85S10598 SMH/CAE-D

By: White H.B. No. 288

A BILL TO BE ENTITLED

AN ACT

relating to an exemption from ad valorem taxation by a school district of a portion of the appraised value of a residence homestead based on the median market value of all residence homesteads in this state, a reduction of the limitation on the total amount of ad valorem taxes that may be imposed by a school district on the homestead of an elderly or disabled person to reflect any increase in the exemption amount, and the protection of school districts against any resulting loss in local revenue.

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

SECTION 1. 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 a portion [$25,000] of the appraised value of the adult's residence homestead equal to 25 percent of the highest median market value for any tax year beginning with the 2017 tax year of all residence homesteads in the state, except that only $5,000 of the exemption applies 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, not later than March 1 of each year the Legislative Budget Board shall determine the median market value of all residence homesteads in the state as of the preceding tax year and publish in the Texas Register the highest median market value for any preceding tax year beginning with the 2017 tax year of all residence homesteads in the state. The Legislative Budget Board shall make the determination based on information provided to the board by each appraisal district. Each appraisal district shall provide to the Legislative Budget Board the information requested by the board that the board determines to be necessary to make the determination.

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 2018 [2015] tax year, the amount of the limitation provided by this section is the amount of tax the school district imposed for the 2017 [2014] tax year less an amount equal to the amount determined by subtracting $25,000 from the amount of the exemption under Section 11.13(b) for the 2018 tax year and multiplying that amount by [$10,000 times] the tax rate of the school district for the 2018 [2015] tax year, plus any 2018 [2015] tax attributable to improvements made in 2017 [2014], other than improvements made to comply with governmental regulations or repairs.

SECTION 3. 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 2018-2019 SCHOOL YEAR. Notwithstanding any other provision of this chapter, in computing a school district's wealth per student for the 2018-2019 school year, a school district's taxable value of property under Subchapter M, Chapter 403, Government Code, is determined as if any change in the amount of the residence homestead exemption under Section 1-b(c), Article VIII, Texas Constitution, and any additional limitation on tax increases under Section 1-b(d) of that article in effect for the 2018 tax year as proposed by the 85th Legislature, 1st Called Session, 2017, had been in effect for the 2017 tax year. This section expires September 1, 2019.

SECTION 4. Section 42.2518, Education Code, as effective September 1, 2017, is amended by amending Subsections (a) and (b) and adding Subsection (a-1) to read as follows:

(a) For [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 September 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 as proposed by S.J.R. 1, 84th Legislature, Regular Session, 2015, had not occurred.

(a-1) Beginning with the 2018-2019 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 September 1, 2017, if any change in the amount of the residence homestead exemption under Section 1-b(c), Article VIII, Texas Constitution, as proposed by the joint resolution to amend that subsection adopted by the 85th Legislature, 1st Called Session, 2017, and any additional limitation on tax increases under Section 1-b(d) of that article as proposed by the joint resolution to amend that subsection adopted by the 85th Legislature, 1st Called Session, 2017, 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:

(1) the 2014 tax year is used for the purpose of determining additional state aid under Subsection (a); and

(2) the 2017 tax year is used for the purpose of determining additional state aid under Subsection (a-1) [this section].

SECTION 5. 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 2018-2019 school year, a school district's taxable value of property under Subchapter M, Chapter 403, Government Code, is determined as if any change in the amount of the residence homestead exemption under Section 1-b(c), Article VIII, Texas Constitution, and any additional limitation on tax increases under Section 1-b(d) of that article in effect for the 2018 tax year as proposed by the 85th Legislature, 1st Called Session, 2017, had been in effect for the 2017 tax year. This subsection expires September 1, 2019.

SECTION 6. 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 2018-2019 school year, a school district's taxable value of property under Subchapter M, Chapter 403, Government Code, is determined as if any change in the amount of the residence homestead exemption under Section 1-b(c), Article VIII, Texas Constitution, and any additional limitation on tax increases under Section 1-b(d) of that article in effect for the 2018 tax year as proposed by the 85th Legislature, 1st Called Session, 2017, had been in effect for the 2017 tax year. This subsection expires September 1, 2019.

SECTION 7. 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 2018-2019 school year, a school district's taxable value of property under Subchapter M, Chapter 403, Government Code, is determined as if any change in the amount of the residence homestead exemption under Section 1-b(c), Article VIII, Texas Constitution, and any additional limitation on tax increases under Section 1-b(d) of that article in effect for the 2018 tax year as proposed by the 85th Legislature, 1st Called Session, 2017, had been in effect for the 2017 tax year. This subsection expires September 1, 2019.

SECTION 8. 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 2018-2019 school year, a school district's taxable value of property under Subchapter M, Chapter 403, Government Code, is determined as if any change in the amount of the residence homestead exemption under Section 1-b(c), Article VIII, Texas Constitution, and any additional limitation on tax increases under Section 1-b(d) of that article in effect for the 2018 tax year as proposed by the 85th Legislature, 1st Called Session, 2017, had been in effect for the 2017 tax year. This subsection expires September 1, 2019.

SECTION 9. Section 46.071, Education Code, is amended by amending Subsections (a), (b), and (c) and adding Subsections (a-1), (b-1), and (c-1) to read as follows:

(a) Beginning with the 2015-2016 school year and continuing through the 2017-2018 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 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 September 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 as proposed by S.J.R. 1, 84th Legislature, Regular Session, 2015, had not occurred.

(a-1) Beginning with the 2018-2019 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 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 September 1, 2017, if any change in the amount of the residence homestead exemption under Section 1-b(c), Article VIII, Texas Constitution, and any additional limitation on tax increases under Section 1-b(d) of that article as proposed by the 85th Legislature, 1st Called Session, 2017, had not occurred.

(b) Subject to Subsections (c), (d), and (e) [(c)-(e)], additional state aid under this section through the 2017-2018 school year 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 as proposed by S.J.R. 1, 84th Legislature, Regular Session, 2015, is not offset by a gain in state aid under this chapter.

(b-1) Subject to Subsections (c-1), (d), and (e), additional state aid under this section beginning with the 2018-2019 school year is equal to the amount by which the loss of local interest and sinking revenue for debt service attributable to any change in the amount of the residence homestead exemption under Section 1-b(c), Article VIII, Texas Constitution, and any additional limitation on tax increases under Section 1-b(d) of that article as proposed by the 85th Legislature, 1st Called Session, 2017, is not offset by a gain in state aid under this chapter.

(c) For the purpose of determining state aid under Subsections (a) and (b) [this section], local interest and sinking revenue for debt service is limited to revenue required to service debt eligible under this chapter as of September 1, 2015, including refunding of that debt, subject to Section 46.061. The limitation imposed by Section 46.034(a) does not apply for the purpose of determining state aid under this section.

(c-1) For the purpose of determining state aid under Subsections (a-1) and (b-1), local interest and sinking revenue for debt service is limited to revenue required to service debt eligible under this chapter as of September 1, 2017, including refunding of that debt, subject to Section 46.061. The limitation imposed by Section 46.034(a) does not apply for the purpose of determining state aid under this section.

SECTION 10. The changes in law made by this Act to Sections 11.13 and 11.26, Tax Code, apply only to an ad valorem tax year that begins on or after January 1, 2018.

SECTION 11. This Act takes effect January 1, 2018, but only if the constitutional amendment proposed by the 85th Legislature, 1st Called Session, 2017, providing for an exemption from ad valorem taxation for public school purposes of a portion of the market value of a residence homestead based on the median market value of all residence homesteads in the state and 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 is approved by the voters. If that constitutional amendment is not approved by the voters, this Act has no effect.