By: Hochberg H.B. No. 2484

A BILL TO BE ENTITLED

AN ACT

relating to the state property tax compression percentage and the homestead property tax exemption under the public school finance system.

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

SECTION 1. Section 42.2516, Education Code, is amended by amending Subsections (a), (b), (b-1), (f-1), (g) and (h) and adding Subsections (a-1) and (i) to read as follows:

(a) In this section, "state compression percentage" means the percentage, as determined by the commissioner, of a school district's adopted maintenance and operations tax rate for the 2005 tax year that serves as the basis for state funding for tax rate reduction under this section. Subject to Subsection (a-1), the [The] commissioner shall determine the state compression percentage for each school year based on the percentage by which a district is able to reduce the district's maintenance and operations tax rate for that year, as compared to the district's adopted maintenance and operations tax rate for the 2005 tax year, as a result of state funds appropriated for distribution under this section for that year from the property tax relief fund established under Section 403.109, Government Code, or from another funding source available for school district property tax relief.

(a-1) The state compression percentage must be at least the percentage required to maintain the amount of state and local revenue per student in weighted average daily attendance for maintenance and operations to which each district is entitled under this section.

(b) Subject to Subsection (g), but notwithstanding [Notwithstanding] any other provision of this title, a school district that imposes a maintenance and operations tax at a rate at least equal to the product of the state compression percentage multiplied by the maintenance and operations tax rate adopted by the district for the 2005 tax year is entitled to at least the amount of state revenue necessary to provide the district with the sum of:

(1) [as calculated under Subsection (e),] the amount of state and local revenue per student in weighted average daily attendance for maintenance and operations that the district [would have] received during the 2010-2011 [2009-2010] school year [under Chapter 41 and this chapter, as those chapters existed on January 1, 2009,] at a maintenance and operations tax rate equal to the product of the state compression percentage for that year multiplied by the maintenance and operations tax rate adopted by the district for the 2005 tax year;

(2) [an amount equal to the product of $120 multiplied by the number of students in weighted average daily attendance in the district;

[(3)] an amount equal to the amount the district is required to pay into the tax increment fund for a reinvestment zone under Section 311.013(n), Tax Code, in the current tax year; and

(3) [(4)] any amount to which the district is entitled under Section 42.106.

(b-1) The amount determined for a school district under Subsection (b) is increased or reduced as follows:

(1) if for any school year the district is entitled to a greater allotment under Section 42.155 or 42.158 or more additional state aid under Section 42.2515 than the allotment or additional state aid to which the district was entitled under Section 42.155, 42.158, or 42.2515, as applicable, for the 2010-2011 [2009-2010] school year, the district's entitlement under Subsection (b) is increased by an amount equal to the difference between the amount to which the district is entitled under Section 42.155, 42.158, or 42.2515, as applicable, for that school year and the amount to which the district was entitled under the applicable section for the 2010-2011 [2009-2010] school year; and

(2) if for any school year the district is not entitled to an allotment under Section 42.155 or 42.158 or additional state aid under Section 42.2515 or is entitled to a lesser allotment or less additional state aid under the applicable section than the allotment or additional state aid to which the district was entitled under the applicable section for the 2010-2011 [2009-2010] school year, the district's entitlement under Subsection (b) is reduced by an amount equal to the difference between the amount to which the district was entitled under Section 42.155, 42.158, or 42.2515, as applicable, for the 2010-2011 [2009-2010] school year and the amount to which the district is entitled under the applicable section for the current school year.

(f-1) The commissioner shall, in accordance with rules adopted by the commissioner, adjust the amount of a school district's local revenue derived from maintenance and operations tax collections, as calculated for purposes of determining the amount of state revenue to which the district is entitled under this section, if the district, for the 2011 [2010] tax year or a subsequent tax year:

(1) adopts an exemption under Section 11.13(n), Tax Code, that was not in effect for the 2010 [2009] tax year, or eliminates an exemption under Section 11.13(n), Tax Code, that was in effect for the 2010 [2009] tax year;

(2) adopts an exemption under Section 11.13(n), Tax Code, at a greater or lesser percentage than the percentage in effect for the district for the 2010 [2009] tax year;

(3) grants an exemption under an agreement authorized by Chapter 312, Tax Code, that was not in effect for the 2010 [2009] tax year, or ceases to grant an exemption authorized by that chapter that was in effect for the 2010 [2009] tax year; or

(4) agrees to deposit taxes into a tax increment fund created under Chapter 311, Tax Code, under a reinvestment zone financing plan that was not in effect for the 2010 [2009] tax year, or ceases depositing taxes into a tax increment fund created under that chapter under a reinvestment zone financing plan that was in effect for the 2010 [2009] tax year.

(g) If a school district adopts a maintenance and operations tax rate that is below the rate equal to the product of the state compression percentage multiplied by the maintenance and operations tax rate adopted by the district for the 2005 tax year, the commissioner shall reduce the district's entitlement under this section in proportion to the amount by which the rate equal to the adopted rate is less than the rate equal to the product of the state compression percentage multiplied by the rate adopted by the district for the 2005 tax year.

(h) The commissioner may adopt rules necessary to implement this section.

(i) [(h)] A determination by the commissioner under this section is final and may not be appealed.

SECTION 2. Section 42.253(c-1), Education Code, is amended to read as follows:

(c-1) The amounts to be paid under Section 42.2516(b)(2) [42.2516(b)(3)] shall be paid at the same time as other state revenue is paid to the district. Payments shall be based on amounts paid under Section 42.2516(b)(2) [42.2516(b)(3)] for the preceding year. Any deficiency shall be paid to the district at the same time the final amount to be paid to the district is determined, and any overpayment shall be deducted from the payments the district would otherwise receive in the following year.

SECTION 3. Sections 42.2516(d) and (e), Education Code, are repealed.

SECTION 4. Section 11.13(b), Tax Code, is amended to read as follows:

(b) An adult is entitled to exemption from taxation by a school district of $45,000 [$15,000] of the appraised value of the adult's residence homestead, except that $40,000 [$10,000] of the exemption does not apply to an entity operating under former Chapter 17, 18, 25, 26, 27, or 28, Education Code, as those chapters existed on May 1, 1995, as permitted by Section 11.301, Education Code.

SECTION 5. Section 11.26(a), Tax Code, is amended to read as follows:

(a) The tax officials shall appraise the property to which this section applies and calculate taxes as on other property, but if the tax so calculated exceeds the limitation imposed by this section, the tax imposed is the amount of the tax as limited by this section, except as otherwise provided by this section. A school district may not increase the total annual amount of ad valorem tax it imposes on the residence homestead of an individual 65 years of age or older or on the residence homestead of an individual who is disabled, as defined by Section 11.13, above the amount of the tax it imposed in the first tax year in which the individual qualified that residence homestead for the applicable exemption provided by Section 11.13(c) for an individual who is 65 years of age or older or is disabled. If the individual qualified that residence homestead for the exemption after the beginning of that first year and the residence homestead remains eligible for the same exemption for the next year, and if the school district taxes imposed on the residence homestead in the next year are less than the amount of taxes imposed in that first year, a school district may not subsequently increase the total annual amount of ad valorem taxes it imposes on the residence homestead above the amount it imposed in the year immediately following the first year for which the individual qualified that residence homestead for the same exemption, except as provided by Subsection (b). If the first tax year the individual qualified the residence homestead for the exemption provided by Section 11.13(c) for individuals 65 years of age or older or disabled was a tax year before the 2012 [1997] tax year, the amount of the limitation provided by this section is the amount of tax the school district imposed for the 2011 [1996] tax year less an amount equal to the amount determined by multiplying $30,000 [$10,000] times the tax rate of the school district for the 2012 [1997] tax year, plus any 2012 [1997] tax attributable to improvements made in 2011 [1996], other than improvements made to comply with governmental regulations or repairs.

SECTION 6. Section 403.302(j), Government Code, is amended to read as follows:

(j) For purposes of Chapter 42, Education Code, the comptroller shall certify to the commissioner of education:

(1) a final value for each school district computed on a residence homestead exemption under Section 1-b(c), Article VIII, Texas Constitution, of $5,000;

(2) a final value for each school district computed on:

(A) a residence homestead exemption under Section 1-b(c), Article VIII, Texas Constitution, of $15,000; and

(B) the effect of the additional limitation on tax increases under Section 1-b(d), Article VIII, Texas Constitution, as proposed by H.J.R. No. 4, 75th Legislature, Regular Session, 1997; [and]

(3) a final value for each school district computed on:

(A) a residence homestead exemption under Section 1-b(c), Article VIII, Texas Constitution, of $45,000; and

(B) the effect of the additional limitation on tax increases under Section 1-b(d), Article VIII, Texas Constitution, as proposed by the joint resolution to amend that section adopted by the 82nd Legislature, Regular Session, 2011; and

(4) a final value for each school district computed on the effect of the reduction of the limitation on tax increases to reflect any reduction in the school district tax rate as provided by Section 11.26(a-1), (a-2), or (a-3), Tax Code, as applicable.

SECTION 7. Sections 1, 2 and 3 of this Act take effect September 1, 2011.

SECTION 8. Sections 4, 5, 6 take effect January 1, 2012, but only if the constitutional amendment proposed by the 82nd Legislature, Regular Session, 2011, increasing the amount of the school district residence homestead property tax exemption to $45,000 and providing for a corresponding adjustment of the limitation on school taxes on residence homesteads of elderly and disabled persons is approved by the voters. If that amendment is not approved by the voters, those sections have no effect.