exemption available only
to disabled persons or persons 65 years of age or older;
(E) the amount of tax that would be imposed by the
unit in the current year on a residence homestead appraised at the
average appraised value of a residence homestead in the current
year, disregarding any homestead exemption available only to
disabled persons or persons 65 years of age or older, if the
proposed tax rate is adopted; and
(F) the difference between the amounts of tax
calculated under Paragraphs (D) and (E), expressed in dollars and
cents and described as the annual increase or decrease, as
applicable, in the tax to be imposed by the unit on the average
residence homestead in the unit in the current year if the proposed
tax rate is adopted.
(d) At the public hearing the governing body shall announce
the date, time, and place of the meeting at which it will vote on the
proposed tax rate. After the hearing the governing body of a taxing
unit other than a county or a municipality to which Section 26.05(g)
applies shall give notice of the meeting at which it will vote on
the proposed tax rate and the notice shall be in the same form as
prescribed by Subsections (b) and (c), except that it must state the
following:
"NOTICE OF VOTE ON TAX RATE
"The (name of the taxing unit) conducted a public hearing on a
proposal to increase the total tax revenues of the (name of the
taxing unit) from properties on the tax roll in the preceding year
by (percentage by which proposed tax rate exceeds lower of rollback
tax rate or effective tax rate calculated under this chapter)
percent on (date and time public hearing was conducted).
"The (governing body of the taxing unit) is scheduled to vote
on the tax rate that will result in that tax increase at a public
meeting to be held on (date and time) at (meeting place)."
(e) The meeting to vote on the tax increase may not be
earlier than the third day or later than the 14th day after the date
of the public hearing. The meeting must be held inside the
boundaries of the taxing unit in a publicly owned building or, if a
suitable publicly owned building is not available, in a suitable
building to which the public normally has access. If the governing
body of a taxing unit other than a county or a municipality to which
Section 26.05(g) applies does not adopt a tax rate that exceeds the
lower of the rollback tax rate or 103 percent of the effective tax
rate by the 14th day, it must give a new notice under Subsection (d)
before it may adopt a rate that exceeds the lower of the rollback
tax rate or 103 percent of the effective tax rate. If the governing
body of a county or a municipality to which Section 26.05(g) applies
does not adopt a tax rate that exceeds the effective tax rate by the
14th day, it must give a new notice under Subsection (d) before it
may adopt a rate that exceeds the effective tax rate.
(h) This subsection applies only to a county or a
municipality to which Section 26.05(g) applies. Subsections (b)
and (d) govern the notice of the public hearing to be conducted by
the governing body of the county or municipality and the notice of
the meeting of the governing body to vote on the tax rate, except
that:
(1) the statement otherwise required by Subsection
(b)(1) must be in the following form:
"NOTICE OF PUBLIC HEARING ON TAX INCREASE
"The (name of the county or municipality) will hold a public
hearing on a proposal to increase total tax revenues from
properties on the tax roll in the preceding year by (percentage by
which proposed tax rate exceeds the effective tax rate calculated
under this chapter) percent. Your individual taxes may increase at
a greater or lesser rate, or even decrease, depending on the change
in the taxable value of your property in relation to the change in
taxable value of all other property and the tax rate that is
adopted.
"The public hearing will be held on (date and time) at
(meeting place).
"(Names of all members of county or municipal governing body,
showing how each voted on the proposal to consider the tax increase
or, if one or more were absent, indicating the absences.)"; and
(2) the notice required by Subsection (d) must state
the following:
"NOTICE OF VOTE ON TAX RATE
"The (name of the county or municipality) conducted a public
hearing on a proposal to increase the total tax revenues of the
(county or municipality) from properties on the tax roll in the
preceding year by (percentage by which proposed tax rate exceeds
the effective tax rate calculated under this chapter) percent on
(date and time public hearing was conducted).
"The (governing body of the county or municipality) is
scheduled to vote on the tax rate that will result in that tax
increase at a public meeting to be held on (date and time) at
(meeting place)."
SECTION 5. Section 26.065(d), Tax Code, is amended to read
as follows:
(d) The notice of the public hearing required by Subsection
(b) must contain a statement that is substantially the same as the
statement required by Section 26.06(b)(1) or (h)(1), as applicable,
and must contain information that is substantially the same as the
information required by Section 26.06(b)(2).
SECTION 6. The heading to Section 26.08, Tax Code, is
amended to read as follows:
Sec. 26.08. ELECTION TO RATIFY TAX RATE [SCHOOL TAXES].
SECTION 7. Sections 26.08(a), (b), (d), (e), and (h), Tax
Code, are amended to read as follows:
(a) If the governing body of a taxing unit [school district]
adopts a tax rate that exceeds the taxing unit's [district's]
rollback tax rate, the registered voters of the taxing unit
[district] at an election held for that purpose must determine
whether to approve the adopted tax rate. When increased
expenditure of money by a taxing unit [school district] is
necessary to respond to a disaster, including a tornado, hurricane,
flood, or other calamity, but not including a drought, that has
impacted the taxing unit [a school district] and the governor has
requested federal disaster assistance for the area in which the
taxing unit [school district] is located, an election is not
required under this section to approve the tax rate adopted by the
governing body for the year following the year in which the disaster
occurs.
(b) The governing body shall order that the election be held
in the taxing unit [school district] on a date not less than 30 or
more than 90 days after the day on which the governing body [it]
adopted the tax rate. Section 41.001, Election Code, does not apply
to the election unless a date specified by that section falls within
the time permitted by this section. At the election, the ballots
shall be prepared to permit voting for or against the proposition:
"Approving the ad valorem tax rate of $_____ per $100 valuation in
(name of taxing unit [school district]) for the current year, a rate
that is $_____ higher per $100 valuation than the [school district]
rollback tax rate of (name of taxing unit)." The ballot proposition
must include the adopted tax rate and the difference between that
rate and the rollback tax rate in the appropriate places.
(d) If the proposition is not approved as provided by
Subsection (c), the governing body may not adopt a tax rate for the
taxing unit [school district] for the current year that exceeds the
[school district's] rollback tax rate of the taxing unit.
(e) For purposes of this section, local tax funds dedicated
to a junior college district under Section 45.105(e), Education
Code, shall be eliminated from the calculation of the tax rate
adopted by the governing body of a [the] school district. However,
the funds dedicated to the junior college district are subject to
Section 26.085.
(h) For purposes of this section, increases in taxable
values and tax levies occurring within a reinvestment zone under
Chapter 311 (Tax Increment Financing Act), in which a school [the]
district is a participant, shall be eliminated from the calculation
of the tax rate adopted by the governing body of the school
district.
SECTION 8. Sections 31.12(a) and (b), Tax Code, are amended
to read as follows:
(a) If a refund of a tax provided by Section 11.431(b),
[26.07(g),] 26.15(f), 31.11, or 31.111 is paid on or before the 60th
day after the date the liability for the refund arises, no interest
is due on the amount refunded. If not paid on or before that 60th
day, the amount of the tax to be refunded accrues interest at a rate
of one percent for each month or part of a month that the refund is
unpaid, beginning with the date on which the liability for the
refund arises.
(b) For purposes of this section, liability for a refund
arises:
(1) if the refund is required by Section 11.431(b), on
the date the chief appraiser notifies the collector for the unit of
the approval of the late homestead exemption;
(2) [if the refund is required by Section 26.07(g), on
the date the results of the election to reduce the tax rate are
certified;
[(3)] if the refund is required by Section 26.15(f):
(A) for a correction to the tax roll made under
Section 26.15(b), on the date the change in the tax roll is
certified to the assessor for the taxing unit under Section 25.25;
or
(B) for a correction to the tax roll made under
Section 26.15(c), on the date the change in the tax roll is ordered
by the governing body of the taxing unit;
(3) [(4)] if the refund is required by Section 31.11,
on the date the auditor for the taxing unit determines that the
payment was erroneous or excessive or, if the amount of the refund
exceeds the applicable amount specified by Section 31.11(a), on the
date the governing body of the unit approves the refund; or
(4) [(5)] if the refund is required by Section 31.111,
on the date the collector for the taxing unit determines that the
payment was erroneous.
SECTION 9. Section 33.08(b), Tax Code, is amended to read as
follows:
(b) The governing body of the taxing unit or appraisal
district, in the manner required by law for official action, may
provide that taxes that become delinquent on or after June 1 under
Section [26.07(f),] 26.15(e), 31.03, 31.031, 31.032, or 31.04 incur
an additional penalty to defray costs of collection. The amount of
the penalty may not exceed the amount of the compensation specified
in the applicable contract with an attorney under Section 6.30 to be
paid in connection with the collection of the delinquent taxes.
SECTION 10. Section 130.016(b), Education Code, is amended
to read as follows:
(b) If the board of trustees of an independent school
district that divests itself of the management, control, and
operation of a junior college district under this section or under
Section 130.017 [of this code] was authorized by [Subsection (e)
of] Section 45.105(e) or under former Section 20.48(e) [20.48 of
this code] to dedicate a portion of its tax levy to the junior
college district before the divestment, the junior college district
may levy an ad valorem tax from and after the divestment. In the
first two years in which the junior college district levies an ad
valorem tax, the tax rate adopted by the governing body may not
exceed the rate that, if applied to the total taxable value
submitted to the governing body under Section 26.04, Tax Code,
would impose an amount equal to the amount of taxes of the school
district dedicated to the junior college under [Subsection (e) of]
Section 45.105(e) or former Section 20.48(e) [20.48 of this code]
in the last dedication before the divestment. In subsequent years,
the tax rate of the junior college district is subject to Section
26.08 [26.07], Tax Code.
SECTION 11. Section 49.107(g), Water Code, is amended to
read as follows:
(g) Sections 26.04, 26.05, and 26.08 [26.07], Tax Code, do
not apply to a tax levied and collected under this section or an ad
valorem tax levied and collected for the payment of the interest on
and principal of bonds issued by a district.
SECTION 12. Section 49.108(f), Water Code, is amended to
read as follows:
(f) Sections 26.04, 26.05, and 26.08 [26.07], Tax Code, do
not apply to a tax levied and collected for payments made under a
contract approved in accordance with this section.
SECTION 13. Sections 49.236(a) and (d), Water Code, as
added by Chapter 335, Acts of the 78th Legislature, Regular
Session, 2003, are amended to read as follows:
(a) Before the board adopts an ad valorem tax rate for the
district for debt service, operation and maintenance purposes, or
contract purposes, the board shall give notice of each meeting of
the board at which the adoption of a tax rate will be considered.
The notice must:
(1) contain a statement in substantially the following
form:
"NOTICE OF PUBLIC HEARING ON TAX RATE
"The (name of the district) will hold a public hearing on a
proposed tax rate for the tax year (year of tax levy) on (date and
time) at (meeting place). Your individual taxes may increase or
decrease, depending on the change in the taxable value of your
property in relation to the change in taxable value of all other
property and the tax rate that is adopted.
"(Names of all board members and, if a vote was taken, an
indication of how each voted on the proposed tax rate and an
indication of any absences.)";
(2) contain the following information:
(A) the district's total adopted tax rate for the
preceding year and the proposed tax rate, expressed as an amount per
$100;
(B) the difference, expressed as an amount per
$100 and as a percent increase or decrease, as applicable, in the
proposed tax rate compared to the adopted tax rate for the preceding
year;
(C) the average appraised value of a residence
homestead in the district in the preceding year and in the current
year; the district's total homestead exemption, other than an
exemption available only to disabled persons or persons 65 years of
age or older, applicable to that appraised value in each of those
years; and the average taxable value of a residence homestead in the
district in each of those years, disregarding any homestead
exemption available only to disabled persons or persons 65 years of
age or older;
(D) the amount of tax that would have been
imposed by the district in the preceding year on a residence
homestead appraised at the average appraised value of a residence
homestead in that year, disregarding any homestead exemption
available only to disabled persons or persons 65 years of age or
older;
(E) the amount of tax that would be imposed by the
district in the current year on a residence homestead appraised at
the average appraised value of a residence homestead in that year,
disregarding any homestead exemption available only to disabled
persons or persons 65 years of age or older, if the proposed tax
rate is adopted; and
(F) the difference between the amounts of tax
calculated under Paragraphs (D) and (E), expressed in dollars and
cents and described as the annual percentage increase or decrease,
as applicable, in the tax to be imposed by the district on the
average residence homestead in the district in the current year if
the proposed tax rate is adopted; and
(3) contain a statement in substantially the following
form:
"NOTICE OF VOTE ON TAX RATE [TAXPAYERS' RIGHT TO
ROLLBACK ELECTION]
"If taxes on the average residence homestead increase by more
than five [eight] percent, [the qualified voters of the district by
petition may require that] an election must be held to determine
whether to ratify [reduce] the operation and maintenance tax rate
[to the rollback tax rate] under Section 49.236(d), Water Code."
(d) If the governing body of a district adopts a combined
debt service, operation and maintenance, and contract tax rate that
would impose more than 1.05 [1.08] times the amount of tax imposed
by the district in the preceding year on a residence homestead
appraised at the average appraised value of a residence homestead
in the district in that year, disregarding any homestead exemption
available only to disabled persons or persons 65 years of age or
older, [the qualified voters of the district by petition may
require that] an election must be held to determine whether [or not]
to ratify [reduce] the tax rate adopted for the current year [to the
rollback tax rate] in accordance with the procedures provided by
Sections 26.08(b)-(d) [26.07(b)-(g) and 26.081], Tax Code. For
purposes of Sections 26.08(b)-(d) [26.07(b)-(g)] and this
subsection, the rollback tax rate is the current year's debt
service and contract tax rates plus the operation and maintenance
tax rate that would impose 1.05 [1.08] times the amount of the
operation and maintenance tax imposed by the district in the
preceding year on a residence homestead appraised at the average
appraised value of a residence homestead in the district in that
year, disregarding any homestead exemption available only to
disabled persons or persons 65 years of age or older.
SECTION 14. The following laws are repealed:
(1) Section 26.07, Tax Code; and
(2) Section 49.236, Water Code, as added by Chapter
248, Acts of the 78th Legislature, Regular Session, 2003.
SECTION 15. (a) The changes in law made by this Act that
relate to the adoption of the ad valorem tax rate of a taxing unit
apply to the ad valorem tax rate of the taxing unit beginning with
the 2004 tax year, except as provided by Subsection (b) of this
section.
(b) If the governing body of a taxing unit has adopted an ad
valorem tax rate for the taxing unit for the 2004 tax year before
the effective date of this Act, the changes in law made by this Act
that relate to the adoption of the ad valorem tax rate of a taxing
unit apply to the ad valorem tax rate of that taxing unit beginning
with the 2005 tax year, and the law in effect when the tax rate was
adopted applies to the 2004 tax year with respect to that taxing
unit.