By: Patrick S.B. No. 700

(In the Senate - Filed February 6, 2009; February 23, 2009, read first time and referred to Committee on Finance; April 23, 2009, reported adversely, with favorable Committee Substitute by the following vote: Yeas 12, Nays 1; April 23, 2009, sent to printer.)

COMMITTEE SUBSTITUTE FOR S.B. No. 700 By: Williams

A BILL TO BE ENTITLED

AN ACT

relating to increased transparency regarding appraisals for ad valorem tax purposes and increased tax rates.

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

ARTICLE 1. NOTICE OF APPRAISAL

SECTION 1.01. Section 25.19, Tax Code, is amended by adding Subsection (b-3) to read as follows:

(b-3) For real property, in addition to the information required by Subsection (b), the chief appraiser shall state in a notice required to be delivered under Subsection (a) the following for the current tax year and each of the preceding five tax years:

(1) the appraised value of the property; and

(2) the difference, expressed as a percent increase or decrease, as applicable, in the appraised value of the property compared to the appraised value of the property for the preceding tax year.

ARTICLE 2. REQUIRED ELECTION TO RATIFY TAX RATE INCREASE

SECTION 2.01. Section 26.07, Tax Code, is amended to read as follows:

Sec. 26.07. ELECTION TO RATIFY TAX [REPEAL] INCREASE OF TAXING UNIT OTHER THAN SCHOOL DISTRICT. (a) The [If the] governing body of a taxing unit other than a school district may not adopt [adopts] a tax rate that exceeds the rollback tax rate calculated as provided by this chapter without voter approval as provided by this section. To adopt a tax rate that exceeds the rollback tax rate, the governing body must adopt the rate as a proposed tax rate and call an election to permit[,] the qualified voters of the taxing unit [by petition may require that an election be held to determine whether or not] to approve or disapprove [reduce] the proposed tax rate [adopted for the current year to the rollback tax rate calculated as provided by this chapter].

(b) The [A petition is valid only if:

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

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

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

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

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

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

[(d) If the] governing body [finds that the petition is valid (or fails to act within the time allowed), it] shall order that the [an] election be held in the taxing unit on a date not less than 30 or more than 90 days after the [last] day on which the governing body adopted the proposed tax rate. Section 41.001, Election Code, [it could have acted to approve or disapprove the petition. A state law requiring local elections to be held on a specified date] does not apply to the election unless a [specified] date specified by that section falls within the time permitted by this section. At the election, the ballots shall be prepared to permit voting for or against the proposition: "Approving ["Reducing] the proposed ad valorem tax rate of $_____ per $100 valuation in (name of taxing unit) for the current year, a rate that is $_____ higher per $100 valuation than the [from (the rate adopted) to (the] rollback tax rate [calculated as provided by this chapter)]." The ballot proposition must include the proposed tax rate and the difference between that rate and the rollback tax rate in the appropriate places.

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

(d) [(f)] If the proposition is not approved as provided by Subsection (c), the governing body may not adopt a tax rate for the taxing unit for the current year that exceeds the taxing unit's rollback tax rate [is reduced by an election called under this section after tax bills for the unit are mailed, the assessor for the unit shall prepare and mail corrected tax bills. He shall include with the bill a brief explanation of the reason for and effect of the corrected bill. The date on which the taxes become delinquent for the year is extended by a number of days equal to the number of days between the date the first tax bills were sent and the date the corrected tax bills were sent].

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

SECTION 2.02. Subsections (a) and (b), Section 31.12, Tax Code, are amended to read as follows:

(a) If a refund of a tax provided by Section 11.431(b), [26.07(g),] 26.15(f), 31.11, or 31.111 is paid on or before the 60th day after the date the liability for the refund arises, no interest is due on the amount refunded. If not paid on or before that 60th day, the amount of the tax to be refunded accrues interest at a rate of one percent for each month or part of a month that the refund is unpaid, beginning with the date on which the liability for the refund arises.

(b) For purposes of this section, liability for a refund arises:

(1) if the refund is required by Section 11.431(b), on the date the chief appraiser notifies the collector for the unit of the approval of the late homestead exemption;

(2) [if the refund is required by Section 26.07(g), on the date the results of the election to reduce the tax rate are certified;

[(3)] if the refund is required by Section 26.15(f):

(A) for a correction to the tax roll made under Section 26.15(b), on the date the change in the tax roll is certified to the assessor for the taxing unit under Section 25.25; or

(B) for a correction to the tax roll made under Section 26.15(c), on the date the change in the tax roll is ordered by the governing body of the taxing unit;

(3) [(4)] if the refund is required by Section 31.11, on the date the auditor for the taxing unit determines that the payment was erroneous or excessive or, if the amount of the refund exceeds the applicable amount specified by Section 31.11(a), on the date the governing body of the unit approves the refund; or

(4) [(5)] if the refund is required by Section 31.111, on the date the collector for the taxing unit determines that the payment was erroneous.

SECTION 2.03. Subsection (b), Section 33.08, Tax Code, is amended to read as follows:

(b) The governing body of the taxing unit or appraisal district, in the manner required by law for official action, may provide that taxes that become delinquent on or after June 1 under Section [26.07(f),] 26.15(e), 31.03, 31.031, 31.032, or 31.04 incur an additional penalty to defray costs of collection. The amount of the penalty may not exceed the amount of the compensation specified in the applicable contract with an attorney under Section 6.30 to be paid in connection with the collection of the delinquent taxes.

SECTION 2.04. 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 difference, expressed as an amount per $100 and as a percent increase or decrease, as applicable, in the proposed tax rate compared to the adopted tax rate for the preceding year;

(C) the average appraised value of a residence homestead in the district in the preceding year and in the current year; the district's total homestead exemption, other than an exemption available only to disabled persons or persons 65 years of age or older, applicable to that appraised value in each of those years; and the average taxable value of a residence homestead in the district in each of those years, disregarding any homestead exemption available only to disabled persons or persons 65 years of age or older;

(D) the amount of tax that would have been imposed by the district in the preceding year on a residence homestead appraised at the average appraised value of a residence homestead in that year, disregarding any homestead exemption available only to disabled persons or persons 65 years of age or older;

(E) the amount of tax that would be imposed by the district in the current year on a residence homestead appraised at the average appraised value of a residence homestead in that year, disregarding any homestead exemption available only to disabled persons or persons 65 years of age or older, if the proposed tax rate is adopted; and

(F) the difference between the amounts of tax calculated under Paragraphs (D) and (E), expressed in dollars and cents and described as the annual percentage increase or decrease, as applicable, in the tax to be imposed by the district on the average residence homestead in the district in the current year if the proposed tax rate is adopted; and

(3) contain a statement in substantially the following form:

"NOTICE OF VOTE ON TAX RATE [TAXPAYERS' RIGHT TO

ROLLBACK ELECTION]

"If 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 must be held to determine whether to ratify [reduce] the operation and maintenance tax rate [to the rollback tax rate] under Section 49.236(d), Water Code."

(b) Notice of the hearing shall be:

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

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

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

(d) If the governing body of a district adopts a combined debt service, operation and maintenance, and contract tax rate that would impose more than 1.08 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 must be held to determine whether [or not] to ratify [reduce] the tax rate adopted for the current year [to the rollback tax rate] in accordance with the procedures provided by Section 26.07 [Sections 26.07(b)-(g) and 26.081], Tax Code. For purposes of Section 26.07, Tax Code, [Sections 26.07(b)-(g)] and this subsection, the rollback tax rate is the current year's debt service and contract tax rates plus the operation and maintenance tax rate that would impose 1.08 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 2.05. (a) The change in law made by this article applies to the ad valorem tax rate of a taxing unit beginning with the 2009 tax year, except as provided by Subsection (b) of this section.

(b) If the governing body of a taxing unit adopted an ad valorem tax rate for the taxing unit for the 2009 tax year before the effective date of this article, the change in law made by this article applies to the ad valorem tax rate of that taxing unit beginning with the 2010 tax year, and the law in effect when the tax rate was adopted applies to the 2009 tax year with respect to that taxing unit.

SECTION 2.06. This article takes effect immediately if this Act receives a vote of two-thirds of all the members elected to each house, as provided by Section 39, Article III, Texas Constitution. If this Act does not receive the vote necessary for immediate effect, this article takes effect on the 91st day after the last day of the legislative session.

ARTICLE 3. ELECTRONIC PROTEST PROCEDURE

SECTION 3.01. Subchapter C, Chapter 41, Tax Code, is amended by adding Section 41.415 to read as follows:

Sec. 41.415. ELECTRONIC FILING OF NOTICE OF PROTEST. (a) This section applies only to an appraisal district established for a county having a population of 500,000 or more.

(b) The appraisal district shall implement a system that allows the owner of a property that for the current tax year has been granted a residence homestead exemption under Section 11.13, in connection with the property, to electronically:

(1) file a notice of protest under Section 41.41(a)(1) or (2) with the appraisal review board;

(2) receive and review comparable sales data and other evidence that the chief appraiser intends to use at the protest hearing before the board;

(3) receive, as applicable:

(A) a settlement offer from the district to correct the appraisal records by changing the appraised value of the property to the value as redetermined by the district; or

(B) a notice from the district that a settlement offer will not be made; and

(4) accept or reject a settlement offer received from the appraisal district under Subdivision (3)(A).

(c) With each notice sent under Section 25.19 to an eligible property owner, the chief appraiser shall include information about the system required by this section, including instructions for accessing and using the system.

(d) A notice of protest filed electronically under this section must include, at a minimum:

(1) a statement as to whether the protest is brought under Section 41.41(a)(1) or under Section 41.41(a)(2);

(2) a statement of the property owner's good faith estimate of the value of the property; and

(3) an electronic mail address that the district may use to communicate electronically with the property owner in connection with the protest.

(e) If the property owner accepts a settlement offer made by the appraisal district, the chief appraiser shall notify the appraisal review board. The board shall determine the protest accordingly and otherwise comply with Section 41.47.

(f) If the property owner rejects a settlement offer, the appraisal review board shall hear and determine the property owner's protest in the manner otherwise provided by this subchapter and Subchapter D.

(g) An appraisal district is not required to make the system required by this section available to an owner of a residence homestead located in an area in which the chief appraiser determines that the factors affecting the market value of real property are unusually complex.

(h) An electronic mail address provided by a property owner to an appraisal district under Subsection (d)(3) is confidential and may not be disclosed by the district.

(i) The comptroller shall encourage appraisal districts to which this section does not apply to voluntarily implement an electronic system for filing protests.

SECTION 3.02. Section 41.415, Tax Code, as added by this article, applies only to a tax year that begins on or after the effective date of this Act.

ARTICLE 4. EFFECTIVE DATE

SECTION 4.01. Except as otherwise provided by this Act, this Act takes effect January 1, 2010.

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