81R4854 JD/CBH/SMH-D

By: Zerwas H.B. No. 701

A BILL TO BE ENTITLED

AN ACT

relating to the provision of ad valorem tax relief.

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

ARTICLE 1. SHORT TITLE

SECTION 1.01. This Act may be cited as the 2009 Continued Commitment to Property Tax Relief Act.

ARTICLE 2. RESIDENCE HOMESTEAD QUALIFICATION DATE

SECTION 2.01. Section 11.42, Tax Code, is amended by amending Subsection (a) and adding Subsection (e) to read as follows:

(a) Except as otherwise provided by this section [Subsections (b) and (c)] and by Sections 11.421, 11.422, 11.434, 11.435, and 11.436, eligibility for and amount of an exemption authorized by this chapter for any tax year are determined by a claimant's qualifications on January 1. A person who does not qualify for an exemption on January 1 of any year may not receive the exemption that year.

(e) A person who acquires property after January 1 of a tax year is entitled to receive an exemption authorized by Section 11.13, other than an exemption authorized by Section 11.13(c) or (d) for an individual 65 years of age or older, for that entire tax year if the person qualifies the property for that exemption during that tax year.

SECTION 2.02. Section 11.43(d), Tax Code, is amended to read as follows:

(d) To receive an exemption the eligibility for which is determined by the claimant's qualifications on January 1 of the tax year, a person required to claim an exemption must file a completed exemption application form before May 1 and must furnish the information required by the form. A person who after January 1 of a tax year acquires property that qualifies for an exemption covered by Section 11.42(d) must apply for the exemption for the applicable portion of that tax year before the first anniversary of the date the person acquires the property. A person who after January 1 of a tax year acquires property that qualifies for an exemption covered by Section 11.42(e) must apply for the exemption for that tax year before the first anniversary of the date the person acquires the property. For good cause shown the chief appraiser may extend the deadline for filing an exemption application by written order for a single period not to exceed 60 days.

SECTION 2.03. Section 26.10(b), Tax Code, is amended to read as follows:

(b) If the appraisal roll shows that a residence homestead exemption [for an individual 65 years of age or older or a residence homestead exemption for a disabled individual] applicable to a property on January 1 of a year terminated during the year and if the owner qualifies a different property for a [one of those] residence homestead exemption [exemptions] during the same year, the tax due against the former residence homestead is calculated by:

(1) subtracting:

(A) the amount of the taxes that otherwise would be imposed on the former residence homestead for the entire year had the individual qualified for the residence homestead exemption for the entire year; from

(B) the amount of the taxes that otherwise would be imposed on the former residence homestead for the entire year had the individual not qualified for the residence homestead exemption during the year;

(2) multiplying the remainder determined under Subdivision (1) by a fraction, the denominator of which is 365 and the numerator of which is the number of days of that year that elapsed after the date the exemption terminated; and

(3) adding the product determined under Subdivision (2) and the amount described by Subdivision (1)(A).

SECTION 2.04. Section 26.112, Tax Code, is amended to read as follows:

Sec. 26.112. CALCULATION OF TAXES ON RESIDENCE HOMESTEAD [OF ELDERLY OR DISABLED PERSON]. (a) Except as provided by Section 26.10(b), if at any time during a tax year property is owned by an individual who qualifies for an exemption under Section 11.13 with respect to the property [11.13(c) or (d)], the amount of the tax due on the property for the tax year is calculated as if the person qualified for the exemption on January 1 and continued to qualify for the exemption for the remainder of the tax year.

(b) If a person qualifies for an exemption under Section 11.13 [11.13(c) or (d)] with respect to the property after the amount of the tax due on the property is calculated and the effect of the qualification is to reduce the amount of the tax due on the property, the assessor for each taxing unit shall recalculate the amount of the tax due on the property and correct the tax roll. If the tax bill has been mailed and the tax on the property has not been paid, the assessor shall mail a corrected tax bill to the person in whose name the property is listed on the tax roll or to the person's authorized agent. If the tax on the property has been paid, the tax collector for the taxing unit shall refund to the person who paid the tax the amount by which the payment exceeded the tax due.

SECTION 2.05. This article applies only to ad valorem taxes imposed for a tax year that begins on or after the effective date of this Act.

ARTICLE 3. LIMITATIONS ON PROPERTY TAX APPRAISAL INCREASES

SECTION 3.01. Section 1.12(d), Tax Code, is amended to read as follows:

(d) For purposes of this section, the appraisal ratio of real property [a homestead] to which Section 23.23 applies is the ratio of the property's market value as determined by the appraisal district or appraisal review board, as applicable, to the market value of the property according to law. The appraisal ratio is not calculated according to the appraised value of the property as limited by Section 23.23.

SECTION 3.02. The heading to Section 23.23, Tax Code, is amended to read as follows:

Sec. 23.23. LIMITATION ON APPRAISED VALUE OF REAL PROPERTY [RESIDENCE HOMESTEAD].

SECTION 3.03. Section 23.23, Tax Code, is amended by amending Subsections (a), (b), (c), (e), and (f) and adding Subsections (c-1), (c-2), and (c-3) to read as follows:

(a) Notwithstanding the requirements of Section 25.18 and regardless of whether the appraisal office has appraised the property and determined the market value of the property for the tax year, an appraisal office may increase the appraised value of real property [a residence homestead] for a tax year to an amount not to exceed the lesser of:

(1) the market value of the property for the most recent tax year that the market value was determined by the appraisal office; or

(2) the sum of:

(A) 10 percent of the appraised value of the property for the preceding tax year;

(B) the appraised value of the property for the preceding tax year; and

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

(b) When appraising real property [a residence homestead], the chief appraiser shall:

(1) appraise the property at its market value; and

(2) include in the appraisal records both the market value of the property and the amount computed under Subsection (a)(2).

(c) The limitation provided by Subsection (a) takes effect on January 1 of the tax year following the first tax year in which the owner owns the property on January 1, or, if the property qualifies as the [to a] residence homestead of the owner under Section 11.13 in the tax year in which the owner acquires the property, the limitation takes effect on January 1 of the tax year following that [the first] tax year [the owner qualifies the property for an exemption under Section 11.13]. Except as provided by Subsection (c-1) or (c-2), the [The] limitation expires on January 1 of the first tax year following the year in which [that neither] the owner of the property ceases to own the property.

(c-1) If property subject to a limitation under this section qualifies for an exemption under Section 11.13 when the ownership of the property is transferred to the owner's spouse or surviving spouse, the limitation expires on January 1 of the first tax year following the year in which [when the limitation took effect nor] the owner's spouse or surviving spouse ceases to own the property, unless the limitation is further continued under this subsection on the subsequent transfer to a spouse or surviving spouse [qualifies for an exemption under Section 11.13].

(c-2) If property subject to a limitation under Subsection (a), other than a residence homestead, is owned by two or more persons, the limitation expires on January 1 of the first tax year following the year in which the ownership of at least a 50 percent interest in the property is sold or otherwise transferred.

(c-3) For purposes of applying the limitation provided by this section in the first tax year after the 2009 tax year in which the property is appraised for taxation:

(1) the property is considered to have been appraised for taxation in the 2009 tax year at a market value equal to the appraised value of the property for that tax year;

(2) a person who acquired real property in a tax year before the 2009 tax year is considered to have acquired the property on January 1, 2009; and

(3) a person who qualified the property for an exemption under Section 11.13 as the person's residence homestead for any portion of the 2009 tax year is considered to have acquired the property in the 2009 tax year.

(e) In this section, "new improvement" means an improvement to real property [a residence homestead] made after the most recent appraisal of the property that increases the market value of the property and the value of which is not included in the appraised value of the property for the preceding tax year. The term does not include repairs to or ordinary maintenance of an existing structure or the grounds or another feature of the property.

(f) Notwithstanding Subsections (a) and (e) and except as provided by Subdivision (2), an improvement to property that would otherwise constitute a new improvement is not treated as a new improvement if the improvement is a replacement structure for a structure that was rendered uninhabitable or unusable by a casualty or by mold or water damage. For purposes of appraising the property in the tax year in which the structure would have constituted a new improvement:

(1) the appraised value of the property for the last year in which the property was appraised for taxation before the casualty or damage occurred is considered to be the appraised value of the property for the preceding tax [last] year [in which the property was appraised for taxation] for purposes of Subsection (a)(2) [(a)(2)(A)]; and

(2) the replacement structure is considered to be a new improvement only to the extent it is a significant improvement over the replaced structure as that structure existed before the casualty or damage occurred.

SECTION 3.04. Section 42.26(d), Tax Code, is amended to read as follows:

(d) For purposes of this section, the value of the property subject to the suit and the value of a comparable property or sample property that is used for comparison must be the market value determined by the appraisal district when the property is [a residence homestead] subject to the limitation on appraised value imposed by Section 23.23.

SECTION 3.05. Sections 403.302(d) and (i), Government Code, are amended to read as follows:

(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 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 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 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 real property [a residence homestead] to which Section 23.23, Tax Code, applies exceeds the appraised value of that property as calculated under that section.

(i) If the comptroller determines in the 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 properties [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 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 properties [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.

SECTION 3.06. This article applies only to the appraisal for ad valorem tax purposes of real property for a tax year that begins on or after the effective date of this Act.

SECTION 3.07. This article takes effect January 1, 2010, but only if the constitutional amendment proposed by the 81st Legislature, Regular Session, 2009, to authorize the legislature to limit the maximum appraised value of real property for ad valorem tax purposes to 110 percent or more of the appraised value of the property for the preceding tax year is approved by the voters. If that amendment is not approved by the voters, this article has no effect.

ARTICLE 4. MUNICIPAL OR COUNTY OPTIONAL SALES AND USE TAX FOR

PROPERTY TAX RELIEF

SECTION 4.01. Subtitle C, Title 3, Tax Code, is amended by adding Chapter 326 to read as follows:

CHAPTER 326. MUNICIPAL AND COUNTY SALES AND USE TAX FOR PROPERTY

TAX RELIEF

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 326.001. APPLICABLE LAW. Except as otherwise provided by this chapter:

(1) Chapter 321 applies to the municipal tax authorized by this chapter in the same manner as that chapter applies to the tax authorized by that chapter; and

(2) Chapter 323 applies to the county tax authorized by this chapter in the same manner as that chapter applies to the tax authorized by that chapter.

Sec. 326.002. EFFECT ON COMBINED LOCAL TAX RATE. (a) Sections 321.101 and 323.101 do not apply to the municipal or county tax authorized by this chapter.

(b) The rate of a municipal or county sales and use tax imposed under this chapter may not be considered in determining the combined or overlapping rate of local sales and use taxes in any area under this subtitle or another law, including:

(1) the Health and Safety Code;

(2) the Local Government Code;

(3) the Special District Local Laws Code; or

(4) the Transportation Code.

[Sections 326.003-326.050 reserved for expansion]

SUBCHAPTER B. IMPOSITION OF TAX

Sec. 326.051. TAX AUTHORIZED. (a) A municipality or a county may adopt or abolish the sales and use tax authorized by this chapter at an election held in the municipality or county.

(b) The adoption of the tax authorized by this chapter by one political subdivision does not affect the authority of another political subdivision that has overlapping boundaries to also adopt the tax authorized by this chapter.

Sec. 326.052. TAX RATE. The rate of the tax authorized by this chapter is one-half of one percent.

Sec. 326.053. SALES AND USE TAX EFFECTIVE DATE. (a) The adoption or abolition of 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 from the municipality or county.

(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 or to implement the abolition of the tax, the effective date may be extended by the comptroller until the first day of the next succeeding calendar quarter.

[Sections 326.054-326.100 reserved for expansion]

SUBCHAPTER C. TAX ELECTION PROCEDURES

Sec. 326.101. CALLING ELECTION. (a) An election authorized by this chapter in a municipality is called by the adoption of an ordinance by the governing body of the municipality.

(b) An election authorized by this chapter in a county is called by the adoption of an order by the commissioners court of the county.

(c) The governing body of a municipality or the commissioners court may call an election on its own motion or shall call an election if a number of qualified voters of the municipality or county equal to at least five percent of the number of registered voters in the municipality or county petition the governing body or commissioners court to call the election.

Sec. 326.102. ELECTION DATE. An election under this chapter must be held on the next uniform election date that occurs after the date of the election order and that allows sufficient time to comply with the requirements of other law.

Sec. 326.103. BALLOT. (a) At an election to adopt the tax, the ballot shall be prepared to permit voting for or against the proposition: "The adoption of a local sales and use tax in (name of municipality or county) at the rate of one-half of one percent to reduce the (municipal or county) property tax rate."

(b) At an election to abolish the tax, the ballot shall be prepared to permit voting for or against the proposition: "The abolition of the one-half of one percent sales and use tax in (name of municipality or county) used to reduce the (municipal or county) property tax rate."

[Sections 326.104-326.150 reserved for expansion]

SUBCHAPTER D. USE OF TAX REVENUE

Sec. 326.151. USE OF REVENUE. Any amount derived by a municipality or county from the sales and use tax under this chapter is additional sales and use tax revenue for purposes of Section 26.041.

SECTION 4.02. Section 26.012(1), Tax Code, is amended to read as follows:

(1) "Additional sales and use tax" means an additional sales and use tax imposed by:

(A) a municipality [city] under Section 321.101(b) or Chapter 326;

(B) a county under Chapter 323 or 326; or

(C) a hospital district, other than a hospital district created on or after September 1, 2001, that:

(i) imposes the sales and use tax under Subchapter I, Chapter 286, Health and Safety Code; or

(ii) imposes the sales and use tax under Subchapter L, Chapter 285, Health and Safety Code.

SECTION 4.03. Section 31.01(i), Tax Code, is amended to read as follows:

(i) For a municipality [city or town] that imposes an additional sales and use tax under Section 321.101(b) or Chapter 326 [of this code], or a county that imposes a sales and use tax under Chapter 323 or 326 [of this code], the tax bill shall indicate the amount of additional ad valorem taxes, if any, that would have been imposed on the property if additional ad valorem taxes had been imposed in an amount equal to the amount of revenue estimated to be collected from the additional municipal [city] sales and use tax or from the county sales and use tax, as applicable, for the year determined as provided by Section 26.041 [of this code].

SECTION 4.04. Sections 4.02 and 4.03 of this article apply only to ad valorem taxes that are imposed for an ad valorem tax year that begins on or after January 1, 2010.

SECTION 4.05. (a) Except as provided by Subsection (b) of this section, this article takes effect September 1, 2009.

(b) Sections 4.02 and 4.03 of this article take effect January 1, 2010.

ARTICLE 5. DEPOSIT OF CERTAIN TAXES IMPOSED IN CONNECTION WITH SALE

OR CONSUMPTION OF SCHOOL SUPPLIES TO FOUNDATION SCHOOL FUND

SECTION 5.01. Section 151.801, Tax Code, is amended by amending Subsection (a) and adding Subsections (f) and (g) to read as follows:

(a) Except for the amounts allocated under Subsections (b), [and] (c), and (f), all proceeds from the collection of the taxes imposed by this chapter shall be deposited to the credit of the general revenue fund.

(f) The amount of the proceeds from the collection of the taxes imposed by this chapter on the sale, storage, use, or other consumption of a school supply shall be deposited to the credit of the foundation school fund.

(g) The comptroller shall determine the amount to be deposited to the foundation school fund under Subsection (f) according to available statistical data indicating the estimated average or actual consumption or sales of school supplies. If satisfactory data are not available, the comptroller may require taxpayers who make taxable sales or uses of those school supplies to report to the comptroller as necessary to make the allocation required by Subsection (f).

SECTION 5.02. Section 151.801(e), Tax Code, is amended by adding Subdivision (1-a) to read as follows:

(1-a) "School supply" means:

(A) crayons;

(B) scissors;

(C) glue, paste, and glue sticks;

(D) pencils;

(E) pens;

(F) erasers;

(G) rulers;

(H) markers;

(I) highlighters;

(J) paper, including loose-leaf ruled notebook paper, copy paper, graph paper, tracing paper, manila paper, colored paper, poster board, and construction paper;

(K) writing tablets;

(L) spiral notebooks;

(M) bound composition notebooks;

(N) pocket folders;

(O) plastic folders;

(P) expandable portfolios;

(Q) manila folders;

(R) three-ring binders that are three inches or less in capacity;

(S) zipper pencil bags;

(T) school supply boxes;

(U) clipboards;

(V) index cards;

(W) index card boxes;

(X) calculators;

(Y) protractors;

(Z) compasses;

(AA) music notebooks;

(BB) sketch or drawing pads;

(CC) paintbrushes;

(DD) watercolors;

(EE) acrylic, tempera, or oil paints;

(FF) tape, including masking tape and Scotch tape;

(GG) clay and glazes;

(HH) pencil sharpeners;

(II) thesauruses; and

(JJ) dictionaries.

SECTION 5.03. The change in law made by this article does not affect taxes collected before the effective date of this Act, and the law in effect before the effective date of this Act is continued in effect for purposes of the disposition of those taxes.

ARTICLE 6. EFFECTIVE DATE

SECTION 6.01. Except as otherwise provided by this Act, this Act takes effect September 1, 2009.