LEGISLATIVE BUDGET BOARD
Austin, Texas
 
FISCAL NOTE, 84TH LEGISLATIVE REGULAR SESSION
 
May 9, 2015

TO:
Honorable Dennis Bonnen, Chair, House Committee on Ways & Means
 
FROM:
Ursula Parks, Director, Legislative Budget Board
 
IN RE:
HB1965 by Paul (relating to the calculation of the ad valorem rollback tax rate of a taxing unit and voter approval of a proposed tax rate that exceeds the rollback tax rate.), Committee Report 1st House, Substituted

No fiscal implication to the State is anticipated.

The bill would amend Chapter 26 of the Tax Code, regarding property taxation and assessment, to change the percentage by which the effective maintenance and operations tax rate is increased in the rollback tax rate calculation for taxing units other than school districts from 8 percent to 6 percent. 
 
The bill would require all local taxing units to hold an automatic election to ratify a tax rate that exceeds the rollback rate.  Currently, only school districts must hold the automatic election and other taxing units hold an election only if a specified percentage of registered voters petition for the election before the 90th day after the tax rate is adopted. Section 26.07, regarding tax rate rollback elections by petition, would be repealed.
 
The bill would make certain conforming changes and repeals in various parts of the Tax Code, Education Code, Health and Safety Code, Local Government Code, Special District Local Laws Code, and Water Code.

The bill's provision that would change the percentage by which the effective maintenance and operations tax rate is increased in the rollback tax rate calculation for taxing units other than school districts from 8 percent to 6 percent could create a cost to taxing units other than school districts by making it more difficult to increase tax rates. If these taxing units propose a tax rate higher than the rollback rate the automatic rollback election might result in reducing the proposed rate to a rate determined by multiplying the effective rate times 1 plus 6 percent.  Future proposed tax rates and the outcome of any elections cannot be predicted and the increase in cost attributable to the proposed provision to units of local government cannot be estimated.  There would be no cost to school districts or to the state through the operation of the school funding formula.
 
The bill would take effect immediately upon enactment, assuming it received the requisite two-thirds majority votes in both houses of the Legislature.  Otherwise, it would take effect on the 91st day after the last day of the legislative session.

Local Government Impact

The bill's provision that would change the percentage by which the effective maintenance and operations tax rate is increased in the rollback tax rate calculation for taxing units other than school districts from 8 percent to 6 percent could create a cost to taxing units other than school districts by making it more difficult to increase tax rates. If these taxing units propose a tax rate higher than the rollback rate the automatic rollback election might result in reducing the proposed rate to a rate determined by multiplying the effective rate times 1 plus 6 percent. 


Source Agencies:
304 Comptroller of Public Accounts
LBB Staff:
UP, KK, SD, SJS