80R9828 JD-D

By: Isett H.B. No. 3534

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 26.04(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 TAX 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 TAX 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. Chapter 26, Tax Code, is amended by adding Section 26.046 to read as follows:

Sec. 26.046. ROLLBACK RELIEF FOR UNFUNDED STATE MANDATE. (a) In this section, "state mandate" means a statutory provision that is enacted by the legislature, or a rule or order implementing a state statute that is prescribed or issued by a state officer or state agency in the executive branch of state government, and that requires a taxing unit to establish, expand, or change an activity in a way that requires an expenditure of revenue that would not have been required in the absence of the statutory provision, rule, or order.

(b) For purposes of this section, a state mandate is considered to be unfunded during any period for which the state has not provided, by legislative appropriation or otherwise, for the affected taxing unit to receive state or federal funds in an amount estimated to be sufficient to meet the cost of complying with or implementing the mandate. If the legislature provides for funds by authorizing or requiring an affected taxing unit to collect a regulatory or user fee that the state will impose or that a taxing unit is authorized to impose on persons who engage in an activity that is the subject of or is directly connected to the subject of the state mandate, the anticipated revenue from the fee is considered for purposes of this section to be funds provided by the state to pay for the costs of the state mandate.

(c) This section does not apply to:

(1) a state mandate the existence of which is necessary for compliance with a requirement of the Texas Constitution, a court order, or federal law, including a state mandate that is necessary for continued participation in a federal program;

(2) a state statute that creates a criminal offense or changes the elements of a criminal offense; or

(3) a decision or order by a state officer or state agency that requires a taxing unit to comply with, or that sanctions the taxing unit for failure to comply with, a law, rule, or order that is not an unfunded state mandate to which this section applies.

(d) The effective tax rate and the rollback tax rate for a taxing unit calculated under any other provision of this chapter are increased by the rate that, if applied to current total value, would impose an amount of taxes equal to the amount the taxing unit is required to spend to comply with or implement an unfunded state mandate in the budget year for which the taxes will be imposed. If the taxing unit is a county or a municipality, in the formula for calculating the rollback tax rate under any other provision of this chapter, the governing body of the taxing unit may, at its option, substitute the sum of 1 plus the consumer price index percentage change, if any, not to exceed eight percent, for 1.05. For a county or municipality that elects to make the substitution in the calculation of its rollback tax rate as authorized by this subsection, notwithstanding Section 26.07(b)(2), a petition authorized by Section 26.07(a) is valid only if it is signed by a number of registered voters of the county or municipality equal to at least 10 percent of the number of registered voters of the taxing unit according to the most recent official list of registered voters. Not later than July 1 of each year the state auditor shall determine the consumer price index percentage change and publish that change in the Texas Register. In this subsection:

(1) "Consumer price index" means the consumer price index, as published by the Bureau of Labor Statistics of the United States Department of Labor, that measures the average changes in prices of goods and services purchased by urban wage earners and clerical workers' families and single workers living alone (CPI-W: Seasonally Adjusted U.S. City Average--All Items).

(2) "Consumer price index percentage change" means the percentage increase or decrease in the consumer price index for the most recent state fiscal year for which the information is available, from the consumer price index for the state fiscal year preceding that state fiscal year, as calculated by the state auditor.

(e) In each subsequent year that the taxing unit adopts a tax rate, if the amount the taxing unit is required to spend to comply with or implement the unfunded state mandate is greater than the amount required to be spent for the mandate in the preceding year, the effective tax rate and the rollback tax rate for the taxing unit are increased by the rate that, if applied to current total value, would impose an amount of taxes equal to the increase in the amount required to be spent to comply with or implement the mandate in that year.

(f) A taxing unit shall include a notice of an increase in the effective tax rate and the rollback tax rate made as provided by this section, including a description of and the estimated amount of the unfunded state mandate, in the information published under Sections 26.04 and 26.06 of this code, Section 44.004, Education Code, or Section 49.236, Water Code.

(g) On or before the September 1 following a regular session of the legislature and on or before the 90th day after the last day of a special session of the legislature, the comptroller shall publish a list of legislative mandates for which the legislature has not provided reimbursement as provided by Subsection (b) and that were enacted by the legislature during that legislative session. By that same date the comptroller shall:

(1) remove from the list of legislative mandates from a previous legislative session a legislative mandate:

(A) for which the legislature has provided reimbursement as provided by Subsection (b); or

(B) that is no longer in effect; and

(2) add to the list a legislative mandate from a previous legislative session for which reimbursement was provided as provided by Subsection (b) in the previous session but for which reimbursement was not provided in the most recent regular session or in any subsequent special session.

(h) The comptroller shall deliver the list prepared under Subsection (g) to the secretary of state for publication in the Texas Register.

(i) A taxing unit that believes it is subject to an unfunded state mandate that is not listed by the comptroller under Subsection (g) must apply in writing to the comptroller for a determination as to whether the taxing unit is subject to an unfunded state mandate. The comptroller shall make the determination as soon as practicable and send a copy of the determination to the chief executive officer of the taxing unit. If the comptroller determines that an unfunded mandate exists, the comptroller shall add the unfunded mandate to the list published under Subsection (g) as soon as practicable and deliver a notice of the addition to the secretary of state for publication in the Texas Register.

SECTION 4. Section 26.07(b), Tax Code, is amended to read as follows:

(b) A petition is valid only if:

(1) it states that it is intended to require an election in the 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 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 taxing unit who voted in the most recent gubernatorial election [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 governing body on or before the 90th day after the date on which the governing body adopted the tax rate for the current year.

SECTION 5. 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 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 be held to determine whether to 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 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 be held to determine whether [or not] to reduce the tax rate adopted for the current year to the rollback tax rate in accordance with the procedures provided by Section 26.07 [Sections 26.07(b)-(g) and 26.081], Tax Code. For purposes of Section 26.07, Tax Code, [Sections 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 6. (a) The change in law made by this Act applies to the ad valorem tax rate of a taxing unit beginning with the 2007 tax year, except as provided by Subsection (b) of this section.

(b) If the governing body of a taxing unit adopted an ad valorem tax rate for the taxing unit for the 2007 tax year before the effective date of this Act, the change in law made by this Act applies to the ad valorem tax rate of that taxing unit beginning with the 2008 tax year, and the law in effect when the tax rate was adopted applies to the 2007 tax year with respect to that taxing unit.

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 on the 91st day after the last day of the legislative session.