By: Nelson, et al. S.B. No. 1

A BILL TO BE ENTITLED

AN ACT

relating to certain restrictions on the imposition of ad valorem taxes and to the duty of the state to reimburse certain political subdivisions for certain revenue loss.

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

SECTION 1. Section 11.13, Tax Code, is amended by amending Subsection (b) and adding Subsections (b-1) and (n-1) to read as follows:

(b) An adult is entitled to exemption from taxation by a school district of a portion [$15,000] of the appraised value of the adult's residence homestead equal to 25 percent of the median market value in the current tax year of all residence homesteads in the state, except that only $5,000 [$10,000] of the exemption applies [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. For purposes of this subsection, the Legislative Budget Board shall determine the median market value in the current tax year of all residence homesteads in the state as of July 25 and publish that value in the Texas Register.

(b-1) Notwithstanding Subsection (b), for purposes of computing the amount of the exemption under that subsection for the 2015 tax year, the Legislative Budget Board shall determine the median market value in that tax year of all residence homesteads in the state as of September 30 and publish that value in the Texas Register. This subsection expires December 31, 2016.

(n-1) The governing body of a taxing unit that adopted an exemption under Subsection (n) for the 2014 tax year may not reduce the amount of or repeal the exemption. This subsection expires December 31, 2024.

SECTION 2. 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 2015 [1997] tax year, the amount of the limitation provided by this section is the amount of tax the school district imposed for the 2014 [1996] tax year less an amount equal to the amount determined by subtracting $15,000 from the amount of the exemption under Section 11.13(b) for the 2015 tax year and multiplying that amount by [$10,000 times] the tax rate of the school district for the 2015 [1997] tax year, plus any 2015 [1997] tax attributable to improvements made in 2014 [1996], other than improvements made to comply with governmental regulations or repairs.

SECTION 3. Section 26.05, Tax Code, is amended by adding Subsection (a-1) to read as follows:

(a-1) Notwithstanding Subsection (a), the governing body of a taxing unit shall adopt a tax rate for the 2015 tax year before the later of October 31 or the 60th day after the date the certified appraisal roll is received by the taxing unit. This subsection expires December 31, 2016.

SECTION 4. Subchapter A, Chapter 41, Education Code, is amended by adding Section 41.0011 to read as follows:

Sec. 41.0011. COMPUTATION OF WEALTH PER STUDENT FOR 2015-2016 SCHOOL YEAR. Notwithstanding any other provision of this chapter, in computing a school district's wealth per student for the 2015-2016 school year, a school district's taxable value of property under Subchapter M, Chapter 403, Government Code, is determined as if the increase in the residence homestead exemption under Section 1-b(c), Article VIII, Texas Constitution, and the additional limitation on tax increases under Section 1-b(d) of that article in effect for the 2015 tax year as proposed by the joint resolution to amend that article adopted by the 84th Legislature, Regular Session, 2015, had been in effect for the 2014 tax year. This section expires September 1, 2016.

SECTION 5. Subchapter E, Chapter 42, Education Code, is amended by adding Section 42.2518 to read as follows:

Sec. 42.2518. ADDITIONAL STATE AID FOR HOMESTEAD EXEMPTION AND LIMITATION ON TAX INCREASES. (a) For the 2015-2016 and 2016-2017 school years, a school district is entitled to additional state aid to the extent that state and local revenue under this chapter and Chapter 41 is less than the state and local revenue that would have been available to the district under Chapter 41 and this chapter as those chapters existed on January 1, 2015, if the increase in the residence homestead exemption under Section 1-b(c), Article VIII, Texas Constitution, and the additional limitation on tax increases under Section 1-b(d) of that article in effect for the applicable tax year as proposed by the joint resolution to amend that article adopted by the 84th Legislature, Regular Session, 2015, had not occurred.

(b) The lesser of the school district's currently adopted maintenance and operations tax rate or the adopted maintenance and operations tax rate for the 2014 tax year is used for the purpose of determining additional state aid under this section.

(c) The commissioner, using information provided by the comptroller and other information as necessary, shall compute the amount of additional state aid to which a district is entitled under this section. A determination by the commissioner under this section is final and may not be appealed.

(d) This section expires August 31, 2017.

SECTION 6. Effective September 1, 2017, Subchapter E, Chapter 42, Education Code, is amended by adding Section 42.2518 to read as follows:

Sec. 42.2518. ADDITIONAL STATE AID FOR HOMESTEAD EXEMPTION AND LIMITATION ON TAX INCREASES. (a) Beginning with the 2017-2018 school year, a school district is entitled to additional state aid to the extent that state and local revenue under this chapter and Chapter 41 is less than the state and local revenue that would have been available to the district under Chapter 41 and this chapter as those chapters existed on January 1, 2015, excluding any state aid that would have been provided under former Section 42.2516, if the increase in the residence homestead exemption under Section 1-b(c), Article VIII, Texas Constitution, and the additional limitation on tax increases under Section 1-b(d) of that article in effect for the applicable tax year as proposed by the joint resolution to amend that article adopted by the 84th Legislature, Regular Session, 2015, had not occurred.

(b) The lesser of the school district's currently adopted maintenance and operations tax rate or the adopted maintenance and operations tax rate for the 2014 tax year is used for the purpose of determining additional state aid under this section.

(c) The commissioner, using information provided by the comptroller and other information as necessary, shall compute the amount of additional state aid to which a district is entitled under this section. A determination by the commissioner under this section is final and may not be appealed.

SECTION 7. Section 42.252, Education Code, is amended by adding Subsection (e) to read as follows:

(e) Notwithstanding any other provision of this chapter, in computing each school district's local share of program cost under this section for the 2015-2016 school year, a school district's taxable value of property under Subchapter M, Chapter 403, Government Code, is determined as if the increase in the residence homestead exemption under Section 1-b(c), Article VIII, Texas Constitution, and the additional limitation on tax increases under Section 1-b(d) of that article in effect for the 2015 tax year as proposed by the joint resolution to amend that article adopted by the 84th Legislature, Regular Session, 2015, had been in effect for the 2014 tax year. This subsection expires September 1, 2016.

SECTION 8. Section 42.302, Education Code, is amended by adding Subsection (g) to read as follows:

(g) Notwithstanding any other provision of this chapter, in computing a school district's enrichment tax rate ("DTR") and local revenue ("LR") for the 2015-2016 school year, a school district's taxable value of property under Subchapter M, Chapter 403, Government Code, is determined as if the increase in the residence homestead exemption under Section 1-b(c), Article VIII, Texas Constitution, and the additional limitation on tax increases under Section 1-b(d) of that article in effect for the 2015 tax year as proposed by the joint resolution to amend that article adopted by the 84th Legislature, Regular Session, 2015, had been in effect for the 2014 tax year. This subsection expires September 1, 2016.

SECTION 9. Section 46.003, Education Code, is amended by adding Subsection (i) to read as follows:

(i) Notwithstanding any other provision of this chapter, in computing a district's bond tax rate ("BTR") and taxable value of property ("DPV") for the 2015-2016 school year, a school district's taxable value of property under Subchapter M, Chapter 403, Government Code, is determined as if the increase in the residence homestead exemption under Section 1-b(c), Article VIII, Texas Constitution, and the additional limitation on tax increases under Section 1-b(d) of that article in effect for the 2015 tax year as proposed by the joint resolution to amend that article adopted by the 84th Legislature, Regular Session, 2015, had been in effect for the 2014 tax year. This subsection expires September 1, 2016.

SECTION 10. Section 46.032, Education Code, is amended by adding Subsection (d) to read as follows:

(d) Notwithstanding any other provision of this chapter, in computing a district's existing debt tax rate ("EDTR") and taxable value of property ("DPV") for the 2015-2016 school year, a school district's taxable value of property under Subchapter M, Chapter 403, Government Code, is determined as if the increase in the residence homestead exemption under Section 1-b(c), Article VIII, Texas Constitution, and the additional limitation on tax increases under Section 1-b(d) of that article in effect for the 2015 tax year as proposed by the joint resolution to amend that article adopted by the 84th Legislature, Regular Session, 2015, had been in effect for the 2014 tax year. This subsection expires September 1, 2016.

SECTION 11. Chapter 46, Education Code, is amended by adding Subchapter D to read as follows:

SUBCHAPTER D. STATE AID FOR HOMESTEAD EXEMPTION AND LIMITATION ON

TAX INCREASES

Sec. 46.071. ADDITIONAL STATE AID FOR HOMESTEAD EXEMPTION AND LIMITATION ON TAX INCREASES. (a) Beginning with the 2015-2016 school year, a school district is entitled to additional state aid under this subchapter to the extent that state and local revenue used to service debt eligible for assistance under this chapter is less than the state and local revenue that would have been available to the district under this chapter as it existed on January 1, 2015, if the increase in the residence homestead exemption under Section 1-b(c), Article VIII, Texas Constitution, and the additional limitation on tax increases under Section 1-b(d) of that article in effect for the applicable tax year as proposed by the joint resolution to amend that article adopted by the 84th Legislature, Regular Session, 2015, had not occurred.

(b) Subject to Subsections (c)-(g), additional state aid under this section is equal to the amount by which the loss of local interest and sinking revenue for debt service attributable to the increase in the residence homestead exemption under Section 1-b(c), Article VIII, Texas Constitution, and the additional limitation on tax increases under Section 1-b(d) of that article in effect for the applicable tax year as proposed by the joint resolution to amend that article adopted by the 84th Legislature, Regular Session, 2015, is not offset by a gain in state aid under this chapter.

(c) For the purpose of determining state aid under this section, local interest and sinking revenue for debt service is limited to revenue required to service debt eligible for assistance under this chapter that was issued on or before January 1, 2015, including refunding of that debt, subject to Section 46.061.

(d) To the extent that the revenue is not included in the calculation of state aid under Section 42.2518, local maintenance and operations revenue for lease-purchase agreements eligible for assistance under this chapter as described by Section 46.004 is included for the purpose of calculating state aid under this section.

(e) The effective tax rate used to calculate state aid under this section may not exceed the lesser of the district's current effective tax rate or the tax rate that would have been necessary for the current year to make payments for eligible debt service, as defined under this section, if the increase in the residence homestead exemption under Section 1-b(c), Article VIII, Texas Constitution, and the additional limitation on tax increases under Section 1-b(d) of that article in effect for the applicable tax year as proposed by the joint resolution to amend that article adopted by the 84th Legislature, Regular Session, 2015, had not occurred.

(f) If the amount required to pay debt service eligible under this section is less than the sum of state and local assistance provided under this chapter, including the amount of additional aid provided under this section, the district may not receive aid under this section in excess of the amount that, when added to the district's local interest and sinking revenue for debt service for the school year, as defined by this section, and state aid under Subchapters A and B, equals the amount required to pay the eligible debt service.

(g) The commissioner, using information provided by the comptroller and other information as necessary, shall compute the amount of additional state aid to which a district is entitled under this section. A determination by the commissioner under this section is final and may not be appealed.

SECTION 12. 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 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; and

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

(A) the amount of the residence homestead exemption under Section 1-b(c), Article VIII, Texas Constitution, in effect for the applicable tax year; 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 subsection adopted by the 84th Legislature, Regular Session, 2015.

SECTION 13. This Act applies to each tax year that begins on or after January 1, 2015.

SECTION 14. Except as otherwise provided by this Act, this Act takes effect on the date that the constitutional amendment proposed by the 84th Legislature, Regular Session, 2015, providing for an exemption from ad valorem taxation for public school purposes of a portion of the market value of a residence homestead equal to 25 percent of the median market value of all residence homesteads in the state, providing for a reduction of the limitation on the total amount of ad valorem taxes that may be imposed for those purposes on the homestead of an elderly or disabled person to reflect the increased exemption amount, authorizing the legislature to prohibit a political subdivision that has adopted an optional residence homestead exemption from reducing the amount of or repealing the exemption, and prohibiting the imposition or collection of a tax on the conveyance, including by sale, lease, or other transfer, of an interest in real property takes effect. If that constitutional amendment is not approved by the voters, this Act has no effect.