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S.B. No. 671
AN ACT
relating to the determination of school district property values
and the accountability of appraisal district operations.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 403.301, Government Code, is amended to
read as follows:
Sec. 403.301. PURPOSE. It is the policy of this state to
ensure equity among taxpayers in the burden of school district
taxes and among school districts in the distribution [payment] of
state financial aid for public education [to schools]. The purpose
of this subchapter is to promote that policy [equity] by providing
for uniformity in local property appraisal [the tax appraisal and
assessment] practices and procedures and in the determination of
property values for schools in order to distribute state funding
equitably [of school district tax offices, for improvement in the
administration and operation of school district tax offices, and
for greater competence among persons appraising and assessing
school districts' taxes].
SECTION 2. Subchapter M, Chapter 403, Government Code, is
amended by adding Section 403.3011 to read as follows:
Sec. 403.3011. DEFINITIONS. In this subchapter:
(1) "Annual study" means a study conducted under
Section 403.302.
(2) "Eligible school district" means a school district
for which the comptroller has determined the following:
(A) in the most recent annual study, the local
value is invalid under Section 403.302(c) and does not exceed the
state value for the school district determined in the annual study;
(B) in the annual study for each of the two years
preceding the most recent annual study, the school district's local
value was valid under Section 403.302(c); and
(C) in the most recent annual study, the
aggregate local value of all of the categories of property sampled
by the comptroller is not less than 90 percent of the lower limit of
the margin of error as determined by the comptroller of the
aggregate value as determined by the comptroller of all of the
categories of property sampled by the comptroller.
(3) "Local value" means the market value of property
in a school district as determined by the appraisal district that
appraises property for the school district, less the total amounts
and values listed in Section 403.302(d) as determined by that
appraisal district.
(4) "State value" means the value of property in a
school district as determined in the annual study.
SECTION 3. Section 403.302, Government Code, is amended by
amending Subsections (c) and (h) and adding Subsections (l) and (m)
to read as follows:
(c) If after conducting the annual study the comptroller
determines [in the annual study] that the local value for a school
district [the market value of property in a school district as
determined by the appraisal district that appraises property for
the school district, less the total of the amounts and values listed
in Subsection (d) as determined by that appraisal district,] is
valid, the local value [the market value of property in the school
district as determined by the appraisal district that appraises
property for the school district, less the total of the amounts and
values listed in Subsection (d) as determined by that appraisal
district,] is presumed to represent taxable value for the school
district. In the absence of that [such a] presumption, taxable
value for a school district is the state value for the school
district determined by the comptroller under Subsections
[Subsection] (a) and (b) unless the local value exceeds the state
value, in which case the taxable value for the school district is
the district's local value. In determining whether the local value
for a school district is valid, the comptroller shall use a margin
of error that does not exceed five percent unless the comptroller
determines that the size of the sample of properties necessary to
make the determination makes the use of such a margin of error not
feasible, in which case the comptroller may use a larger margin of
error.
(h) On request of the commissioner of education or a school
district, the comptroller may audit [a school district to
determine] the total taxable value of property in a [the] school
district and may revise the annual study findings. The request for
audit is limited to corrections and changes in a school district's
appraisal roll that occurred after preliminary certification of the
annual study findings by the comptroller. Except as otherwise
provided by this subsection, the request for audit must be filed
with the comptroller not later than the third anniversary of the
date of the final certification of the annual study findings. The
request for audit may be filed not later than the first anniversary
of the date the chief appraiser certifies a change to the appraisal
roll if the chief appraiser corrects the appraisal roll under
Section 25.25 or 42.41, Tax Code, and the change results in a
material reduction in the total taxable value of property in the
school district[, including the productivity values of land only if
the land qualifies for appraisal on that basis and the owner of the
land has applied for and received a productivity appraisal]. The
comptroller shall certify the [comptroller's] findings of the audit
to the commissioner of education.
(l) If after conducting the annual study for the year 2003
or a subsequent year the comptroller determines that a school
district is an eligible school district, for that year and the
following year the taxable value for the school district is the
district's local value. Not later than the first anniversary of the
date of the determination that a school district is an eligible
school district, the comptroller shall complete an appraisal
standards review as provided by Section 5.102, Tax Code, of each
appraisal district that appraises property for the school district.
(m) If the comptroller determines in the annual study
conducted for the year 2002 that the taxable value for a school
district is the local value because the local value is invalid and
exceeds the state value, the commissioner of education shall
compute the amount by which the funding under Chapter 42, Education
Code, of the school district is reduced for the 2003-2004 school
year because of the use of local value rather than state value as
taxable value. The commissioner of education shall allocate an
amount equal to the amount of the reduction for that school year to
the school districts that receive funding under Chapter 42,
Education Code, whose taxable value for the applicable year is the
state value, and whose maintenance and operations tax rate for the
applicable year exceeds $1.42 on the $100 valuation of taxable
property. The allocation shall be made in proportion to the amount
of funding under Chapter 42, Education Code, that each of those
school districts would otherwise have received in that year. This
subsection expires September 30, 2004.
SECTION 4. Subsection (c), Section 5.07, Tax Code, is
amended to read as follows:
(c) The comptroller shall also prescribe a uniform record
system to be used by all appraisal districts for the purpose of
submitting data to be used in the annual studies required by Section
5.10 of this code and by Section 403.302, Government Code. The
record system shall include a compilation of information concerning
sales of real property within the boundaries of the appraisal
district. The sales information maintained in the uniform record
system shall be submitted annually in a form prescribed by the
comptroller [offices appraising property for tax purposes].
SECTION 5. Section 5.102, Tax Code, is amended to read as
follows:
Sec. 5.102. REVIEW OF APPRAISAL STANDARDS. (a) The
comptroller shall review the appraisal standards, procedures, and
methodology used by each appraisal district that appraises property
for an eligible school district as defined by Section 403.3011,
Government Code, to determine compliance with generally accepted
appraisal standards and practices. The comptroller by rule may
establish procedures and standards for conducting the review.
(b) In conducting the review, the comptroller is entitled to
access to all records and reports of the appraisal district and to
the assistance of the appraisal district's officers and employees.
(c) If the review results in a finding that an appraisal
district is not in compliance with generally accepted appraisal
standards and practices, the comptroller shall deliver a report
that details the comptroller's findings and recommendations for
improvement to:
(1) the appraisal district's chief appraiser and board
of directors; and
(2) the superintendent and board of trustees of each
school district participating in the appraisal district.
(d) If the appraisal district fails to comply with the
recommendations in the report and the comptroller finds that the
board of directors of the appraisal district failed to take
remedial action before the first anniversary of the date the report
was issued, the comptroller shall notify the judge of each district
court in the county for which the appraisal district is
established, who shall appoint a board of conservators consisting
of five members to implement the recommendations. The board of
conservators shall exercise supervision and control over the
operations of the appraisal district until the comptroller
determines under Section 403.302, Government Code, that in the same
year the taxable value of each school district for which the
appraisal district appraises property is the local value for the
school district. The appraisal district shall bear the costs
related to the supervision and control of the district by the board
of conservators [(c) If noncompliance with generally accepted
appraisal standards and practices is found in two consecutive
reviews and if an affected appraisal district's chief appraiser and
board of directors fail to take effective remedial action as
determined by the comptroller, the comptroller may appoint a
special master who may exercise supervision and control over the
operations of the district until full compliance with generally
accepted appraisal standards and practices is achieved. The
appraisal district shall bear the costs related to the master's
supervision and control].
SECTION 6. Section 5.12, Tax Code, is amended by adding
Subsection (h) to read as follows:
(h) In addition to the performance audits required by
Subsections (a), (b), and (c) and the review of appraisal standards
required by Section 5.102, the comptroller may audit an appraisal
district to analyze the effectiveness and efficiency of the
policies, management, and operations of the appraisal district.
The results of the audit shall be delivered in a report that details
the comptroller's findings and recommendations for improvement to
the appraisal district's chief appraiser and board of directors and
the governing body of each taxing unit participating in the
appraisal district. The comptroller may require reimbursement by
the appraisal district for some or all of the costs of the audit,
not to exceed the actual costs associated with conducting the
audit.
SECTION 7. This Act takes effect immediately if it 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, this
Act takes effect September 1, 2003.
______________________________ ______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 671 passed the Senate on
May 6, 2003, by the following vote: Yeas 30, Nays 0;
May 30, 2003, Senate refused to concur in House amendments and
requested appointment of Conference Committee; May 31, 2003, House
granted request of the Senate; June 1, 2003, Senate adopted
Conference Committee Report by the following vote: Yeas 31,
Nays 0.
______________________________
Secretary of the Senate
I hereby certify that S.B. No. 671 passed the House, with
amendments, on May 28, 2003, by the following vote: Yeas 135,
Nays 0, three present not voting; May 31, 2003, House granted
request of the Senate for appointment of Conference Committee;
June 1, 2003, House adopted Conference Committee Report by the
following vote: Yeas 147, Nays 0, one present not voting.
______________________________
Chief Clerk of the House
Approved:
______________________________
Date
______________________________
Governor