Senate Research Center S.B. 881
AUTHOR'S / SPONSOR'S STATEMENT OF INTENT
Currently, in order to issue bonds, school districts must prove to the attorney general that they can pay for outstanding debt as they mature in the future at a tax rate of 50 cents or less per $100 of valuation. This causes some districts to extend the life of their bonds to satisfy these requirements, increasing the interest paid by local taxpayers.
As proposed, S.B. 881 allows school districts to issue bonds if the actual tax rate does not exceed 50 cents and that bond issuances do not exceed 10 percent of the district's assessed property value. This bill ensures fiscal responsibility by school districts and saves local taxpayers millions of dollars by not requiring districts to extend the life of their bonded indebtedness.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Section 45.0031, Education Code, by adding Subsection (f), to authorize a school district, in lieu of demonstrating to the attorney general the ability to comply with Subsection (a), before bonds are issued, to demonstrate that the district's current tax rate for all bonds issued under Section 45.001 (Limitation on Issuance of Tax-Supported Bonds) is less than $0.50 per $100 of valuation and that the aggregate principal amount of tax bond indebtedness of the district after the proposed issuance would not exceed 10 percent of the assessed valuation of taxable property in the district according to the most recent certified ad valorem tax rolls of the district.
SECTION 2. Makes application of this Act prospective.
SECTION 3. Effective date: upon passage or September 1, 2007.