85R3108 SMH-F
 
  By: Paul H.B. No. 1165
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  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.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 26.04, Tax Code, is amended by amending
  Subsection (c) and adding Subsection (c-1) to read as follows:
         (c)  An officer or employee designated by the governing body
  shall calculate the effective tax rate and the rollback tax rate for
  the unit, where:
               (1)  "Effective tax rate" means a rate expressed in
  dollars per $100 of taxable value calculated according to the
  following formula:
         EFFECTIVE TAX RATE = (LAST YEAR'S LEVY - LOST PROPERTY
  LEVY) / (CURRENT TOTAL VALUE - NEW PROPERTY VALUE)
         ; and
               (2)  "Rollback tax rate" means a rate expressed in
  dollars per $100 of taxable value calculated according to the
  following formula:
         ROLLBACK TAX RATE = (EFFECTIVE MAINTENANCE AND
  OPERATIONS RATE x 1.06 [1.08]) + CURRENT DEBT RATE
         (c-1)  Notwithstanding any other provision of this section,
  the governing body may direct the designated officer or employee to
  substitute "1.08" for "1.06" in the calculation of the rollback tax
  rate if any part of the taxing unit is located in an area declared a
  disaster area during the current tax year by the governor or by the
  president of the United States.
         SECTION 2.  Section 26.041, Tax Code, is amended by amending
  Subsections (a), (b), and (c) and adding Subsection (c-1) to read as
  follows:
         (a)  In the first year in which an additional sales and use
  tax is required to be collected, the effective tax rate and rollback
  tax rate for the unit are calculated according to the following
  formulas:
         EFFECTIVE TAX RATE = [(LAST YEAR'S LEVY - LOST PROPERTY
  LEVY) / (CURRENT TOTAL VALUE - NEW PROPERTY VALUE)] -
  SALES TAX GAIN RATE
  and
         ROLLBACK TAX RATE = (EFFECTIVE MAINTENANCE AND
  OPERATIONS RATE x 1.06 [1.08]) + CURRENT DEBT RATE -
  SALES TAX GAIN RATE
  where "sales tax gain rate" means a number expressed in dollars per
  $100 of taxable value, calculated by dividing the revenue that will
  be generated by the additional sales and use tax in the following
  year as calculated under Subsection (d) [of this section] by the
  current total value.
         (b)  Except as provided by Subsections (a) and (c) [of this
  section], in a year in which a taxing unit imposes an additional
  sales and use tax the rollback tax rate for the unit is calculated
  according to the following formula, regardless of whether the unit
  levied a property tax in the preceding year:
         ROLLBACK TAX RATE = [(LAST YEAR'S MAINTENANCE AND
  OPERATIONS EXPENSE x 1.06 [1.08]) / ([TOTAL] CURRENT
  TOTAL VALUE - NEW PROPERTY VALUE)] + (CURRENT DEBT RATE
  - SALES TAX REVENUE RATE)
  where "last year's maintenance and operations expense" means the
  amount spent for maintenance and operations from property tax and
  additional sales and use tax revenues in the preceding year, and
  "sales tax revenue rate" means a number expressed in dollars per
  $100 of taxable value, calculated by dividing the revenue that will
  be generated by the additional sales and use tax in the current year
  as calculated under Subsection (d) [of this section] by the current
  total value.
         (c)  In a year in which a taxing unit that has been imposing
  an additional sales and use tax ceases to impose an additional sales
  and use tax the effective tax rate and rollback tax rate for the
  unit are calculated according to the following formulas:
         EFFECTIVE TAX RATE = [(LAST YEAR'S LEVY - LOST PROPERTY
  LEVY) / (CURRENT TOTAL VALUE - NEW PROPERTY VALUE)] +
  SALES TAX LOSS RATE
  and
  ROLLBACK TAX RATE = [(LAST YEAR'S MAINTENANCE AND
  OPERATIONS EXPENSE x 1.06 [1.08]) / ([TOTAL] CURRENT
  TOTAL VALUE - NEW PROPERTY VALUE)] + CURRENT DEBT RATE
  where "sales tax loss rate" means a number expressed in dollars per
  $100 of taxable value, calculated by dividing the amount of sales
  and use tax revenue generated in the last four quarters for which
  the information is available by the current total value and "last
  year's maintenance and operations expense" means the amount spent
  for maintenance and operations from property tax and additional
  sales and use tax revenues in the preceding year.
         (c-1)  Notwithstanding any other provision of this section,
  the governing body may direct the designated officer or employee to
  substitute "1.08" for "1.06" in the calculation of the rollback tax
  rate if any part of the taxing unit is located in an area declared a
  disaster area during the current tax year by the governor or by the
  president of the United States.
         SECTION 3.  The heading to Section 26.08, Tax Code, is
  amended to read as follows:
         Sec. 26.08.  ELECTION TO RATIFY TAX RATE [SCHOOL TAXES].
         SECTION 4.  Sections 26.08(a), (b), (d), (d-1), (d-2), (e),
  and (h), Tax Code, are amended to read as follows:
         (a)  If the governing body of a taxing unit [school district]
  adopts a tax rate that exceeds the taxing unit's [district's]
  rollback tax rate, the registered voters of the taxing unit
  [district] at an election held for that purpose must determine
  whether to approve the adopted tax rate. When increased
  expenditure of money by a taxing unit [school district] is
  necessary to respond to a disaster, including a tornado, hurricane,
  flood, or other calamity, but not including a drought, that has
  impacted the taxing unit [a school district] and the governor has
  requested federal disaster assistance for the area in which the
  taxing unit [school district] is located, an election is not
  required under this section to approve the tax rate adopted by the
  governing body for the year following the year in which the disaster
  occurs.
         (b)  The governing body shall order that the election be held
  in the taxing unit [school district] on a date not less than 30 or
  more than 90 days after the day on which it adopted the tax rate.
  Section 41.001, Election Code, does not apply to the election
  unless a date specified by that section falls within the time
  permitted by this section. At the election, the ballots shall be
  prepared to permit voting for or against the
  proposition:  "Approving the ad valorem tax rate of $_____ per $100
  valuation in (name of taxing unit [school district]) for the
  current year, a rate that is $_____ higher per $100 valuation than
  the [school district] rollback tax rate of (name of taxing unit),
  for the purpose of (description of purpose of increase)." The
  ballot proposition must include the adopted tax rate and the
  difference between that rate and the rollback tax rate in the
  appropriate places.
         (d)  If the proposition is not approved as provided by
  Subsection (c), the governing body may not adopt a tax rate for the
  taxing unit [school district] for the current year that exceeds the
  taxing unit's [school district's] rollback tax rate.
         (d-1)  If, after tax bills for the taxing unit [school
  district] have been mailed, a proposition to approve the taxing
  unit's [school district's] adopted tax rate is not approved by the
  voters of the taxing unit [district] at an election held under this
  section, on subsequent adoption of a new tax rate by the governing
  body of the taxing unit [district], the assessor for the taxing unit
  [school] shall prepare and mail corrected tax bills.  The assessor
  shall include with each bill a brief explanation of the reason for
  and effect of the corrected bill.  The date on which the taxes
  become delinquent for the year is extended by a number of days equal
  to the number of days between the date the first tax bills were sent
  and the date the corrected tax bills were sent.
         (d-2)  If a property owner pays taxes calculated using the
  originally adopted tax rate of the taxing unit [school district]
  and the proposition to approve the adopted tax rate is not approved
  by the voters, the taxing unit [school district] shall refund the
  difference between the amount of taxes paid and the amount due under
  the subsequently adopted rate if the difference between the amount
  of taxes paid and the amount due under the subsequent rate is $1 or
  more.  If the difference between the amount of taxes paid and the
  amount due under the subsequent rate is less than $1, the taxing
  unit [school district] shall refund the difference on request of
  the taxpayer.  An application for a refund of less than $1 must be
  made within 90 days after the date the refund becomes due or the
  taxpayer forfeits the right to the refund.
         (e)  For purposes of this section, local tax funds dedicated
  to a junior college district under Section 45.105(e), Education
  Code, shall be eliminated from the calculation of the tax rate
  adopted by the governing body of a [the] school district. However,
  the funds dedicated to the junior college district are subject to
  Section 26.085.
         (h)  For purposes of this section, increases in taxable
  values and tax levies occurring within a reinvestment zone under
  Chapter 311 (Tax Increment Financing Act), in which a school [the]
  district is a participant, shall be eliminated from the calculation
  of the tax rate adopted by the governing body of the school
  district.
         SECTION 5.  Section 26.16(d), Tax Code, is amended to read as
  follows:
         (d)  The county assessor-collector shall post immediately
  below the table prescribed by Subsection (c) the following
  statement:
         "The county is providing this table of property tax rate
  information as a service to the residents of the county.  Each
  individual taxing unit is responsible for calculating the property
  tax rates listed in this table pertaining to that taxing unit and
  providing that information to the county.
         "The adopted tax rate is the tax rate adopted by the governing
  body of a taxing unit.
         "The maintenance and operations rate is the component of the
  adopted tax rate of a taxing unit that will impose the amount of
  taxes needed to fund maintenance and operation expenditures of the
  unit for the following year.
         "The debt rate is the component of the adopted tax rate of a
  taxing unit that will impose the amount of taxes needed to fund the
  unit's debt service for the following year.
         "The effective tax rate is the tax rate that would generate
  the same amount of revenue in the current tax year as was generated
  by a taxing unit's adopted tax rate in the preceding tax year from
  property that is taxable in both the current tax year and the
  preceding tax year.
         "The effective maintenance and operations rate is the tax
  rate that would generate the same amount of revenue for maintenance
  and operations in the current tax year as was generated by a taxing
  unit's maintenance and operations rate in the preceding tax year
  from property that is taxable in both the current tax year and the
  preceding tax year.
         "The rollback tax rate is the highest tax rate a taxing unit
  may adopt before requiring voter approval at an election.  An [In
  the case of a taxing unit other than a school district, the voters
  by petition may require that a rollback election be held if the unit
  adopts a tax rate in excess of the unit's rollback tax rate.     In the
  case of a school district, an] election will automatically be held
  if a taxing unit [the district] wishes to adopt a tax rate in excess
  of the unit's [district's] rollback tax rate."
         SECTION 6.  Sections 31.12(a) and (b), Tax Code, are amended
  to read as follows:
         (a)  If a refund of a tax provided by Section 11.431(b),
  26.08(d-2) [26.07(g)], 26.15(f), 31.11, or 31.111 is paid on or
  before the 60th day after the date the liability for the refund
  arises, no interest is due on the amount refunded. If not paid on or
  before that 60th day, the amount of the tax to be refunded accrues
  interest at a rate of one percent for each month or part of a month
  that the refund is unpaid, beginning with the date on which the
  liability for the refund arises.
         (b)  For purposes of this section, liability for a refund
  arises:
               (1)  if the refund is required by Section 11.431(b), on
  the date the chief appraiser notifies the collector for the unit of
  the approval of the late homestead exemption;
               (2)  if the refund is required by Section 26.08(d-2)
  [26.07(g)], on the date the results of the election to reduce the
  tax rate are certified;
               (3)  if the refund is required by Section 26.15(f):
                     (A)  for a correction to the tax roll made under
  Section 26.15(b), on the date the change in the tax roll is
  certified to the assessor for the taxing unit under Section 25.25;
  or
                     (B)  for a correction to the tax roll made under
  Section 26.15(c), on the date the change in the tax roll is ordered
  by the governing body of the taxing unit;
               (4)  if the refund is required by Section 31.11, on the
  date the auditor for the taxing unit determines that the payment was
  erroneous or excessive or, if the amount of the refund exceeds the
  applicable amount specified by Section 31.11(a), on the date the
  governing body of the unit approves the refund; or
               (5)  if the refund is required by Section 31.111, on the
  date the collector for the taxing unit determines that the payment
  was erroneous.
         SECTION 7.  Section 33.08(b), Tax Code, is amended to read as
  follows:
         (b)  The governing body of the taxing unit or appraisal
  district, in the manner required by law for official action, may
  provide that taxes that become delinquent on or after June 1 under
  Section 26.08(d-1) [26.07(f)], 26.15(e), 31.03, 31.031, 31.032,
  31.04, or 42.42 incur an additional penalty to defray costs of
  collection. The amount of the penalty may not exceed the amount of
  the compensation specified in the applicable contract with an
  attorney under Section 6.30 to be paid in connection with the
  collection of the delinquent taxes.
         SECTION 8.  Section 130.016(b), Education Code, is amended
  to read as follows:
         (b)  If the board of trustees of an independent school
  district that divests itself of the management, control, and
  operation of a junior college district under this section or under
  Section 130.017 [of this code] was authorized by [Subsection (e)
  of] Section 45.105(e) or under former Section 20.48(e) [20.48 of
  this code] to dedicate a portion of its tax levy to the junior
  college district before the divestment, the junior college district
  may levy an ad valorem tax from and after the divestment. In the
  first two years in which the junior college district levies an ad
  valorem tax, the tax rate adopted by the governing body may not
  exceed the rate that, if applied to the total taxable value
  submitted to the governing body under Section 26.04, Tax Code,
  would impose an amount equal to the amount of taxes of the school
  district dedicated to the junior college under [Subsection (e) of]
  Section 45.105(e) or former Section 20.48(e) [20.48 of this code]
  in the last dedication before the divestment. In subsequent years,
  the tax rate of the junior college district is subject to Section
  26.08 [26.07], Tax Code.
         SECTION 9.  Sections 281.124(d) and (e), Health and Safety
  Code, are amended to read as follows:
         (d)  If a majority of the votes cast in the election favor the
  proposition, the tax rate for the specified tax year is the rate
  approved by the voters, and that rate is not subject to [a rollback
  election under] Section 26.08 [26.07], Tax Code.  The board shall
  adopt the tax rate as provided by Chapter 26, Tax Code.
         (e)  If the proposition is not approved as provided by
  Subsection (c), the board may not adopt a tax rate for the district
  for the specified tax year that exceeds the rate that was not
  approved, and Section 26.08 [26.07], Tax Code, applies to the
  adopted rate if that rate exceeds the district's rollback tax rate.
         SECTION 10.  Section 140.010(e), Local Government Code, is
  amended to read as follows:
         (e)  A county or municipality that proposes a property tax
  rate that exceeds the lower of the effective tax rate or the
  rollback tax rate shall provide the following notice:
  "NOTICE OF (INSERT CURRENT TAX YEAR) TAX YEAR PROPOSED PROPERTY TAX
  RATE FOR (INSERT NAME OF COUNTY OR MUNICIPALITY)
  "A tax rate of $_____ per $100 valuation has been proposed for
  adoption by the governing body of (insert name of county or
  municipality).  This rate exceeds the lower of the effective or
  rollback tax rate, and state law requires that two public hearings
  be held by the governing body before adopting the proposed tax
  rate.  The governing body of (insert name of county or
  municipality) proposes to use revenue attributable to the tax rate
  increase for the purpose of (description of purpose of increase).
         PROPOSED TAX RATE$______ per $100        
         PRECEDING YEAR'S TAX RATE$______ per $100        
         EFFECTIVE TAX RATE$______ per $100        
         ROLLBACK TAX RATE$______ per $100        
  "The effective tax rate is the total tax rate needed to raise the
  same amount of property tax revenue for (insert name of county or
  municipality) from the same properties in both the (insert
  preceding tax year) tax year and the (insert current tax year) tax
  year.
  "The rollback tax rate is the highest tax rate that (insert name of
  county or municipality) may adopt without holding [before voters
  are entitled to petition for] an election to ratify [limit] the rate
  [that may be approved to the rollback rate].
  "YOUR TAXES OWED UNDER ANY OF THE ABOVE RATES CAN BE CALCULATED AS
  FOLLOWS:
  property tax amount = (rate) x (taxable value of your property) /
  100
  "For assistance or detailed information about tax calculations,
  please contact:
         (insert name of county or municipal tax assessor-collector)
         (insert name of county or municipality) tax
  assessor-collector
         (insert address)
         (insert telephone number)
         (insert e-mail address)
         (insert Internet website address, if applicable)
  "You are urged to attend and express your views at the following
  public hearings on the proposed tax rate:
         First Hearing:  (insert date and time) at (insert location of
  meeting).
         Second Hearing:  (insert date and time) at (insert location
  of meeting)."
         SECTION 11.  Section 1101.254(f), Special District Local
  Laws Code, is amended to read as follows:
         (f)  This section does not affect the applicability of [any
  rights district voters may have to petition for an election under]
  Section 26.08 [26.07], Tax Code, to the district's tax rate, except
  that if district voters approve a tax rate increase under this
  section, [the voters may not petition for an election under]
  Section 26.08 [26.07], Tax Code, does not apply [as] to the tax rate
  for that year.
         SECTION 12.  Sections 1122.2522, 3828.157, and 8876.152,
  Special District Local Laws Code, are amended to read as follows:
         Sec. 1122.2522.  ROLLBACK TAX RATE PROVISIONS APPLICABLE.
  [(a)]  If in any year the board adopts a tax rate that exceeds the
  rollback tax rate calculated as provided by Chapter 26, Tax Code,
  [the qualified voters of the district by petition may require that]
  an election under Section 26.08 of that code must be held to
  determine whether or not to approve [reduce] the tax rate adopted by
  the board for that year [to the rollback tax rate].
         [(b)     To the extent a conflict exists between this section
  and a provision of the Tax Code, the provision of the Tax Code
  prevails.]
         Sec. 3828.157.  INAPPLICABILITY OF CERTAIN TAX CODE
  PROVISIONS. Sections 26.04, 26.05, and 26.08 [26.07], Tax Code, do
  not apply to a tax imposed under Section 3828.153 or 3828.156.
         Sec. 8876.152.  APPLICABILITY OF CERTAIN TAX PROVISIONS.
  (a)  Sections 26.04, 26.05, 26.06, and 26.08 [26.07], Tax Code, do
  not apply to a tax imposed by the district.
         (b)  Sections 49.236(a)(1) and (2) and (b) [Section 49.236],
  Water Code, apply [as added by Chapter 248 (H.B. 1541), Acts of the
  78th Legislature, Regular Session, 2003, applies] to the district.
         SECTION 13.  Section 49.107(g), Water Code, is amended to
  read as follows:
         (g)  Sections 26.04, 26.05, and 26.08 [26.07], Tax Code, do
  not apply to a tax levied and collected under this section or an ad
  valorem tax levied and collected for the payment of the interest on
  and principal of bonds issued by a district.
         SECTION 14.  Section 49.108(f), Water Code, is amended to
  read as follows:
         (f)  Sections 26.04, 26.05, and 26.08 [26.07], Tax Code, do
  not apply to a tax levied and collected for payments made under a
  contract approved in accordance with this section.
         SECTION 15.  Section 49.236, Water Code, as added by Chapter
  335 (S.B. 392), Acts of the 78th Legislature, Regular Session,
  2003, is amended by amending Subsections (a) and (d) and adding
  Subsection (e) to read as follows:
         (a)  Before the board adopts an ad valorem tax rate for the
  district for debt service, operation and maintenance purposes, or
  contract purposes, the board shall give notice of each meeting of
  the board at which the adoption of a tax rate will be considered.
  The notice must:
               (1)  contain a statement in substantially the following
  form:
  "NOTICE OF PUBLIC HEARING ON TAX RATE
         "The (name of the district) will hold a public hearing on a
  proposed tax rate for the tax year (year of tax levy) on (date and
  time) at (meeting place). Your individual taxes may increase or
  decrease, depending on the change in the taxable value of your
  property in relation to the change in taxable value of all other
  property and the tax rate that is adopted.
         "(Names of all board members and, if a vote was taken, an
  indication of how each voted on the proposed tax rate and an
  indication of any absences.)";
               (2)  contain the following information:
                     (A)  the district's total adopted tax rate for the
  preceding year and the proposed tax rate, expressed as an amount per
  $100;
                     (B)  the difference, expressed as an amount per
  $100 and as a percent increase or decrease, as applicable, in the
  proposed tax rate compared to the adopted tax rate for the preceding
  year;
                     (C)  the average appraised value of a residence
  homestead in the district in the preceding year and in the current
  year; the district's total homestead exemption, other than an
  exemption available only to disabled persons or persons 65 years of
  age or older, applicable to that appraised value in each of those
  years; and the average taxable value of a residence homestead in the
  district in each of those years, disregarding any homestead
  exemption available only to disabled persons or persons 65 years of
  age or older;
                     (D)  the amount of tax that would have been
  imposed by the district in the preceding year on a residence
  homestead appraised at the average appraised value of a residence
  homestead in that year, disregarding any homestead exemption
  available only to disabled persons or persons 65 years of age or
  older;
                     (E)  the amount of tax that would be imposed by the
  district in the current year on a residence homestead appraised at
  the average appraised value of a residence homestead in that year,
  disregarding any homestead exemption available only to disabled
  persons or persons 65 years of age or older, if the proposed tax
  rate is adopted; [and]
                     (F)  the difference between the amounts of tax
  calculated under Paragraphs (D) and (E), expressed in dollars and
  cents and described as the annual percentage increase or decrease,
  as applicable, in the tax to be imposed by the district on the
  average residence homestead in the district in the current year if
  the proposed tax rate is adopted; and
                     (G)  if the proposed combined debt service,
  operation and maintenance, and contract tax rate exceeds the
  rollback tax rate, a description of the purpose of the proposed tax
  increase; and
               (3)  contain a statement in substantially the following
  form:
  "NOTICE OF VOTE ON TAX RATE [TAXPAYERS' RIGHT TO ROLLBACK ELECTION]
         "If operation and maintenance taxes on the average residence
  homestead increase by more than six [eight] percent, [the qualified
  voters of the district by petition may require that] an election
  must be held to determine whether to ratify [reduce] the operation
  and maintenance tax rate [to the rollback tax rate] under Section
  49.236(d), Water Code."
         (d)  If the governing body of a district adopts a combined
  debt service, operation and maintenance, and contract tax rate that
  exceeds the rollback tax rate, [would impose more than 1.08 times
  the amount of tax imposed by the district in the preceding year on a
  residence homestead appraised at the average appraised value of a
  residence homestead in the district in that year, disregarding any
  homestead exemption available only to disabled persons or persons
  65 years of age or older, the qualified voters of the district by
  petition may require that] an election must be held to determine
  whether [or not] to ratify [reduce] the tax rate adopted for the
  current year [to the rollback tax rate] in accordance with the
  procedures provided by Sections 26.08(b)-(d) [26.07(b)-(g) and
  26.081], Tax Code. For purposes of Sections 26.08(b)-(d) 
  [26.07(b)-(g)] and this section [subsection], the rollback tax rate
  is the sum of the following tax rates:
               (1)  the current year's debt service tax rate;
               (2)  the current year's [and] contract tax rate; and
               (3)  [rates plus] the operation and maintenance tax
  rate that would impose 1.06 [1.08] times the amount of the operation
  and maintenance tax imposed by the district in the preceding year on
  a residence homestead appraised at the average appraised value of a
  residence homestead in the district in that year, disregarding any
  homestead exemption available only to disabled persons or persons
  65 years of age or older.
         (e)  Notwithstanding any other provision of this section,
  the board may substitute "eight percent" for "six percent" in
  Subsection (a) and "1.08" for "1.06" in Subsection (d) if any part
  of the district is located in an area declared a disaster area
  during the current tax year by the governor or by the president of
  the United States.
         SECTION 16.  The following provisions are repealed:
               (1)  Section 1063.255, Special District Local Laws
  Code;
               (2)  Section 26.07, Tax Code;
               (3)  Section 49.236, Water Code, as added by Chapter
  248 (H.B. 1541), Acts of the 78th Legislature, Regular Session,
  2003; and
               (4)  Section 49.2361, Water Code.
         SECTION 17.  (a) The change in law made by this Act applies
  to the ad valorem tax rate of a taxing unit beginning with the 2017
  tax year, except as provided by Subsection (b) of this section.
         (b)  If the governing body of a taxing unit adopted an ad
  valorem tax rate for the taxing unit for the 2017 tax year before
  the effective date of this Act, the change in law made by this Act
  applies to the ad valorem tax rate of that taxing unit beginning
  with the 2018 tax year, and the law in effect when the tax rate was
  adopted applies to the 2017 tax year with respect to that taxing
  unit.
         SECTION 18.  This Act takes effect immediately if it
  receives a vote of two-thirds of all the members elected to each
  house, as provided by Section 39, Article III, Texas Constitution.  
  If this Act does not receive the vote necessary for immediate
  effect, this Act takes effect on the 91st day after the last day of
  the legislative session.