81R1923 SMH-D

By: Villarreal H.B. No. 134

A BILL TO BE ENTITLED

AN ACT

relating to ad valorem taxation.

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

ARTICLE 1. STATE ADMINISTRATION OF PROPERTY TAX SYSTEM

SECTION 1.01. Chapter 5, Tax Code, is amended by adding Sections 5.01 and 5.02 to read as follows:

Sec. 5.01. OFFICE OF PROPERTY APPRAISAL. (a) The Office of Property Appraisal is established as an office in the comptroller's office.

(b) The office is under the direction and control of the comptroller.

(c) Unless the context indicates otherwise, a reference in another law or an administrative rule to the comptroller in connection with state administration of the property tax system means the Office of Property Appraisal.

Sec. 5.02. OFFICE OF PROPERTY TAX PUBLIC COUNSEL. (a) The Office of Property Tax Public Counsel is established as an office in the Office of Property Appraisal.

(b) The office is headed by a property tax public counsel appointed by the comptroller.

(c) The property tax public counsel shall represent the interests of owners of single-family residential property and small businesses in property tax matters.

(d) The property tax public counsel may:

(1) represent a property owner in a protest under Chapter 41 or an appeal through binding arbitration under Chapter 41A; and

(2) appear or intervene, as a party or otherwise, as a matter of right on behalf of owners of single-family residential property or small businesses, as a class, in an action under Section 43.01 or bring an action under that section, regardless of whether the property tax public counsel is affected by the appraisal district or appraisal review board's failure to comply with the law.

SECTION 1.02. This article takes effect January 1, 2010, but only if the constitutional amendment proposed by the 81st Legislature, Regular Session, 2009, authorizing the legislature to provide that ad valorem tax appraisal services in any county are under the jurisdiction of the entity specified by the legislature, to provide for the consolidation of ad valorem tax appraisal services, and to provide for enforcement of ad valorem tax standards and procedures by the specified entity is approved by the voters. If that amendment is not approved by the voters, this article has no effect.

ARTICLE 2. REVIEW BY OFFICE OF PROPERTY APPRAISAL OF APPRAISAL

STANDARDS, PROCEDURES, AND METHODOLOGY USED BY AN APPRAISAL

DISTRICT TO DETERMINE TAXABLE VALUE OF PROPERTY IN A SCHOOL

DISTRICT

SECTION 2.01. The heading to Subchapter M, Chapter 403, Government Code, is amended to read as follows:

SUBCHAPTER M. DETAILED REVIEW [STUDY] OF STANDARDS,

PROCEDURES, AND METHODOLOGY USED TO DETERMINE

SCHOOL DISTRICT PROPERTY VALUES

SECTION 2.02. Sections 403.3011(1), (2), and (4), Government Code, are amended to read as follows:

(1) "Detailed review [Annual study]" means a review [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 detailed review [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 detailed review [annual study];

(B) in the detailed review [annual study] for each of the two years preceding the most recent detailed review [annual study], the school district's local value was valid under Section 403.302(c); and

(C) in the most recent detailed review [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.

(4) "State value" means the value of property in a school district as determined in a detailed review [the annual study].

SECTION 2.03. Sections 403.302(a), (b), (c), (c-1), (d), (f), (g), (h), (i), and (l), Government Code, are amended to read as follows:

(a) The comptroller shall conduct a detailed review of the appraisal standards, procedures, and methodology by which an appraisal district determines [an annual study using comparable sales and generally accepted auditing and sampling techniques to determine] the [total taxable] value of all property in each school district that participates in the appraisal district. The review must test the standards, procedures, and methodology of an appraisal district used to [study shall] determine the taxable value of all property and of each category of property in the district and the productivity value of all land that qualifies for appraisal on the basis of its productive capacity and for which the owner has applied for and received a productivity appraisal. The comptroller shall make appropriate adjustments in the review [study] to account for actions taken under Chapter 41, Education Code.

(b) In conducting the detailed review [study], the comptroller shall use [determine the taxable value of property in each school district]:

(1) [using, if appropriate,] samples selected through generally accepted auditing and sampling techniques in testing the standards, procedures, and methodology used by the appraisal district to determine the taxable value of property on a school district's appraisal roll for compliance with generally accepted appraisal standards and practices; and

(2) 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 [according to generally accepted standard valuation, statistical compilation, and analysis techniques;

[(3) ensuring that different levels of appraisal on sold and unsold property do not adversely affect the accuracy of the study; and

[(4) ensuring that different levels of appraisal resulting from protests determined under Section 41.43, Tax Code, are appropriately adjusted in the study].

(c) If after conducting the detailed review [annual study] the comptroller determines that the appraisal district used appropriate information and methodology to appraise all property or a category of property for a school district, the local value of all property or the category of property for the [a] school district is valid and [,] the local value is presumed to represent taxable value for the school district. If after conducting the detailed review the comptroller determines that the appraisal district did not use appropriate information and methodology to appraise all property or a category of property for a school district, [In] the [absence of that presumption,] taxable value of all property or the category of property for the [a] school district is the state value of that property or category for the school district determined by the comptroller under Subsections (a) and (b) unless the local value of all property or of the category of property exceeds the state value of all property or the category of property, as applicable, in which case the taxable value of all property or the category of property 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.]

(c-1) This subsection applies only to a school district whose central administrative office is located in a county with a population of 9,000 or less and a total area of more than 6,000 square miles. If after conducting the detailed review [annual study] for a tax year the comptroller determines that the local value for a school district is not valid, the comptroller shall adjust the taxable value determined under Subsections (a) and (b) as follows:

(1) for each category of property sampled and tested by the comptroller in the school district, the comptroller shall use the weighted mean appraisal ratio determined by the detailed review [study], unless the ratio is more than four percentage points lower than the weighted mean appraisal ratio determined by the comptroller for that category of property in the immediately preceding detailed review [study], in which case the comptroller shall use the weighted mean appraisal ratio determined in the immediately preceding detailed review [study] minus four percentage points;

(2) the comptroller shall use the category weighted mean appraisal ratios as adjusted under Subdivision (1) to establish a value estimate for each category of property sampled and tested by the comptroller in the school district; and

(3) the value estimates established under Subdivision (2), together with the local tax roll value for any categories not sampled and tested by the comptroller, less total deductions determined by the comptroller, determine the taxable value for the school district.

(d) For the purposes of this section, "taxable value" means the market value of all taxable property less:

(1) the total dollar amount of any residence homestead exemptions lawfully granted under Section 11.13(b) or (c), Tax Code, in the year that is the subject of the detailed review [study] for each school district;

(2) one-half of the total dollar amount of any residence homestead exemptions granted under Section 11.13(n), Tax Code, in the year that is the subject of the detailed review [study] for each school district;

(3) the total dollar amount of any exemptions granted before May 31, 1993, within a reinvestment zone under agreements authorized by Chapter 312, Tax Code;

(4) subject to Subsection (e), the total dollar amount of any captured appraised value of property that:

(A) is within a reinvestment zone created on or before May 31, 1999, or is proposed to be included within the boundaries of a reinvestment zone as the boundaries of the zone and the proposed portion of tax increment paid into the tax increment fund by a school district are described in a written notification provided by the municipality or the board of directors of the zone to the governing bodies of the other taxing units in the manner provided by Section 311.003(e), Tax Code, before May 31, 1999, and within the boundaries of the zone as those boundaries existed on September 1, 1999, including subsequent improvements to the property regardless of when made;

(B) generates taxes paid into a tax increment fund created under Chapter 311, Tax Code, under a reinvestment zone financing plan approved under Section 311.011(d), Tax Code, on or before September 1, 1999; and

(C) is eligible for tax increment financing under Chapter 311, Tax Code;

(5) for a school district for which a deduction from taxable value is made under Subdivision (4), an amount equal to the taxable value required to generate revenue when taxed at the school district's current tax rate in an amount that, when added to the taxes of the district paid into a tax increment fund as described by Subdivision (4)(B), is equal to the total amount of taxes the district would have paid into the tax increment fund if the district levied taxes at the rate the district levied in 2005;

(6) the total dollar amount of any captured appraised value of property that:

(A) is within a reinvestment zone:

(i) created on or before December 31, 2008, by a municipality with a population of less than 18,000; and

(ii) the project plan for which includes the alteration, remodeling, repair, or reconstruction of a structure that is included on the National Register of Historic Places and requires that a portion of the tax increment of the zone be used for the improvement or construction of related facilities or for affordable housing;

(B) generates school district taxes that are paid into a tax increment fund created under Chapter 311, Tax Code; and

(C) is eligible for tax increment financing under Chapter 311, Tax Code;

(7) the total dollar amount of any exemptions granted under Section 11.251 or 11.253, Tax Code;

(8) the difference between the comptroller's estimate of the market value and the productivity value of land that qualifies for appraisal on the basis of its productive capacity, except that the productivity value estimated by the comptroller may not exceed the fair market value of the land;

(9) the portion of the appraised value of residence homesteads of individuals who receive a tax limitation under Section 11.26, Tax Code, on which school district taxes are not imposed in the year that is the subject of the detailed review [study], calculated as if the residence homesteads were appraised at the full value required by law;

(10) a portion of the market value of property not otherwise fully taxable by the district at market value because of:

(A) action required by statute or the constitution of this state that, if the tax rate adopted by the district is applied to it, produces an amount equal to the difference between the tax that the district would have imposed on the property if the property were fully taxable at market value and the tax that the district is actually authorized to impose on the property, if this subsection does not otherwise require that portion to be deducted; or

(B) action taken by the district under Subchapter B or C, Chapter 313, Tax Code;

(11) the market value of all tangible personal property, other than manufactured homes, owned by a family or individual and not held or used for the production of income;

(12) the appraised value of property the collection of delinquent taxes on which is deferred under Section 33.06, Tax Code;

(13) the portion of the appraised value of property the collection of delinquent taxes on which is deferred under Section 33.065, Tax Code; and

(14) the amount by which the market value of a residence homestead to which Section 23.23, Tax Code, applies exceeds the appraised value of that property as calculated under that section.

(f) The detailed review [study] shall determine the values as of January 1 of each year.

(g) The comptroller shall publish preliminary findings, listing values by district, before February 1 of the year following the year of the detailed review [study]. Preliminary findings shall be delivered to each school district and shall be certified to the commissioner of education.

(h) On request of the commissioner of education or a school district, the comptroller may audit the total taxable value of property in a school district and may revise the detailed review [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 detailed review [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 detailed review [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. The comptroller shall certify the findings of the audit to the commissioner of education.

(i) If the comptroller determines in the detailed review [annual study] that 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 comptroller, in determining the taxable value of property in the school district under Subsection (d), shall for purposes of Subsection (d)(14) subtract from the market value as determined by the appraisal district of residence homesteads to which Section 23.23, Tax Code, applies the amount by which that amount exceeds the appraised value of those properties as calculated by the appraisal district under Section 23.23, Tax Code. If the comptroller determines in the detailed review [annual study] that 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 not valid, the comptroller, in determining the taxable value of property in the school district under Subsection (d), shall for purposes of Subsection (d)(14) subtract from the market value as estimated by the comptroller of residence homesteads to which Section 23.23, Tax Code, applies the amount by which that amount exceeds the appraised value of those properties as calculated by the appraisal district under Section 23.23, Tax Code.

(l) If after conducting the detailed review [annual study] for the year 2009 [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.]

SECTION 2.04. Sections 403.303(a) and (b), Government Code, are amended to read as follows:

(a) A school district or a property owner whose property is included in the detailed review [study] under Section 403.302 and whose tax liability on the property is $100,000 or more may protest the comptroller's findings under Section 403.302(g) or (h) by filing a petition with the comptroller. The petition must be filed not later than the 40th day after the date on which the comptroller's findings are certified to the commissioner of education and must specify the grounds for objection and the value claimed to be correct by the school district or property owner.

(b) After receipt of a petition, the comptroller shall hold a hearing. The comptroller has the burden to prove the accuracy of the findings. Until a final decision is made by the comptroller, the taxable value of property in the district is determined, with respect to property subject to the protest, according to the value claimed by the school district or property owner, except that the value to be used while a final decision is pending may not be less than the appraisal roll value for the year of the detailed review [study]. If after a hearing the comptroller concludes that the findings should be changed, the comptroller shall order the appropriate changes and shall certify to the commissioner of education the changes in the values of the school district that brought the protest, the values of the school district named by the property owner who brought the protest, or, if the comptroller by rule allows an appraisal district to bring a protest, the values of the school district named by the appraisal district that brought the protest. The comptroller may not order a change in the values of a school district as a result of a protest brought by another school district, a property owner in the other school district, or an appraisal district that appraises property for the other school district. The comptroller shall complete all protest hearings and certify all changes as necessary to comply with Chapter 42, Education Code. A hearing conducted under this subsection is not a contested case for purposes of Section 2001.003.

SECTION 2.05. Section 403.304(a), Government Code, is amended to read as follows:

(a) All information the comptroller obtains from a person, other than a government or governmental subdivision or agency, under an assurance that the information will be kept confidential, in the course of conducting a detailed review [study of school district values] is confidential and may not be disclosed except as provided in Subsection (b).

SECTION 2.06. Section 825.405(i), Government Code, is amended to read as follows:

(i) Not later than the seventh day after the final date the comptroller certifies to the commissioner of education changes to the detailed review [property value study] conducted under Subchapter M, Chapter 403, the comptroller shall certify to the Teacher Retirement System of Texas:

(1) the effective tax rate for school district maintenance and operation revenues for each school district in the state for the immediately preceding tax year; and

(2) the statewide average effective tax rate for school district maintenance and operation revenues for the immediately preceding tax year.

SECTION 2.07. Section 5.07(c), 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 detailed review [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.

SECTION 2.08. Sections 5.101(a), (b), (c), and (d), Tax Code, are amended to read as follows:

(a) The comptroller shall appoint a technical advisory committee for the purpose of providing professional and practical expertise to the comptroller and to review and comment on the methodology used by the comptroller to conduct the detailed review [annual studies] required by [Section 5.10 of this code and by] Section 403.302, Government Code. A member of the committee serves at the will of the comptroller.

(b) The committee shall:

(1) review the methodology used by the comptroller to conduct the detailed review [studies] described in Subsection (a);

(2) make an annual report to the comptroller that includes the committee's findings and recommendations relating to the methodology used to conduct the detailed review [studies]; and

(3) meet as often as necessary to perform its duties.

(c) The comptroller shall appoint the committee to provide for a balanced representation of the general public and of professionals affiliated with the entities affected by the detailed review [studies].

(d) Each member of the committee must have expertise sufficient to determine the accuracy of the detailed review [annual studies] and the appropriateness of the methods used to develop the findings of the detailed review [studies].

SECTION 2.09. Sections 5.102(a) and (b), Tax Code, are amended to read as follows:

(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 detailed review required by Section 403.302, Government Code, 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.

SECTION 2.10. Section 5.12, Tax Code, is amended to read as follows:

Sec. 5.12. PERFORMANCE AUDIT OF APPRAISAL DISTRICT. (a) [The comptroller shall audit the performance of an appraisal district if one or more of the following conditions exist according to each of two consecutive annual studies conducted by the comptroller under Section 5.10 of this code, regardless of whether the prescribed condition or conditions that exist are the same for each of those studies:

[(1) the overall median level of appraisal for all property in the district for which the comptroller determines a median level of appraisal is less than 0.75;

[(2) the coefficient of dispersion around the overall median level of appraisal of the properties used to determine the overall median level of appraisal for all property in the district for which the comptroller determines a median level of appraisal exceeds 0.30; or

[(3) the difference between the median levels of appraisal for any two classes of property in the district for which the comptroller determines a median level of appraisal is more than 0.45.

[(b)] At the written request of the governing bodies of a majority of the taxing units participating in an appraisal district or of a majority of the taxing units entitled to vote on the appointment of appraisal district directors, the comptroller shall audit the performance of the appraisal district. The governing bodies may request a general audit of the performance of the appraisal district or may request an audit of only one or more particular duties, practices, functions, departments, or other appraisal district matters.

(b) [(c)] At the written request of the owners of not less than 10 percent of the number of accounts or parcels of property in an appraisal district belonging to a single class of property, if the class constitutes at least five percent of the appraised value of taxable property within the district in the preceding year, or at the written request of the owners of property representing not less than 10 percent of the appraised value of all property in the district belonging to a single class of property, if the class constitutes at least five percent of the appraised value of taxable property in the district in the preceding year, the comptroller shall audit the performance of the appraisal district. The property owners may request a general audit of the performance of the appraisal district or may request an audit of only one or more particular duties, practices, functions, departments, or other appraisal district matters. A property owner may authorize an agent to sign a request for an audit under this subsection on the property owner's behalf. The comptroller may require a person signing a request for an audit to provide proof that the person is entitled to sign the request as a property owner or as the agent of a property owner.

(c) [(d) A request for a performance audit of an appraisal district may not be made under Subsection (b) or (c) of this section if according to each of the two most recently published annual studies conducted by the comptroller under Section 5.10 of this code:

[(1) the overall median level of appraisal for all property in the district for which the comptroller determines a median level of appraisal is more than 0.90 and less than 1.10;

[(2) the coefficient of dispersion around the overall median level of appraisal of the properties used to determine the overall median level of appraisal for all property in the district for which the comptroller determines a median level of appraisal is less than 0.15; and

[(3) the difference between the highest and lowest median levels of appraisal in the district for the classes of property for which the comptroller determines a median level of appraisal is less than 0.20.

[(e) A request for a performance audit of an appraisal district may not be made under Subsection (b) or (c) of this section:

[(1) during the two years immediately following the publication of the second of two consecutive annual studies according to which the comptroller is required to conduct an audit of the district under Subsection (a) of this section; or

[(2) during the year immediately following the date the results of an audit of the district conducted by the comptroller under Subsection (a) of this section are reported to the chief appraiser of the district.

[(f) For purposes of this section, "class of property" means a major kind of property for which the comptroller determines a median level of appraisal under Section 5.10 of this code.

[(g) The results of an annual study conducted by the comptroller for a tax year before 1989 may not be considered for purposes of determining whether an audit is required under Subsection (a) of this section.

[(h)] In addition to the performance audits required by Subsections (a) and [,] (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 2.11. Sections 5.13(a), (f), (g), and (h), Tax Code, are amended to read as follows:

(a) [The comptroller shall complete an audit required by Section 5.12(a) of this code within two years after the date of the publication of the second of the two annual studies the results of which required the audit to be conducted.] The comptroller shall complete an audit requested under Section 5.12(a) or (b) [5.12(b) or (c) of this code] as soon as practicable after the request is made.

(f) The comptroller shall report the results of its audit in writing to the governing body of each taxing unit that participates in the appraisal district, to the chief appraiser, and to the presiding officer of the appraisal district board of directors. If the audit was requested under Section 5.12(b) [5.12(c) of this code], the comptroller shall also provide a report to a representative of the property owners who requested the audit.

(g) If the audit is [required or] requested under Section 5.12(a) [or (b) of this code], the appraisal district shall reimburse the comptroller for the costs incurred in conducting the audit and making its report of the audit. The costs shall be allocated among the taxing units participating in the district in the same manner as an operating expense of the district. If the audit is requested under Section 5.12(b) [5.12(c) of this code], the property owners who requested the audit shall reimburse the comptroller for the costs incurred in conducting the audit and making its report of the audit and shall allocate the costs among those property owners in proportion to the appraised value of each property owner's property in the district or on such other basis as the property owners may agree. If the audit confirms that the median level of appraisal for a class of property exceeds 1.10 or that the median level of appraisal for a class of property varies at least 10 percent from the overall median level of appraisal for all property in the district for which the comptroller determines a median level of appraisal, within 90 days after the date a request is made by the property owners for reimbursement the appraisal district shall reimburse the property owners who requested the audit for the amount paid to the comptroller for the costs incurred in conducting the audit and making the report. Before conducting an audit under Section 5.12(b) [5.12(c)], the comptroller may require the requesting taxing units or property owners to provide the comptroller with a bond, deposit, or other financial security sufficient to cover the expected costs of conducting the audit and making the report. For purposes of this subsection, "costs" include expenses related to salaries, professional fees, travel, reproduction or other printing services, and consumable supplies that are directly attributable to conducting the audit.

(h) At any time after the request for an audit is made, the comptroller may discontinue the audit in whole or in part if requested to do so by:

(1) the governing bodies of a majority of the taxing units participating in the district, if the audit was requested by a majority of those units;

(2) the governing bodies of a majority of the taxing units entitled to vote on the appointment of appraisal district directors, if the audit was requested by a majority of those units; or

(3) if the audit was requested under Section 5.12(b) [5.12(c) of this code], [by] the taxpayers who requested the audit.

SECTION 2.12. Section 5.16(a), Tax Code, is amended to read as follows:

(a) The comptroller may inspect the records or other materials of an appraisal office or taxing unit, including the relevant records and materials in the possession or control of a consultant, advisor, or expert hired by the appraisal office or taxing unit, for the purpose of:

(1) establishing, reviewing, or evaluating the value of or an appraisal of any property; or

(2) conducting a detailed [study,] review[, or audit] required by [Section 5.10 or 5.102 or by] Section 403.302, Government Code.

SECTION 2.13. Section 41A.12, Tax Code, is amended to read as follows:

Sec. 41A.12. USE OF PROPERTIES AS SAMPLES. An arbitrator's determination of market value under this chapter is the market value of the property subject to the appeal for the purposes of the detailed review [annual study] conducted under Section 403.302, Government Code.

SECTION 2.14. The following provisions of the Tax Code are repealed:

(1) Section 5.10; and

(2) Section 42.26(c).

SECTION 2.15. This article takes effect January 1, 2010.

ARTICLE 3. REGULATION OF PROPERTY TAX PROFESSIONALS AND PROPERTY

TAX CONSULTANTS

SECTION 3.01. Section 5.04, Tax Code, is amended to read as follows:

Sec. 5.04. TRAINING AND EDUCATION OF APPRAISERS. (a) The comptroller shall set [consult and cooperate with the Board of Tax Professional Examiners or any successor agency responsible for certifying tax professionals in this state in setting] standards for and approve [approving] curricula and materials for use in training and educating appraisers and assessor-collectors, and [the comptroller] may cooperate with [the board or with] other public agencies, educational institutions, or private organizations in sponsoring courses of instruction and training programs.

(b) An appraisal district shall reimburse an employee of the appraisal office for all actual and necessary expenses, tuition and other fees, and costs of materials incurred in attending, with approval of the chief appraiser, a course or training program sponsored or approved by the comptroller [Board of Tax Professional Examiners].

SECTION 3.02. Section 411.122(d), Government Code, is amended to read as follows:

(d) The following state agencies are subject to this section:

(1) Texas Appraiser Licensing and Certification Board;

(2) Texas Board of Architectural Examiners;

(3) Texas Board of Chiropractic Examiners;

(4) State Board of Dental Examiners;

(5) Texas Board of Professional Engineers;

(6) Texas Funeral Service Commission;

(7) Texas Board of Professional Geoscientists;

(8) Department of State Health Services, except as provided by Section 411.110, and agencies attached to the department, including:

(A) Texas State Board of Examiners of Dietitians;

(B) Texas State Board of Examiners of Marriage and Family Therapists;

(C) Midwifery Board;

(D) Texas State Board of Examiners of Perfusionists;

(E) Texas State Board of Examiners of Professional Counselors;

(F) Texas State Board of Social Worker Examiners;

(G) State Board of Examiners for Speech-Language Pathology and Audiology;

(H) Advisory Board of Athletic Trainers;

(I) State Committee of Examiners in the Fitting and Dispensing of Hearing Instruments;

(J) Texas Board of Licensure for Professional Medical Physicists; and

(K) Texas Board of Orthotics and Prosthetics;

(9) Texas Board of Professional Land Surveying;

(10) Texas Department of Licensing and Regulation, except as provided by Section 411.093;

(11) Texas Commission on Environmental Quality;

(12) Texas Board of Occupational Therapy Examiners;

(13) Texas Optometry Board;

(14) Texas State Board of Pharmacy;

(15) Texas Board of Physical Therapy Examiners;

(16) Texas State Board of Plumbing Examiners;

(17) Texas State Board of Podiatric Medical Examiners;

(18) Polygraph Examiners Board;

(19) Texas State Board of Examiners of Psychologists;

(20) Texas Real Estate Commission;

(21) Office of Property Appraisal [Board of Tax Professional Examiners];

(22) Texas Department of Transportation;

(23) State Board of Veterinary Medical Examiners;

(24) Texas Department of Housing and Community Affairs;

(25) secretary of state;

(26) state fire marshal;

(27) Texas Education Agency; and

(28) Department of Agriculture.

SECTION 3.03. Section 2054.352(a), Government Code, is amended to read as follows:

(a) The following licensing entities shall participate in the system established under Section 2054.353:

(1) Texas Board of Chiropractic Examiners;

(2) Court Reporters Certification Board;

(3) State Board of Dental Examiners;

(4) Texas Funeral Service Commission;

(5) Texas Board of Professional Land Surveying;

(6) Texas Medical Board;

(7) Texas Board of Nursing;

(8) Texas Optometry Board;

(9) Department of Agriculture, for licenses issued under Chapter 1951, Occupations Code;

(10) Texas State Board of Pharmacy;

(11) Executive Council of Physical Therapy and Occupational Therapy Examiners;

(12) Texas State Board of Plumbing Examiners;

(13) Texas State Board of Podiatric Medical Examiners;

(14) Office of Property Appraisal [Board of Tax Professional Examiners];

(15) Polygraph Examiners Board;

(16) Texas State Board of Examiners of Psychologists;

(17) State Board of Veterinary Medical Examiners;

(18) Texas Real Estate Commission;

(19) Texas Appraiser Licensing and Certification Board;

(20) Texas Department of Licensing and Regulation;

(21) Texas State Board of Public Accountancy;

(22) State Board for Educator Certification;

(23) Texas Board of Professional Engineers;

(24) Department of State Health Services;

(25) Texas Board of Architectural Examiners;

(26) Texas Racing Commission;

(27) Commission on Law Enforcement Officer Standards and Education; and

(28) Texas Private Security Board.

SECTION 3.04. Section 1151.002(4), Occupations Code, is amended to read as follows:

(4) "Board" means the Office of Property Appraisal [Board of Tax Professional Examiners].

SECTION 3.05. Section 1152.001(1), Occupations Code, is amended to read as follows:

(1) "Commission," "department," and "executive director" mean [means] the Office of Property Appraisal [Texas Commission of Licensing and Regulation].

SECTION 3.06 Sections 1152.102(a) and (b), Occupations Code, are amended to read as follows:

(a) The council is composed of six members appointed by the [presiding officer of the] commission[, with the commission's approval].

(b) The [presiding officer of the] commission may appoint not more than two members who are qualified for an exemption under Section 1152.002(a)(3).

SECTION 3.07. Section 1152.104(b), Occupations Code, is amended to read as follows:

(b) If a vacancy occurs during a member's term, the [presiding officer of the] commission[, with the commission's approval,] shall appoint to fill the unexpired part of the term a replacement who meets the qualifications of the vacated office.

SECTION 3.08. Section 1152.105, Occupations Code, is amended to read as follows:

Sec. 1152.105. PRESIDING OFFICER. The [presiding officer of the] commission[, with the commission's approval,] shall appoint a member of the council to serve as presiding officer of the council for two years.

SECTION 3.09. The following provisions of the Occupations Code are repealed:

(1) Section 1151.003;

(2) Subchapters B and B-1, Chapter 1151;

(3) Section 1151.1015; and

(4) Sections 1152.001(3) and (3-a).

SECTION 3.10. (a) The Board of Tax Professional Examiners is abolished but continues in existence until March 1, 2010, for the sole purpose of transferring obligations, property, full-time equivalent positions, rights, powers, and duties to the Office of Property Appraisal. The Office of Property Appraisal assumes all of the obligations, property, full-time equivalent positions, rights, powers, and duties of the Board of Tax Professional Examiners as it existed immediately before the effective date of this article. All unexpended funds appropriated to the Board of Tax Professional Examiners are transferred to the Office of Property Appraisal. The transfer of the obligations, property, full-time equivalent positions, rights, powers, and duties of the Board of Tax Professional Examiners to the Office of Property Appraisal must be completed not later than March 1, 2010.

(b) All rules of the Board of Tax Professional Examiners are continued in effect as rules of the Office of Property Appraisal until superseded by a rule of the Office of Property Appraisal. A registration or certification issued by the Board of Tax Professional Examiners is continued in effect as provided by the law in effect immediately before the effective date of this article. A complaint, investigation, contested case, or other proceeding pending on the effective date of this article is continued without change in status after the effective date of this article. An activity conducted by the Board of Tax Professional Examiners is considered to be an activity conducted by the Office of Property Appraisal.

(c) A reference in another law or an administrative rule to the Board of Tax Professional Examiners means the Office of Property Appraisal.

SECTION 3.11. This article takes effect January 1, 2010, but only if the constitutional amendment proposed by the 81st Legislature, Regular Session, 2009, authorizing the legislature to provide that ad valorem tax appraisal services in any county are under the jurisdiction of the entity specified by the legislature, to provide for the consolidation of ad valorem tax appraisal services, and to provide for enforcement of ad valorem tax standards and procedures by the specified entity is approved by the voters. If that amendment is not approved by the voters, this article has no effect.

ARTICLE 4. REMEDIES FOR VIOLATIONS OF LAW BY AD VALOREM TAX

OFFICIALS OR ENTITIES

SECTION 4.01. Section 43.01, Tax Code, is amended to read as follows:

Sec. 43.01. AUTHORITY TO BRING SUIT. (a) Any of the following persons [A taxing unit] may sue an appropriate [the] appraisal district or appraisal review board [that appraises property for the unit] to compel the appraisal district or appraisal review board to comply with the provisions of this title, rules of the comptroller, or other applicable law if the person is affected by the appraisal district's or appraisal review board's failure to comply with the law:

(1) a taxing unit;

(2) a property owner;

(3) a lessee of property who is contractually obligated to pay taxes imposed on the property;

(4) an agent of a property owner designated under Section 1.111; or

(5) any other person authorized to bring an action on behalf of a person listed in Subdivisions (1)-(4).

(b) The court shall award court costs and reasonable attorney's fees to a plaintiff who prevails in a suit brought under this section.

SECTION 4.02. The changes in law made by this article to Section 43.01, Tax Code, apply only to a suit filed under Section 43.01, Tax Code, on or after the effective date of this article. A suit filed under Section 43.01, Tax Code, before the effective date of this article is governed by the law in effect on the date the suit was filed, and the former law is continued in effect for that purpose.

SECTION 4.03. This article takes effect September 1, 2009.

ARTICLE 5. CONSOLIDATION OF APPRAISAL DISTRICTS

SECTION 5.01. Subchapter A, Chapter 6, Tax Code, is amended by adding Section 6.025 to read as follows:

Sec. 6.025. CONSOLIDATION OF APPRAISAL DISTRICTS BY COMPTROLLER. (a) The comptroller may order the consolidation of two or more appraisal districts.

(b) An order consolidating appraisal districts:

(1) must:

(A) identify the districts to be consolidated;

(B) state the effective date of the consolidation;

(C) state the name of the consolidated district;

(D) provide for the governance of the consolidated district during and after a reasonable transition period;

(E) provide for the financing of the consolidated district, including the disposition of money and property of the district; and

(F) provide for the status of proceedings pending before each appraisal district or proceedings to which an appraisal district is a party on the effective date of the consolidation; and

(2) may contain other provisions as determined by the comptroller.

SECTION 5.02. This article takes effect January 1, 2010, but only if the constitutional amendment proposed by the 81st Legislature, Regular Session, 2009, authorizing the legislature to provide that ad valorem tax appraisal services in any county are under the jurisdiction of the entity specified by the legislature, to provide for the consolidation of ad valorem tax appraisal services, and to provide for enforcement of ad valorem tax standards and procedures by the specified entity is approved by the voters. If that amendment is not approved by the voters, this article has no effect.

ARTICLE 6. COMMUNICATION IN ELECTRONIC FORMAT

SECTION 6.01. Sections 1.085(a) and (e), Tax Code, are amended to read as follows:

(a) Except as provided by Section 1.07(d), any notice, rendition, application form, or completed application that is required or permitted by this title to be delivered between a chief appraiser and a property owner or between a chief appraiser and a person designated by a property owner under Section 1.111(f) may be delivered in an electronic format if the chief appraiser and the property owner agree under this section. If a property owner requests that the chief appraiser enter into an agreement under this section, the chief appraiser must enter into the agreement.

(e) The comptroller by rule [:

[(1)] shall prescribe acceptable media, formats, content, and methods for the electronic transmission of notices [required by Section 25.19; and

[(2) may prescribe acceptable media, formats, content, and methods for the electronic transmission of other notices], renditions, and applications.

SECTION 6.02. Section 1.085(g), Tax Code, is repealed.

SECTION 6.03. This article takes effect January 1, 2010.

ARTICLE 7. NOTICE OF PROPOSED TAX RATE

SECTION 7.01 Section 26.05(a), Tax Code, is amended to read as follows:

(a) The governing body of each taxing unit, before the later of September 30 or the 60th day after the date the certified appraisal roll is received by the taxing unit, shall adopt a tax rate for the current tax year and shall notify the assessor for the unit of the rate adopted. The tax rate consists of two components, each of which must be approved separately. The components are:

(1) for a taxing unit other than a school district, the rate that, if applied to the total taxable value, will impose the total amount published under Section 26.04(e)(3)(C), less any amount of additional sales and use tax revenue that will be used to pay debt service, or, for a school district, the rate published under Section 44.004(c)(3)(B)(ii) [44.004(c)(5)(A)(ii)(b)], Education Code; and

(2) the rate that, if applied to the total taxable value, will impose the amount of taxes needed to fund maintenance and operation expenditures of the unit for the next year.

SECTION 7.02. Section 26.06(b), Tax Code, is amended to read as follows:

(b) The notice of a public hearing may not be smaller than one-quarter page of a standard-size or a tabloid-size newspaper, and the headline on the notice must be in 24-point or larger type. The notice must contain a statement in the following form:

"NOTICE OF PUBLIC HEARING ON TAX INCREASE

"The (name of the taxing unit) will hold two public hearings on a proposal to increase total tax revenues from properties on the tax roll in the preceding tax year by (percentage by which proposed tax rate exceeds lower of rollback tax rate or effective tax rate calculated under this chapter) percent. Your individual taxes may increase at a greater or lesser rate, or even 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.

"The first public hearing will be held on (date and time) at (meeting place).

"The second public hearing will be held on (date and time) at (meeting place).

"(Names of all members of the governing body, showing how each voted on the proposal to consider the tax increase or, if one or more were absent, indicating the absences.)

"Last year's tax rate was (tax rate for preceding year) per $100 of taxable value.

"The tax rate that would raise the taxes required to fund the same level of services as were provided last year is (effective tax rate) per $100 of taxable value.

"The proposed tax rate is (proposed tax rate) per $100 of taxable value.

["The average taxable value of a residence homestead in (name of taxing unit) last year was $ (average taxable value of a residence homestead in the taxing unit for the preceding tax year, disregarding residence homestead exemptions available only to disabled persons or persons 65 years of age or older). Based on last year's tax rate of $ (preceding year's adopted tax rate) per $100 of taxable value, the amount of taxes imposed last year on the average home was $ (tax on average taxable value of a residence homestead in the taxing unit for the preceding tax year, disregarding residence homestead exemptions available only to disabled persons or persons 65 years of age or older).

["The average taxable value of a residence homestead in (name of taxing unit) this year is $ (average taxable value of a residence homestead in the taxing unit for the current tax year, disregarding residence homestead exemptions available only to disabled persons or persons 65 years of age or older). If the governing body adopts the effective tax rate for this year of $ (effective tax rate) per $100 of taxable value, the amount of taxes imposed this year on the average home would be $ (tax on average taxable value of a residence homestead in the taxing unit for the current tax year, disregarding residence homestead exemptions available only to disabled persons or persons 65 years of age or older).

["If the governing body adopts the proposed tax rate of $ (proposed tax rate) per $100 of taxable value, the amount of taxes imposed this year on the average home would be $ (tax on the average taxable value of a residence in the taxing unit for the current year disregarding residence homestead exemptions available only to disabled persons or persons 65 years of age or older).]

"Members of the public are encouraged to attend the hearings and express their views."

SECTION 7.03. Section 26.06(d), Tax Code, as amended by Chapters 1105 (H.B. 3495) and 1112 (H.B. 3630), Acts of the 80th Legislature, Regular Session, 2007, is reenacted and amended to read as follows:

(d) At the public hearings the governing body shall announce the date, time, and place of the meeting at which it will vote on the proposed tax rate. After each hearing the governing body shall give notice of the meeting at which it will vote on the proposed tax rate and the notice shall be in the same form as prescribed by Subsections (b) and (c), except that it must state the following:

"NOTICE OF TAX REVENUE INCREASE

"The (name of the taxing unit) conducted public hearings on (date of first hearing) and (date of second hearing) on a proposal to increase the total tax revenues of the (name of the taxing unit) from properties on the tax roll in the preceding year by (percentage by which proposed tax rate exceeds lower of rollback tax rate or effective tax rate calculated under this chapter) percent.

"Last year's tax rate was (tax rate for preceding year) per $100 of taxable value.

"The tax rate that would raise the taxes required to fund the same level of services as were provided last year is (effective tax rate) per $100 of taxable value.

"The proposed tax rate is (proposed tax rate) per $100 of taxable value.

["The total tax revenue proposed to be raised last year at last year's tax rate of (insert tax rate for the preceding year) for each $100 of taxable value was (insert total amount of taxes imposed in the preceding year).

["The total tax revenue proposed to be raised this year at the proposed tax rate of (insert proposed tax rate) for each $100 of taxable value, excluding tax revenue to be raised from new property added to the tax roll this year, is (insert amount computed by multiplying proposed tax rate by the difference between current total value and new property value).

["The total tax revenue proposed to be raised this year at the proposed tax rate of (insert proposed tax rate) for each $100 of taxable value, including tax revenue to be raised from new property added to the tax roll this year, is (insert amount computed by multiplying proposed tax rate by current total value).]

"The (governing body of the taxing unit) is scheduled to vote on the tax rate that will result in that tax increase at a public meeting to be held on (date of meeting) at (location of meeting, including mailing address) at (time of meeting)."

SECTION 7.04. Section 44.004(c), Education Code, is amended to read as follows:

(c) The notice of public meeting to discuss and adopt the budget and the proposed tax rate may not be smaller than one-quarter page of a standard-size or a tabloid-size newspaper, and the headline on the notice must be in 18-point or larger type. Subject to Subsection (d), the notice must:

(1) contain a statement in the following form:

"NOTICE OF PUBLIC MEETING TO DISCUSS BUDGET AND PROPOSED TAX RATE

"The (name of school district) will hold a public meeting at (time, date, year) in (name of room, building, physical location, city, state). The purpose of this meeting is to discuss the school district's budget that will determine the tax rate that will be adopted. Public participation in the discussion is invited." The statement of the purpose of the meeting must be in bold type. In reduced type, the notice must state: "The tax rate that is ultimately adopted at this meeting or at a separate meeting at a later date may not exceed the proposed rate shown below unless the district publishes a revised notice containing the same information and comparisons set out below and holds another public meeting to discuss the revised notice.";

(2) contain a section entitled "Comparison of Proposed Budget with Last Year's Budget," which must show the difference, expressed as a percent increase or decrease, as applicable, in the amounts budgeted for the preceding fiscal year and the amount budgeted for the fiscal year that begins in the current tax year for each of the following:

(A) maintenance and operations;

(B) debt service; and

(C) total expenditures;

(3) [contain a section entitled "Total Appraised Value and Total Taxable Value," which must show the total appraised value and the total taxable value of all property and the total appraised value and the total taxable value of new property taxable by the district in the preceding tax year and the current tax year as calculated under Section 26.04, Tax Code;

[(4) contain a statement of the total amount of the outstanding and unpaid bonded indebtedness of the school district;

[(5)] contain a section entitled "Comparison of Proposed Rates with Last Year's Rates," which must[:

[(A)] show in rows the tax rates described by Paragraphs (A)-(C) [Subparagraphs (i)-(iii)], expressed as amounts per $100 valuation of property, for columns entitled "Maintenance & Operations," "Interest & Sinking Fund," and "Total," which is the sum of "Maintenance & Operations" and "Interest & Sinking Fund":

(A) [(i)] the school district's "Last Year's Rate";

(B) [(ii)] the "Rate to Maintain Same Level of Maintenance & Operations Revenue & Pay Debt Service," which:

(i) [(a)] in the case of "Maintenance & Operations," is the tax rate that, when applied to the current taxable value for the district, as certified by the chief appraiser under Section 26.01, Tax Code, and as adjusted to reflect changes made by the chief appraiser as of the time the notice is prepared, would impose taxes in an amount that, when added to state funds to be distributed to the district under Chapter 42, would provide the same amount of maintenance and operations taxes and state funds distributed under Chapter 42 per student in average daily attendance for the applicable school year that was available to the district in the preceding school year; and

(ii) [(b)] in the case of "Interest & Sinking Fund," is the tax rate that, when applied to the current taxable value for the district, as certified by the chief appraiser under Section 26.01, Tax Code, and as adjusted to reflect changes made by the chief appraiser as of the time the notice is prepared, and when multiplied by the district's anticipated collection rate, would impose taxes in an amount that, when added to state funds to be distributed to the district under Chapter 46 and any excess taxes collected to service the district's debt during the preceding tax year but not used for that purpose during that year, would provide the amount required to service the district's debt; and

(C) [(iii)] the "Proposed Rate";

[(B) contain fourth and fifth columns aligned with the columns required by Paragraph (A) that show, for each row required by Paragraph (A):

[(i) the "Local Revenue per Student," which is computed by multiplying the district's total taxable value of property, as certified by the chief appraiser for the applicable school year under Section 26.01, Tax Code, and as adjusted to reflect changes made by the chief appraiser as of the time the notice is prepared, by the total tax rate, and dividing the product by the number of students in average daily attendance in the district for the applicable school year; and

[(ii) the "State Revenue per Student," which is computed by determining the amount of state aid received or to be received by the district under Chapters 42, 43, and 46 and dividing that amount by the number of students in average daily attendance in the district for the applicable school year; and

[(C) contain an asterisk after each calculation for "Interest & Sinking Fund" and a footnote to the section that, in reduced type, states "The Interest & Sinking Fund tax revenue is used to pay for bonded indebtedness on construction, equipment, or both. The bonds, and the tax rate necessary to pay those bonds, were approved by the voters of this district.";

[(6) contain a section entitled "Comparison of Proposed Levy with Last Year's Levy on Average Residence," which must:

[(A) show in rows the information described by Subparagraphs (i)-(iv), rounded to the nearest dollar, for columns entitled "Last Year" and "This Year":

[(i) "Average Market Value of Residences," determined using the same group of residences for each year;

[(ii) "Average Taxable Value of Residences," determined after taking into account the limitation on the appraised value of residences under Section 23.23, Tax Code, and after subtracting all homestead exemptions applicable in each year, other than exemptions available only to disabled persons or persons 65 years of age or older or their surviving spouses, and using the same group of residences for each year;

[(iii) "Last Year's Rate Versus Proposed Rate per $100 Value"; and

[(iv) "Taxes Due on Average Residence," determined using the same group of residences for each year; and

[(B) contain the following information: "Increase (Decrease) in Taxes" expressed in dollars and cents, which is computed by subtracting the "Taxes Due on Average Residence" for the preceding tax year from the "Taxes Due on Average Residence" for the current tax year;]

(4) [(7)] contain the following statement in bold print: "Under state law, the dollar amount of school taxes imposed on the residence of a person 65 years of age or older or of the surviving spouse of such a person, if the surviving spouse was 55 years of age or older when the person died, may not be increased above the amount paid in the first year after the person turned 65, regardless of changes in tax rate or property value.";

(5) [(8)] contain the following statement in bold print: "Notice of Rollback Rate: The highest tax rate the district can adopt before requiring voter approval at an election is (the school district rollback rate determined under Section 26.08, Tax Code). This election will be automatically held if the district adopts a rate in excess of the rollback rate of (the school district rollback rate)."; and

(6) [(9)] contain a section entitled "Fund Balances," which must include the estimated amount of interest and sinking fund balances and the estimated amount of maintenance and operation or general fund balances remaining at the end of the current fiscal year that are not encumbered with or by corresponding debt obligation, less estimated funds necessary for the operation of the district before the receipt of the first payment under Chapter 42 in the succeeding school year.

SECTION 7.05. Section 49.236, Water Code, as added by Chapters 248 (H.B. 1541) and 335 (S.B. 392), 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 district's effective tax rate [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]; and

(C) the district's proposed tax rate, expressed as an amount per $100 [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 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 1.08 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 Sections 26.07(b)-(g) and 26.081, Tax Code. For purposes of 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 1.08 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 7.06. This article applies only to ad valorem taxes imposed for a tax year beginning on or after January 1, 2010.

SECTION 7.07. This article takes effect January 1, 2010.

ARTICLE 8. NOTICE OF APPRAISED VALUE

SECTION 8.01. Sections 25.19(b) and (i), Tax Code, are amended to read as follows:

(b) The chief appraiser shall separate real from personal property and include in the notice for each:

(1) a list of the taxing units in which the property is taxable;

(2) the appraised value of the property in the preceding year;

(3) the taxable value of the property in the preceding year for each taxing unit taxing the property;

(4) the appraised value of the property for the current year and the kind and amount of each partial exemption, if any, approved for the current year;

(5) [if the appraised value is greater than it was in the preceding year, the amount of tax that would be imposed on the property on the basis of the tax rate for the preceding year;

[(6)] in italic typeface, the following statement: "The Texas Legislature does not set the amount of your local taxes. Your property tax burden is decided by your locally elected officials, and all inquiries concerning your taxes should be directed to those officials";

(6) [(7)] a detailed explanation of the time and procedure for protesting the value;

(7) [(8)] the date and place the appraisal review board will begin hearing protests; and

(8) [(9)] a brief explanation that the governing body of each taxing unit decides whether or not taxes on the property will increase and the appraisal district only determines the value of the property.

(i) Delivery with a notice required by Subsection (a) or (g) of a copy of the pamphlet published by the comptroller under Section 5.06 or a copy of the notice published by the chief appraiser under Section 41.70 is sufficient to comply with the requirement that the notice include the information specified by Subsection (b)(6) [(b)(7)] or (g)(3), as applicable.

SECTION 8.02. This article takes effect January 1, 2010.

ARTICLE 9. COMPOSITION AND OPERATION OF APPRAISAL REVIEW BOARDS

SECTION 9.01. Subchapter C, Chapter 6, Tax Code, is amended by adding Section 6.44 to read as follows:

Sec. 6.44. MEMBERSHIP ON BOARD OF ADMINISTRATIVE LAW JUDGE. (a) The comptroller may employ administrative law judges to serve on appraisal review boards. To be eligible for employment with the comptroller as an administrative law judge, an individual must be licensed to practice law in this state and meet other requirements prescribed by the comptroller.

(b) The comptroller may appoint an administrative law judge employed by the comptroller to serve on an appraisal review board. Section 6.41(c) does not apply to a person appointed under this section. If the comptroller appoints an administrative law judge to serve on an appraisal review board, the administrative law judge serves on the board as an additional member and serves as the chairman of the board.

(c) A vacancy in the position on an appraisal review board held by an administrative law judge is filled in the same manner as the original appointment.

(d) A member of an appraisal review board appointed under this subsection holds office for a term of one year beginning January 1.

(e) A member of an appraisal review board appointed under this section may be removed from the board by the comptroller. Grounds for removal are the grounds specified by Section 6.41(f), except that the provision of Section 6.412(c) pertaining to an employee of the comptroller does not apply to a person appointed under this section.

(f) Notwithstanding Section 6.42(c), a member of an appraisal review board appointed under this section is not entitled to per diem.

SECTION 9.02. Section 41.45(d), Tax Code, is amended to read as follows:

(d) An appraisal review board consisting of more than three members may sit in panels of not fewer than three members to conduct protest hearings. However, the determination of a protest heard by a panel must be made by the board. If the comptroller has appointed an administrative law judge to serve on the board, the administrative law judge, to the extent practicable, shall sit on panels that determine complex matters. If the recommendation of a panel is not accepted by the board, the board may refer the matter for rehearing to a panel composed of members who did not hear the original hearing or, if there are not at least three members who did not hear the original protest, the board may determine the protest. Before determining a protest or conducting a rehearing before a new panel or the board, the board shall deliver notice of the hearing or meeting to determine the protest in accordance with the provisions of this subchapter.

SECTION 9.03. This article takes effect January 1, 2010, but only if the constitutional amendment proposed by the 81st Legislature, Regular Session, 2009, authorizing the legislature to provide that ad valorem tax appraisal services in any county are under the jurisdiction of the entity specified by the legislature, to provide for the consolidation of ad valorem tax appraisal services, and to provide for enforcement of ad valorem tax standards and procedures by the specified entity is approved by the voters. If that amendment is not approved by the voters, this article has no effect.

ARTICLE 10. CAPITALIZATION RATE USED TO APPRAISE INCOME-PRODUCING

TANGIBLE PERSONAL PROPERTY

SECTION 10.01. Section 22.01(a), Tax Code, is amended to read as follows:

(a) Except as provided by Chapter 24, a person shall render for taxation all tangible personal property used for the production of income that the person owns or that the person manages and controls as a fiduciary on January 1. A rendition statement shall contain:

(1) the name and address of the property owner;

(2) a description of the property by type or category;

(3) if the property is inventory, a description of each type of inventory and a general estimate of the quantity of each type of inventory;

(4) the physical location or taxable situs of the property; [and]

(5) the property owner's good faith estimate of the market value of the property or, at the option of the property owner, the historical cost when new and the year of acquisition of the property; and

(6) if the property owner provides a good faith estimate of the market value of the property, the capitalization rate, if any, used by the owner to estimate the value.

SECTION 10.02. Subchapter C, Chapter 22, Tax Code, is amended by adding Section 22.42 to read as follows:

Sec. 22.42. REPORT OF CAPITALIZATION RATES USED BY PROPERTY OWNERS TO ESTIMATE VALUE. Not later than April 20 of each year, the chief appraiser of each appraisal district shall deliver a written report to the comptroller containing the following information regarding each rendition statement delivered to the chief appraiser in that year that contains a capitalization rate as provided by Section 22.01(a)(6):

(1) the capitalization rate contained in the statement; and

(2) the information required by Sections 22.01(a)(2)-(4) to be contained in the statement.

SECTION 10.03. Subchapter B, Chapter 23, Tax Code, is amended by adding Section 23.26 to read as follows:

Sec. 23.26. DETERMINATION OF CAPITALIZATION RATE TO BE USED IN APPRAISING INCOME-PRODUCING TANGIBLE PERSONAL PROPERTY. (a) Not later than May 1 of each year, the comptroller shall:

(1) determine the capitalization rate to be used by the chief appraiser of each appraisal district in using the income method of appraisal to appraise tangible personal property used for the production of income that a person owns or that the person manages and controls as a fiduciary on January 1; and

(2) notify in writing the chief appraiser of each appraisal district of the comptroller's determination.

(b) In determining the capitalization rate to be used in appraising property, the comptroller shall consider the information reported to the comptroller under Section 22.42.

(c) The comptroller may specify different capitalization rates to be used in appraising property depending on:

(1) the type or category of the property; and

(2) the physical location or taxable situs of the property.

(d) The comptroller must provide notice and an opportunity for public comment before determining the capitalization rate to be used in appraising property.

SECTION 10.04. This article takes effect January 1, 2010.

ARTICLE 11. APPRAISAL OF RESIDENCE HOMESTEADS

SECTION 11.01. Subchapter B, Chapter 23, Tax Code, is amended by adding Section 23.27 to read as follows:

Sec. 23.27. APPRAISAL OF RESIDENCE HOMESTEAD. (a) This section applies only to the appraisal of a residence homestead.

(b) In appraising the property, the chief appraiser may not consider any factor other than a factor relating to the value of the property for use as a residence homestead.

(c) If generally accepted appraisal methods and techniques require consideration of the highest and best use of the property, the chief appraiser shall consider the highest and best use of the property to be its use as a residence homestead.

(d) If the chief appraiser uses the market data comparison method of appraisal to appraise the property, the chief appraiser may not use comparable sales data pertaining to the sale of property that after the sale ceased to be used as a residence homestead.

(e) If the chief appraiser uses the income method of appraisal to appraise the property, the chief appraiser shall analyze comparable rental data pertaining to residential property available to the chief appraiser or the potential earnings capacity of the property if the property were rented for residential use, or both, to estimate the gross income potential of the property.

SECTION 11.02. This article takes effect January 1, 2010, but only if the constitutional amendment proposed by the 81st Legislature, Regular Session, 2009, authorizing the legislature to provide for the ad valorem taxation of a residence homestead solely on the basis of the property's value as a residence homestead is approved by the voters. If that amendment is not approved by the voters, this article has no effect.

ARTICLE 12. DEFERRED COLLECTION OF TAXES ON APPRECIATING RESIDENCE

HOMESTEAD

SECTION 12.01. Sections 33.065(a) and (g), Tax Code, are amended to read as follows:

(a) An individual is entitled to defer or abate a suit to collect a delinquent tax imposed on the portion of the appraised value of property the individual owns and occupies as the individual's residence homestead that exceeds the sum of:

(1) [105 percent of] the appraised value of the property for the preceding year; and

(2) the market value of all new improvements to the property.

(g) A tax lien remains on the property and interest continues to accrue during the period collection of delinquent taxes is deferred or abated under this section. The annual interest rate during the deferral or abatement period is the prime rate, as published in The Wall Street Journal on the first day of each calendar year that is not a Saturday, Sunday, or legal holiday, [eight percent] instead of the rate provided by Section 33.01. Interest and penalties that accrued or that were incurred or imposed under Section 33.01 or 33.07 before the date the individual files the deferral affidavit under Subsection (c) or the date the judgment abating the suit is entered, as applicable, are preserved. A penalty is not incurred on the delinquent taxes for which collection is deferred or abated during a deferral or abatement period. The additional penalty under Section 33.07 may be imposed and collected only if the delinquent taxes for which collection is deferred or abated remain delinquent on or after the 91st day after the date the deferral or abatement period expires. A plea of limitation, laches, or want of prosecution does not apply against the taxing unit because of deferral or abatement of collection as provided by this section.

SECTION 12.02. Section 33.065(g), Tax Code, as amended by this article, applies only to interest that accrued on a delinquent tax before September 1, 2009, or that accrues on or after that date, regardless of whether the deferral or abatement period under Section 33.065, Tax Code, began before September 1, 2009, or begins on or after that date.

SECTION 12.03. This article takes effect September 1, 2009.