80R1353 KSD-D

By: West, Royce S.B. No. 146

A BILL TO BE ENTITLED

AN ACT

relating to the creation of higher education enhancement districts; authorizing sales and use taxes and property taxes.

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

SECTION 1. Title 3, Education Code, is amended by adding Subtitle I to read as follows: SUBTITLE I. HIGHER EDUCATION DISTRICTS CHAPTER 159. HIGHER EDUCATION ENHANCEMENT DISTRICTS SUBCHAPTER A. GENERAL PROVISIONS

Sec. 159.001. DEFINITIONS. In this chapter:

(1) "Coordinating board" means the Texas Higher Education Coordinating Board.

(2) "District" means a higher education enhancement district created under this chapter.

(3) "Regional university" means:

(A) a general academic teaching institution as defined by Section 61.003, other than Texas A&M University and The University of Texas at Austin; or

(B) a system center of a general academic teaching institution that by statute is authorized to operate as a general academic teaching institution after reaching specified student enrollment goals.

(4) "Service territory" means a geographical area established by the coordinating board under Section 159.003 in which a district may be created under this chapter.

Sec. 159.002. PURPOSE. The purpose of this chapter is to enable a regional university and the community served by the university, through the creation of a higher education enhancement district, to elect to provide local funding to supplement endowment and scholarship funds at the university and to otherwise enhance the quality of education provided by the university.

Sec. 159.003. ESTABLISHMENT OF SERVICE TERRITORIES. (a) Except as provided by Subsection (b) or (c), the coordinating board shall establish a service territory for each regional university.

(b) The coordinating board shall establish a single service territory for two or more regional universities located in the same county. The service territory established under this subsection must include the entire county in which the universities are located.

(c) The coordinating board may establish a single service territory for two or more regional universities located in adjacent counties if the coordinating board determines, based on the criteria described in Subsection (d), that the universities serve primarily the same areas.

(d) In establishing a service territory under this section, the coordinating board shall attempt to include areas:

(1) that are in closest geographic proximity to the university or universities;

(2) that benefit from being served by the university or universities; and

(3) that will benefit economically from the improvements and services that would be provided by a district.

(e) A service territory created under this section may not contain territory that is contained within another service territory.

(f) Subject to Subsection (b), a service territory may consist of whole counties or portions of counties.

(g) Before establishing a service territory under this section, the coordinating board, after notice published in one or more newspapers having general circulation in the counties in which the service territory may be established, shall hold at least one public hearing at which any interested person may appear and offer testimony regarding the establishment of a service territory for a regional university.

Sec. 159.004. DISTRICT AUTHORIZATION. A higher education enhancement district may be created, operated, and financed as provided by this chapter.

Sec. 159.005. PERFORMANCE REVIEW BY COORDINATING BOARD. The coordinating board shall conduct a performance review of each district created under this chapter every five years.

Sec. 159.006. PROVISIONS RELATING TO PROPERTY TAX. A provision of this subchapter relating to a property tax imposed or to be imposed by a district has no effect if Subchapter F does not take effect. [Sections 159.007-159.050 reserved for expansion] SUBCHAPTER B. CREATION OF DISTRICT

Sec. 159.051. CREATION OF DISTRICT. (a) A district may be created under this subchapter to include all of or any portion of a service territory.

(b) Only one district may be created in each service territory. The district must include the campus of each regional university located in the service territory.

Sec. 159.052. REQUEST FOR HEARING ON CREATION OF DISTRICT. (a) Before a district may be created in a service territory that includes only one regional university, the president of the regional university located in the service territory or a person designated by the president must submit to the coordinating board a written request that the coordinating board hold a public hearing on the creation of the district.

(b) Before a district may be created in a service territory that includes more than one regional university, the presidents of the universities or their designees must jointly submit to the coordinating board a written request that the coordinating board hold a public hearing on the creation of the district. A district may not be created in the service territory without the agreement of each regional university in the territory.

(c) A request under this section must include a description of the proposed district and state whether the district would impose a sales and use tax, a property tax, or a combination of a sales and use tax and a property tax.

Sec. 159.053. HEARING; NOTICE. (a) On receipt of a written request for a hearing under Section 159.052, the coordinating board shall hold a public hearing on the request in each county having territory located in the proposed district.

(b) The coordinating board shall give notice of the hearing by publishing notice at least twice in one or more newspapers having general circulation in the county. The notice must be published before the 30th day before the date set for the hearing. The notice may not be smaller than one-quarter page of a standard-size newspaper and the headline on the notice must be in 18-point or larger type.

(c) The notice must include:

(1) the date, time, and location of the hearing;

(2) a statement of the general purpose and effect of creating a district in the service territory;

(3) a map of the proposed district or a description of the boundaries or territory of the proposed district sufficient to provide a person with reasonable notice that the person's property may be included in the proposed district; and

(4) a statement that all interested persons may appear and offer testimony for or against the creation of a district.

Sec. 159.054. COORDINATING BOARD FINDINGS. (a) After holding a hearing in each county having territory located in the proposed district, the coordinating board shall, using due diligence, evaluate:

(1) the needs of the regional university or universities in the proposed district;

(2) the extent to which the creation of the district would:

(A) meet the needs of the regional university or universities;

(B) enhance the economy of the area to be served by the district and the regional university or universities in the district; and

(C) provide or enhance educational opportunities in the area to be served by the district; and

(3) the extent to which the political and business communities and voters in the proposed district support the creation of the district.

(b) If the coordinating board finds, based on its evaluation under Subsection (a), that it is in the best interest of the residents of the counties having territory located in the proposed district to provide those residents with an opportunity through an election held in the proposed district to authorize the creation of a district and the imposition of a sales and use tax, a property tax, or a combination of a sales and use tax and a property tax, as requested under Section 159.052, the coordinating board shall submit its findings to the county judge of each county located in the proposed district in the form of a petition described by Section 159.055.

Sec. 159.055. CONTENTS OF PETITION. (a) The petition prescribed by Section 159.054 must:

(1) state that the district is to be created and operate under this chapter if approved by the voters;

(2) state the name of the proposed district;

(3) contain the proposed district's boundaries as designated by metes and bounds or other sufficient legal description;

(4) show that none of the territory in the proposed district is included in another higher education enhancement district;

(5) state that permanent supervisors will be elected for the district;

(6) state the names of five temporary supervisors from different geographic regions of the proposed district that the commissioners court must appoint under Section 159.061; and

(7) state whether the district will impose a sales and use tax, a property tax, or both, to be voted on at the creation election, and state a maximum rate for each tax the district will be authorized to impose.

(b) To be eligible to be named in the petition as a temporary supervisor, a person must be:

(1) a resident of the proposed district; and

(2) a qualified voter.

Sec. 159.056. FILING OF PETITION; HEARING; ORDERING ELECTION. (a) If the petition is in proper form, the county judge shall:

(1) accept the petition; and

(2) file the petition with the county clerk.

(b) At the next regular or special session of the commissioners court held after the petition is filed with the county clerk for which there is sufficient time to include the matter in the agenda and public notice, the commissioners court shall set a place, date, and time for a hearing to consider the petition.

(c) The county clerk shall issue a notice of the hearing in accordance with Chapter 551, Government Code.

(d) At the time and place set for the hearing, the commissioners court shall consider the petition. If the commissioners court finds that the petition is in proper form and contains the information required by Section 159.055, the court shall approve the petition at the conclusion of the hearing.

(e) If a petition is approved, subject to Subsection (f) the commissioners court shall order an election in the portion of the proposed district located in that county to confirm the district's creation and to authorize the imposition of a sales and use tax or a property tax, or both, at a rate not to exceed the limits provided by law. The election shall be held on the next uniform election date in November that occurs at least 90 days after the date the election is ordered.

(f) If the proposed district will contain territory in more than one county, the commissioners courts may not order an election until the commissioners court of each county in which the district will be located has approved the petition.

Sec. 159.057. ELECTION ORDER. The order calling the election must state the nature of the election, including the proposition that is to appear on the ballot.

Sec. 159.058. BALLOT PROPOSITION. The ballot for the election shall be printed to permit voting for or against the proposition: "The creation of the Higher Education Enhancement District for ____________ (name of regional university or universities) and the adoption of _________ (a local sales and use tax, a property tax, or a combination of a local sales and use tax and a property tax, as applicable) for the district at a rate (or rates, as applicable) not to exceed the limits provided by law, but in no event greater than _________ (the maximum tax rate for each tax as specified in the petition as required by Section 159.055)."

Sec. 159.059. ELECTION RESULTS; CREATION OF DISTRICT. (a) The commissioners court of each county in which the election is held is the canvassing authority for the election in that county. The canvass shall be conducted in the manner provided by law for a local canvass.

(b) If the election is held in one county, the commissioners court of that county shall declare the proposition to have been approved and enter an order creating the district if a majority of the votes cast in the election favor creation of the district. If a majority of the votes cast do not favor creation of the district, the commissioners court shall declare the proposition to create the district to have been defeated.

(c) If the election is held in more than one county, the commissioners court of each county, on receiving the returns of the election, shall canvass the returns and certify the results of the election in that county to the commissioners court of the county in which the election is held having the greatest population. On receipt of the returns of all the counties, the commissioners court of the county with the greatest population shall conduct a final canvass of the returns and shall certify the final results of the election. The commissioners court of that county shall declare the proposition to have been approved and enter an order creating the district if a majority of the votes cast in the election in the entire territory of the proposed district favor the creation of the district. If a majority of the votes cast in the election in the entire territory do not favor creation of the district, the commissioners court conducting the final canvass shall declare the proposition to create the district to have been defeated.

(d) As soon as practicable, the commissioners court ordering creation of a district shall notify the comptroller of the results of the election in the manner specified by the comptroller.

Sec. 159.060. RESTRICTION ON SUBSEQUENT ELECTION. If the proposition to create the district is defeated, another election on the question of creating a district in any part of the same service territory may not be held before the first anniversary of the election.

Sec. 159.061. TEMPORARY SUPERVISORS. (a) The commissioners court that enters an order creating a district shall appoint those persons named as temporary supervisors in the petition as the temporary supervisors of the district on the date the commissioners court enters the order creating the district.

(b) The temporary supervisors serve as supervisors of the district until a majority of the initial supervisors take office.

(c) A vacancy in the office of temporary supervisor shall be filled by appointment by the remaining temporary supervisors. [Sections 159.062-159.100 reserved for expansion] SUBCHAPTER C. BOARD OF SUPERVISORS

Sec. 159.101. BOARD OF SUPERVISORS. (a) The district is governed by a board of five supervisors.

(b) The supervisors shall be elected at the uniform election date in May of each year and serve staggered terms of two years.

Sec. 159.102. INITIAL SUPERVISORS' ELECTION. (a) The initial supervisors shall be elected at large at an election held on the next uniform election date in May that is at least 90 days after the date the district is created.

(b) The initial supervisors shall draw lots to determine which two initial supervisors serve one-year terms and which three initial supervisors serve two-year terms.

(c) After the initial supervisors are elected, the district shall establish single-member election districts within the district from which supervisors shall be elected in subsequent elections.

Sec. 159.103. QUALIFICATIONS FOR OFFICE. To be eligible to be a candidate for or to serve as a supervisor, a person must be:

(1) a resident of the single-member election district the person seeks to represent; and

(2) a qualified voter.

Sec. 159.104. BOARD VACANCY. A vacancy in the office of a supervisor shall be filled for the unexpired term by appointment by the remaining supervisors of a person who is eligible to serve as supervisor. [Sections 159.105-159.150 reserved for expansion] SUBCHAPTER D. CHANGE IN BOUNDARIES

Sec. 159.151. EXPANSION OF DISTRICT TERRITORY. Any portion of the service territory not already included in the district may be added to the district in any manner in which territory may be added to a junior college district under Subchapter D, Chapter 130. [Sections 159.152-159.200 reserved for expansion] SUBCHAPTER E. SALES AND USE TAX

Sec. 159.201. COUNTY SALES AND USE TAX ACT APPLICABLE. (a) Except as provided by Subsection (b) or as inconsistent with this chapter, Chapter 323, Tax Code, applies to a sales and use tax authorized by this chapter in the same manner as that chapter applies to the tax authorized by that chapter.

(b) Sections 323.101(b), (c), (d), and (e), Tax Code, do not apply to a sales and use tax authorized by this chapter.

Sec. 159.202. IMPOSITION OF SALES AND USE TAX. If the tax is approved by the voters at the election authorizing the creation of the district, the district may impose a sales and use tax as provided by this subchapter.

Sec. 159.203. SALES AND USE TAX RATE; LIMITATIONS ON RATE. (a) For the first four quarters for which the tax is to be imposed, and for each subsequent year, the board of supervisors shall set the rate of the district's sales and use tax at a rate the board considers appropriate for the purposes of the district, not to exceed any of the following:

(1) one-half of one percent of taxable receipts or the maximum tax rate approved at the election authorizing the tax, whichever is less;

(2) the rate that, if applied to the total taxable receipts in the territory constituting the district for the most recent four calendar quarters for which information is available, would generate $30 million in taxes for each regional university in the district; or

(3) the rate that, if applied to the total taxable receipts for the most recent four calendar quarters for which information is available, would generate $60 in taxes for each semester credit hour used by the Legislative Budget Board under Section 61.059 for the most recent biennium to establish the base level of appropriations funding for the regional university or universities for which the district is created.

(b) If in any year for which the board of supervisors sets a tax rate the tax imposed by the district generates a total amount of tax revenue that exceeds the amount of taxes specified in Subsection (a)(2) or (3) for that year, in setting the rate of the district's sales and use tax for the second year following that year, the tax rate limitations computed under Subsections (a)(2) and (3) are reduced by the rate that, when added to the total taxable receipts used in the computations under Subsections (a)(2) and (3), would generate an amount of total taxes equal to the excess amount of tax revenue generated.

(c) The tax rate set by the board must be in increments of not less than one-eighth of one percent.

(d) On request, the comptroller shall provide the board of supervisors with the information the board requires to comply with this section.

Sec. 159.204. EFFECTIVE DATE OF SALES AND USE TAX. (a) The tax takes effect on the first day of the first calendar quarter occurring after the expiration of the first complete calendar quarter occurring after the date on which the comptroller receives a notice of the results of the election creating the district.

(b) If the comptroller determines that an effective date provided by Subsection (a) will occur before the comptroller can reasonably take the action required to begin collecting the tax, the comptroller may postpone the effective date until the first day of the next calendar quarter.

Sec. 159.205. EFFECT OF ADOPTION OF TAX ON OTHER LAW. If another law imposes a limit on the combined rate of sales tax imposed by political subdivisions of the state having territory at any location in the district, the total limit provided by that law is increased by one-half of one percent of taxable receipts in the territory of the district. [Sections 159.206-159.250 reserved for expansion] SUBCHAPTER F. PROPERTY TAXES

Sec. 159.251. IMPOSITION OF PROPERTY TAX. If the tax is approved by the voters at the election authorizing the creation of the district, the district may impose and collect a property tax as provided by this subchapter.

Sec. 159.252. PROPERTY TAX RATE; LIMITATIONS. (a) The board of supervisors shall annually set the rate of the district's property tax at a rate the board considers appropriate for the purposes of the district, not to exceed any of the following:

(1) the maximum tax rate approved at the election authorizing the tax;

(2) the rate that, if applied to the taxable property in the district, would generate $30 million in taxes for each regional university in the district; or

(3) the rate that, if applied to the taxable property in the district, would generate $60 in taxes for each semester credit hour used by the Legislative Budget Board under Section 61.059 for the most recent biennium to establish the base level of appropriations funding for the regional university or universities for which the district is created.

(b) If the total amount of taxes collected in a calendar year exceeds the amount of taxes specified in Subsection (a)(2) or (3) for the preceding year, the amounts used under Subsections (a)(2) and (3) to compute the maximum tax rate for the next tax year shall be reduced by the amount of the excess taxes collected.

Sec. 159.253. PROPERTY TAX ASSESSOR-COLLECTOR. The district may employ a person to assess or collect taxes for the district or may contract with another governmental entity as provided by other law for the assessment or collection of the district's taxes. [Sections 159.254-159.300 reserved for expansion] SUBCHAPTER G. GENERAL TAX PROVISIONS

Sec. 159.301. LIMITATIONS ON COMBINED RATE OF SALES AND USE TAX AND PROPERTY TAX. (a) In addition to the tax rate limits provided by Sections 159.203 and 159.252, if the district imposes both a sales and use tax and a property tax, the board of supervisors shall set the rates of those taxes for a year at rates that together would generate a total amount of taxes that is not more than the lesser of:

(1) $30 million in taxes for each regional university in the district; or

(2) $60 in taxes for each semester credit hour used by the Legislative Budget Board under Section 61.059 for the most recent biennium to establish the base level of appropriations funding for the regional university or universities for which the district is created.

(b) If in a district described by Subsection (a) the total amount of sales and use taxes and property taxes collected in a calendar year exceeds the amount specified in Subsection (a)(1) or (2), the amounts used under Subsections (a)(1) and (2) to compute the maximum amount of taxes that may be generated from the sales and use tax and property tax for the next year shall be reduced by the amount of excess taxes collected.

(c) For purposes of this section, the sales tax rate set in a calendar year and the property tax rate adopted for that year are treated as the tax rates for the same year.

Sec. 159.302. USE OF TAX REVENUE. (a) The board of supervisors of the district shall retain the portion of the revenue from a tax imposed by the district under this chapter necessary to cover the district's expenses as provided by the district's budget and shall deliver the remaining tax revenue to the regional university or universities for which the district is created. If the district includes more than one regional university, the board of supervisors of the district shall apportion that tax revenue among the universities in proportion to the number of semester credit hours used by the Legislative Budget Board under Section 61.059 for the most recent biennium to establish the base level of appropriations funding for each university.

(b) Each regional university shall use revenue received under Subsection (a) as follows:

(1) one-third of the revenue shall be used to provide scholarships to students who reside in the district based on merit in academics, the fine arts, or the performing arts;

(2) one-third of the revenue shall be deposited in one or more of the university's endowment funds to support educational or research activities of the university; and

(3) one-third of the revenue shall be used by the university for facility construction and maintenance, economic development programs, and cultural programs that:

(A) are designed to:

(i) make the university a focal point of regional activity; and

(ii) connect the university with the communities served by the university; and

(B) are approved by the university's governing board and the district's board of supervisors.

Sec. 159.303. EFFECT ON UNIVERSITY FUNDING. This chapter and the tax revenue received by a regional university under this chapter do not affect the funds to which the regional university is entitled under other law, including formula funding. [Sections 159.304-159.350 reserved for expansion] SUBCHAPTER H. DISSOLUTION OF DISTRICT

Sec. 159.351. DISSOLUTION AUTHORIZED. The district may be dissolved if the dissolution is approved by a majority of the qualified voters of the district voting in an election held under this subchapter for that purpose.

Sec. 159.352. ORDERING ELECTION. Not earlier than the 12th anniversary of the date of the election creating the district, the board of supervisors of the district shall order an election on the question of dissolving the district if the board receives a petition requesting an election to dissolve the district that is signed by a number of registered voters of the district equal to at least 15 percent of the registered voters in the district.

Sec. 159.353. ELECTION ORDER. The order calling the election must state:

(1) the nature of the election, including the proposition that is to appear on the ballot; and

(2) the date of the election.

Sec. 159.354. ELECTION DATE. The election shall be held on the first uniform election date prescribed by Section 41.001, Election Code, that is at least 65 days after the date the election is ordered.

Sec. 159.355. BALLOT PROPOSITION. The ballot for the election shall be printed to permit voting for or against the proposition: "The dissolution of the Higher Education Enhancement District for ____________ (name of regional university or universities)."

Sec. 159.356. CANVASSING RETURNS; ELECTION RESULTS. (a) The board of supervisors of the district shall canvass the returns of the election.

(b) If a majority of the votes cast in the election favor dissolution of the district, the board of supervisors of the district shall enter an order dissolving the district. The order is effective on the next January 1 that is at least 180 days after the date the order is entered.

(c) If a majority of the votes in the election do not favor dissolution, the board of supervisors of the district shall continue to administer the district, and another election to dissolve the district may not be held before the 12th anniversary of the date of the election.

Sec. 159.357. DISSOLUTION PROCEDURES. (a) Before the dissolution of the district takes effect, the board of supervisors shall:

(1) notify the comptroller and the appropriate appraisal districts that the district is to be dissolved and that the district's tax authority will terminate on that date;

(2) pay all the debts and obligations of the district and transfer the unencumbered assets of the district to the regional university or universities for which the district was created in equal amounts; and

(3) take any other action necessary to conclude the affairs of the district.

(b) The board of supervisors remains in effect and may continue to act on behalf of the district for not more than two years after dissolution of the district as necessary to conclude the affairs of the district.

Sec. 159.358. TAXES ABOLISHED ON DISSOLUTION OF DISTRICT. (a) On dissolution of a district under Section 159.356(b), the tax or taxes imposed by the district are abolished.

(b) After dissolution of the district, the tax assessor-collector of each county in which the district was located serves as the assessor and collector of the district with respect to any unpaid and delinquent property taxes of the district.

(c) After the district is dissolved, the comptroller shall deliver any sales and use tax revenue collected on behalf of and payable to the district to the governing board of the regional university or universities for which the district was created in equal amounts.

SECTION 2. The Texas Higher Education Coordinating Board shall establish service territories for regional universities as required by Section 159.003, Education Code, as added by this Act, as soon as practicable after the effective date of this Act.

SECTION 3. (a) Except as provided by Subsection (b) of this section, 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, 2007.

(b) Subchapter F, Chapter 159, Education Code, and Section 159.301, Education Code, as added by this Act, take effect January 1, 2008, but only if the voters approve the constitutional amendment proposed by the 80th Legislature, Regular Session, 2007, authorizing the legislature to permit a district created to provide local funding to support educational programs at public institutions of higher education to impose an ad valorem tax to support those educational programs if the tax is approved by the voters of the district. If the constitutional amendment is not approved by the voters, Subchapter F, Chapter 159, Education Code, and Section 159.301, Education Code, as added by this Act, do not become law.