80R8038 SMH-D

By: Callegari H.B. No. 2553

A BILL TO BE ENTITLED

AN ACT

relating to certain limitations on the ad valorem tax rates of certain taxing units.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 26.012, Tax Code, is amended by adding Subdivision (13-a) to read as follows:

(13-a) "Last year's total maintenance and operations tax revenue" means the total amount of maintenance and operations expenses of a taxing unit funded by property taxes according to the adopted budget for the preceding year.

SECTION 2. Sections 26.04(c), (i), and (j), Tax Code, are 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," which may also be referred to by a taxing unit in any action taken by the taxing unit as the "truth in taxation effective tax rate," means a rate expressed in dollars per $100 of taxable value calculated according to the following formula:

ROLLBACK TAX RATE =

[(LAST YEAR'S TOTAL MAINTENANCE AND OPERATIONS TAX REVENUE

/ CURRENT TOTAL VALUE) x 1.05] + CURRENT DEBT RATE

[(EFFECTIVE MAINTENANCE AND OPERATIONS RATE x 1.08) + [CURRENT DEBT RATE]

(i) This subsection applies to a taxing unit that has agreed by written contract to transfer a distinct department, function, or activity to another taxing unit and discontinues operating that distinct department, function, or activity if the operation of that department, function, or activity in all or a majority of the territory of the taxing unit is continued by another existing taxing unit or by a new taxing unit. The rollback tax rate of a taxing unit to which this subsection applies in the first tax year in which a budget is adopted that does not allocate revenue to the discontinued department, function, or activity is calculated as otherwise provided by this section, except that last year's total maintenance and operations tax revenue [levy] used to calculate the rollback tax [effective maintenance and operations] rate of the unit is reduced by the amount of maintenance and operations tax revenue spent by the taxing unit to operate the department, function, or activity for the 12 months preceding the month in which the calculations required by this chapter are made and in which the unit operated the discontinued department, function, or activity. If the unit did not operate that department, function, or activity for the full 12 months preceding the month in which the calculations required by this chapter are made, the unit shall reduce last year's total maintenance and operations tax revenue [levy] used for calculating the rollback tax [effective maintenance and operations] rate of the unit by the amount of the revenue spent in the last full fiscal year in which the unit operated the discontinued department, function, or activity.

(j) This subsection applies to a taxing unit that had agreed by written contract to accept the transfer of a distinct department, function, or activity from another taxing unit and operates a distinct department, function, or activity if the operation of a substantially similar department, function, or activity in all or a majority of the territory of the taxing unit has been discontinued by another taxing unit, including a dissolved taxing unit. The rollback tax rate of a taxing unit to which this subsection applies in the first tax year after the other taxing unit discontinued the substantially similar department, function, or activity in which a budget is adopted that allocates revenue to the department, function, or activity is calculated as otherwise provided by this section, except that last year's total maintenance and operations tax revenue [levy] used to calculate the rollback tax [effective maintenance and operations] rate of the unit is increased by the amount of maintenance and operations tax revenue spent by the taxing unit that discontinued operating the substantially similar department, function, or activity to operate that department, function, or activity for the 12 months preceding the month in which the calculations required by this chapter are made and in which the unit operated the discontinued department, function, or activity. If the unit did not operate the discontinued department, function, or activity for the full 12 months preceding the month in which the calculations required by this chapter are made, the unit may increase last year's total maintenance and operations tax revenue [levy] used to calculate the rollback tax [effective maintenance and operations] rate by an amount not to exceed the amount of property tax revenue spent by the discontinuing unit to operate the discontinued department, function, or activity in the last full fiscal year in which the discontinuing unit operated the department, function, or activity.

SECTION 3. 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 TAX RATE =

[(LAST YEAR'S TOTAL MAINTENANCE AND OPERATIONS TAX REVENUE/ CURRENT TOTAL VALUE) x 1.05] + CURRENT DEBT RATE - SALES TAX GAIN RATE

[(EFFECTIVE MAINTENANCE AND OPERATIONS RATE x 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 TAX RATE =

[(LAST YEAR'S MAINTENANCE AND OPERATIONS EXPENSE / CURRENT TOTAL VALUE) x 1.05] + CURRENT DEBT RATE - SALES TAX REVENUE RATE

[[(LAST YEAR'S MAINTENANCE AND OPERATIONS EXPENSE x 1.08) /

[(TOTAL CURRENT 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 /

CURRENT TOTAL VALUE) x 1.05] + CURRENT DEBT RATE

[[(LAST YEAR'S MAINTENANCE AND OPERATIONS EXPENSE x 1.08) /

[(TOTAL CURRENT 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 4. Sections 26.044(a), (b), and (c), Tax Code, are amended to read as follows:

(a) The first time that a county adopts a tax rate after September 1, 1991, in which the state criminal justice mandate applies to the county, the portion of the formula for computing the rollback tax rate for the county tax that consists of the quotient of last year's total maintenance and operations tax revenue and the current total value [the effective maintenance and operation rate for the county] is increased by the rate calculated according to the following formula:

State Criminal Justice Mandate / Current Total Value

[(State Criminal Justice Mandate)

[------------------------------------------

[(Current Total Value - New Property Value)]

(b) In the second and subsequent years that a county adopts a tax rate, if the amount spent by the county for the state criminal justice mandate increased over the previous year, the portion of the formula for computing the rollback tax rate for the county that consists of the quotient of last year's total maintenance and operations tax revenue and the current total value [the effective maintenance and operation rate for the county] is increased by the rate calculated according to the following formula:

(This Year's State Criminal Justice Mandate - Previous Year's State Criminal Justice Mandate) / Current Total Value

[(This Year's State Criminal Justice Mandate - Previous Year's State Criminal Justice Mandate)

[--------------------------------------------------------

[(Current Total Value - New Property Value)]

(c) The county shall include a notice of the increase in the rollback tax [effective maintenance and operation] rate provided by this section, including a description and amount of the state criminal justice mandate, in the information published under Section 26.04(e) and Section 26.06(b) [of this code].

SECTION 5. Sections 26.0441(a), (b), and (c), Tax Code, are amended to read as follows:

(a) In the first tax year in which a taxing unit adopts a tax rate after January 1, 2000, and in which the enhanced minimum eligibility standards for indigent health care established under Section 61.006, Health and Safety Code, apply to the taxing unit, the portion of the formula for computing the rollback tax rate for the taxing unit that consists of the quotient of last year's total maintenance and operations tax revenue and the current total value [effective maintenance and operations rate for the taxing unit] is increased by the rate computed according to the following formula:

AMOUNT OF INCREASE =

Enhanced Indigent Health Care Expenditures / Current Total Value

[Enhanced Indigent Health Care Expenditures

[__________________________________________

[(Current Total Value - New Property Value)]

(b) In each subsequent tax year, if the taxing unit's enhanced indigent health care expenses exceed the amount of those expenses for the preceding year, the portion of the formula for computing the rollback tax rate for the taxing unit that consists of the quotient of last year's total maintenance and operations tax revenue and the current total value [effective maintenance and operations rate for the taxing unit] is increased by the rate computed according to the following formula:

AMOUNT OF INCREASE =

(Current Tax Year's Enhanced Indigent Health Care Expenditures - Preceding Tax Year's Indigent Health Care Expenditures) / Current Total Value [(Current Tax Year's Enhanced Indigent Health Care Expenditures [- Preceding Tax Year's Indigent [Health Care Expenditures) / [(Current Total Value-New Property Value)]

(c) The taxing unit shall include a notice of the increase in its rollback tax [effective maintenance and operations] rate provided by this section, including a brief description and the amount of the enhanced indigent health care expenditures, in the information published under Section 26.04(e) and, if applicable, Section 26.06(b).

SECTION 6. Section 26.05(b), Tax Code, is amended to read as follows:

(b) A taxing unit may not impose property taxes in any year until the governing body has adopted a tax rate for that year, and the annual tax rate must be set by ordinance, resolution, or order, depending on the method prescribed by law for adoption of a law by the governing body. The vote on the ordinance, resolution, or order setting the tax rate must be separate from the vote adopting the budget. The vote on the ordinance, resolution, or order setting a tax rate that exceeds the effective tax rate must be a record vote. If Section 26.071 applies, the adopted tax rate is not effective unless approved at an election held under that section. A motion to adopt an ordinance, resolution, or order setting a tax rate that exceeds the effective tax rate must be made in the following form: "I move that property taxes be increased by the adoption of a tax rate of (specify tax rate)." If the ordinance, resolution, or order sets a tax rate that, if applied to the total taxable value, will impose an amount of taxes to fund maintenance and operation expenditures of the taxing unit that exceeds the amount of taxes imposed for that purpose in the preceding year, the taxing unit must:

(1) include in the ordinance, resolution, or order in type larger than the type used in any other portion of the document:

(A) the following statement: "THIS TAX RATE WILL RAISE MORE TAXES FOR MAINTENANCE AND OPERATIONS THAN LAST YEAR'S TAX RATE."; and

(B) if the tax rate exceeds the effective maintenance and operations rate, the following statement: "THE TAX RATE WILL RAISE TAXES FOR MAINTENANCE AND OPERATIONS ON A $100,000 HOME BY APPROXIMATELY $(Insert amount)."; and

(2) include on the home page of any Internet website operated by the unit:

(A) the following statement: "(Insert name of unit) ADOPTED A TAX RATE THAT WILL RAISE MORE TAXES FOR MAINTENANCE AND OPERATIONS THAN LAST YEAR'S TAX RATE"; and

(B) if the tax rate exceeds the effective maintenance and operations rate, the following statement: "THE TAX RATE WILL RAISE TAXES FOR MAINTENANCE AND OPERATIONS ON A $100,000 HOME BY APPROXIMATELY $(Insert amount)."

SECTION 7. Section 26.07, Tax Code, is amended to read as follows:

Sec. 26.07. ELECTION TO REDUCE ADOPTED TAX RATE [REPEAL INCREASE]. (a) If the commissioners court [governing body] of a county [taxing unit other than a school district] adopts a tax rate that would impose taxes of $5 million or less when applied to the current total value for the county and that exceeds the rollback tax rate calculated as provided by this chapter, the qualified voters of the county [taxing unit] by petition may require that an election be held to determine whether [or not] to reduce the tax rate adopted for the current year to the rollback tax rate calculated as provided by this chapter.

(b) A petition is valid only if:

(1) it states that it is intended to require an election in the county [taxing unit] on the question of reducing the tax rate for the current year;

(2) it is signed by a number of registered voters of the county [taxing unit] equal to at least[:

[(A) seven percent of the number of registered voters of the taxing unit according to the most recent list of registered voters if the tax rate adopted for the current tax year would impose taxes for maintenance and operations in an amount of at least $5 million; or

[(B)] 10 percent of the number of registered voters of the county [taxing unit] according to the most recent official list of registered voters [if the tax rate adopted for the current tax year would impose taxes for maintenance and operations in an amount of less than $5 million]; and

(3) it is submitted to the commissioners court of the county [governing body] on or before the 90th day after the date on which the commissioners court [governing body] adopted the tax rate for the current year.

(c) Not later than the 20th day after the day a petition is submitted, the commissioners court [governing body] shall determine whether [or not] the petition is valid and pass a resolution or order stating its finding. If the commissioners court [governing body] fails to act within the time allowed, the petition is treated as if it had been found valid.

(d) If the commissioners court [governing body] finds that the petition is valid (or fails to act within the time allowed), it shall order that an election be held in the county [taxing unit] on a date not less than 30 or more than 90 days after the last day on which it could have acted to approve or disapprove the petition. Section 41.001, Election Code, [A state law requiring local elections to be held on a specified date] does not apply to the election unless a [specified] 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: "Reducing the tax rate in (name of county [taxing unit]) for the current year from (the rate adopted) to (the rollback tax rate calculated as provided by this chapter)."

(e) If a majority of the qualified voters voting on the question in the election favor the proposition, the tax rate for the county [taxing unit] for the current year is the rollback tax rate calculated as provided by this chapter; otherwise, the tax rate for the current year is the one adopted by the governing body.

(f) If the tax rate is reduced by an election called under this section after tax bills for the county [unit] are mailed, the assessor for the county [unit] shall prepare and mail corrected tax bills. The assessor [He] shall include with the bill a brief explanation of the reason for and effect of the corrected bill. The date on which the taxes become delinquent for the year is extended by a number of days equal to the number of days between the date the first tax bills were sent and the date the corrected tax bills were sent.

(g) If a property owner pays taxes calculated using the higher tax rate when the rate is reduced by an election called under this section, the county [taxing unit] shall refund the difference between the amount of taxes paid and the amount due under the reduced rate if the difference between the amount of taxes paid and the amount due under the reduced rate is $1 or more. If the difference between the amount of taxes paid and the amount due under the reduced rate is less than $1, the county [taxing unit] shall refund the difference on request of the taxpayer. An application for a refund of less than $1 must be made within 90 days after the date the refund becomes due or the taxpayer forfeits the right to the refund.

SECTION 8. Chapter 26, Tax Code, is amended by adding Section 26.071 to read as follows:

Sec. 26.071. ELECTION TO RATIFY TAX RATE OF CERTAIN TAXING UNITS. (a) The governing body of a taxing unit other than a county to which Section 26.07 applies and other than a school district may not adopt a tax rate that exceeds the rollback tax rate calculated as provided by this chapter without voter approval as provided by this section. To adopt a tax rate that exceeds the rollback tax rate, the governing body must adopt the rate as a proposed tax rate and call an election to permit the qualified voters of the taxing unit to approve or disapprove the proposed tax rate.

(b) The governing body shall order that the election be held in the taxing unit on a date not less than 30 or more than 90 days after the day on which the governing body adopted the proposed 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 proposed ad valorem tax rate of $_____ per $100 valuation in (name of taxing unit) for the current year, a rate that is $_____ higher per $100 valuation than the rollback tax rate." The ballot proposition must include the proposed tax rate and the difference between that rate and the rollback tax rate in the appropriate places.

(c) If a majority of the votes cast in the election favor the proposition, the proposition is approved and the tax rate for the current year is the proposed tax rate that was adopted by the governing body.

(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 for the current year that exceeds the taxing unit's rollback tax rate.

SECTION 9. 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 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 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 26.071 [26.07], Tax Code.

SECTION 10. Section 3828.157, Special District Local Laws Code, is amended to read as follows:

Sec. 3828.157. INAPPLICABILITY OF CERTAIN TAX CODE PROVISIONS. Sections 26.04, 26.05, and 26.071 [26.07], Tax Code, do not apply to a tax imposed under Section 3828.153 or 3828.156.

SECTION 11. Section 49.107(g), Water Code, is amended to read as follows:

(g) Sections 26.04, 26.05, and 26.071 [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 26.071 [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. Section 49.236, Water Code, as added by Chapters 248 and 335, Acts of the 78th Legislature, Regular Session, 2003, is reenacted and amended to read as follows:

Sec. 49.236. NOTICE OF TAX HEARING. (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 operation and maintenance 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."

(b) Notice of the hearing shall be:

(1) published at least once in a newspaper having general circulation in the district at least seven days before the date of the hearing; or

(2) mailed to each owner of taxable property in the district, at the address for notice shown on the most recently certified tax roll of the district, at least 10 days before the date of the hearing.

(c) The notice provided under this section may not be smaller than one-quarter page of a standard-size or tabloid-size newspaper of general circulation, and the headline on the notice must be in 18-point or larger type.

(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 total 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 Section 26.071 [Sections 26.07(b)-(g) and 26.081], Tax Code. For purposes of Section 26.071, Tax Code, [Sections 26.07(b)-(g)] and this subsection, the rollback tax rate of the district 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 total 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. This Act applies only to ad valorem taxes imposed for a tax year beginning on or after January 1, 2008.

SECTION 15. This Act takes effect January 1, 2008.