| TO: | Honorable Harvey Hilderbran, Chair, House Committee on Ways & Means |
| FROM: | John S O'Brien, Director, Legislative Budget Board |
| IN RE: | HB3275 by Coleman (Relating to the powers and duties of counties and political subdivisions of this state and entities created by those subdivisions.), As Introduced |
The bill would amend Chapter 311 of the Tax Code to increase from 10 percent to 30 percent the percentage cap on the amount of residential property in a tax increment reinvestment zone and to provide that the total appraised value of taxable real property in a zone cannot exceed 25 percent (rather than 20 percent) of the total appraised value of taxable real property in the municipality and in the industrial districts created by the municipality, if the municipality has a population of 100,000 or more (the previous population bracket was the county seat of a county that is adjacent to a county with a population of 3.3 million or more; and in which a planned community is located that has 20,000 or more acres of land, that was originally established under the Urban Growth and New Community Development Act of 1970 (42 U.S.C. Section 4501 et seq.). The bill would modify the eligibility requirements and procedures for appointing the reinvestment zone's board of directors.
The bill would amend Chapter 375 of the Local Government Code to provide that all or any part of the area of a municipal management district is eligible to be included in (1) a tax increment reinvestment zone created under chapter 311 of the Tax Code; (2) a tax abatement reinvestment zone created under Chapter 312 of the Tax Code; (3) an enterprise zone created under Chapter 2303 of the Government Code; or (4) an industrial district created under Chapter 42 of the Local Government Code.
The bill would amend Chapter 375 of the Local Government Code and Chapter 311 of the Tax Code to require a conclusive presumption that governmental acts or proceedings related to the designation, operation, or administration of a reinvestment zone performed by municipal management districts, cities, counties, reinvestment zone boards, and other entities are valid and in accord with all applicable statutes and rules and would prescribe exceptions to this presumption.
The bill would amend Chapter 387 of the Local Government Code to allow the creation by election of more than one county assistance district in the county and to limit the combined rate of sales and use taxes.
The bill would amend Chapter 42 of the Education Code to require the state to reimburse school districts for all payments into tax increment funds. The state reimbursement through the school funding formula is currently limited by Section 403 of the Government Code.
The bill would repeal Section 382.155(d) of the Local Government Code which makes a hotel occupancy tax contingent on the hotel owner's agreement. The owner's agreement would no longer be necessary to impose the hotel occupancy tax.
The bill would repeal Section 387.010(d) of the Local Government Code which governs the ballot language for an election to repeal a county assistance district's sales and use tax.
The bill would add Section 42.2514, Education Code and amend Section 42.2516(b), Education Code to change the statutory authority under which Foundation School Program state aid is distributed to school districts for special payments resulting from tax rate compression that are made to tax increment reinvestment zones in which certain districts participate. Because this state aid is currently paid under the authority provided by 42.2516(b), Education Code, no fiscal implications are expected for the Foundation School Program (FSP) or for the operations of the TEA.
The bill would make other conforming changes.
The bill would take effect September 1, 2011.
According to the Texas Municipal League (TML), the bill would provide options for cities that if they decided to implement them they could incur some costs, but it would based on the presumption that it would benefit them in the cities in the future. TML also included this analysis with regard to the provisions of the bill:
Municipal management district (MMD): (1) would be authorized to be included in a tax increment reinvestment zone, a tax abatement reinvestment zone, an enterprise zone, or an industrial district; and (2) provide that a governmental act or proceeding of an MMD is presumed valid after the third anniversary of the effective date if no litigation is pending in regard to the act or proceeding;
Public improvement district (PID): would authorize PIDs in certain counties to annex or exclude land and require consent by a city if certain powers have been delegated to the PID;
County assistance districts: (1) provide that the order calling the election to create a county assistance district may not authorize a tax rate that would exceed the maximum combined rate of sale and use taxes imposed by political subdivisions prescribed by the Tax Code; (2) allow an area to be included in a county assistance district upon petition by the owners of the land in the area; (3) authorize county assistance districts to enter into agreements with cities including agreements regarding the duration, rate, and allocation of sales and use taxes; (4) authorize a county assistance district to define specific areas to pay for improvements, facilities or services and impose different rates of sales and use tax in those areas; and (5) allow a county assistance district to increase the rate of sales and use by order if the increased rate does not exceed the rate approved at an election;
Municipal utilities: (1) authorize a city to enter into a contract with a water district or nonprofit corporation under which the district or corporation will acquire for the benefit of and convey to the city one or more projects including a water supply or treatment system, a water distribution system, a sanitary sewage collection nor treatment system, works or improvements necessary for drainage of land, recreation facilities, roads and improvements in aid of roads, or facilities to provide firefighting services; and (2) authorize a city to make payments under a contract described in (1), above, with revenues from city sales and use tax;
Reinvestment zones: (1) prohibit a city from designating a reinvestment zone if: (a) more than 30 percent of the property is used for residential purposes; or (b) the total appraised value of real property in the zone and existing zones exceeds 25 percent of the total appraised value of real property in the city and in industrial districts created by the city, if the city has a population of 100,000 or more, or 50 percent of the total appraised value of taxable real property in the city and industrial districts created by the city, if the city has a population of less than 100,000; (2) prohibit a city from changing the boundaries of an existing reinvestment zone to include property in excess of the restriction on composition of a zone described in (1), above; (3) make changes regarding the composition of the board of directors of a reinvestment zone; (4) provide that a taxing unit’s payments into a tax increment fund may specify projects to which the taxing unit’s tax increment will be dedicated and that the taxing unit’s participation may be computed with respect to a base year later than the original base year of the zone; (5) change the amount certain school districts must pay into a tax increment fund dependent upon receipt of state aid to the district; (6) provide that a governmental act or proceeding of a city, the board of directors of a reinvestment zone, or an entity acting to operate or administer a reinvestment zone or implement a project plan or reinvestment zone financial plan under Chapter 311 of the Tax Code is presumed valid on the second anniversary of the effective date of the act or proceeding if there is no pending litigation regarding the act or proceeding; and
Special districts operating under Chapter 49 of the Water Code would provide that a peace officer contracted by the district through a city is an independent contractor and the district is responsible for the actions or omissions of the peace officer only to the extent provide by law for other independent contractors.]
Based on costs reported to the Secretary of State (SOS) in 2010 by a sampling of counties, municipalities, and special districts, the average cost incurred by a local government entity for an election is $1.98 per registered voter. According to 2010 data from the SOS, there are an estimated 93.6 million registered voters in Texas. The election cost per local government would vary depending on the number of registered voters in each locality. If a special election were to be held on the general election date, the local government would experience an increase in costs that would not likely be significant (because the state pays the majority of the costs). However, if a special election were to be held on a uniform election date other than the general election date, the local government would incur the full costs associated with conducting the special election (pay to election workers, fees for the use of polling locations, publishing notices, and printing ballots).
The change in statutory authority for the payment of Foundation School Program aid to school districts for special payments to tax increment reinvestment zones related to tax rate compression would ensure that school districts continue to receive state aid for this purpose if the statutory authority for other hold harmless aid related to tax rate compression were to be repealed.
| Source Agencies: | 304 Comptroller of Public Accounts, 701 Central Education Agency
|
| LBB Staff: | JOB, KK, JGM, TP, JSp
|