88R7156 CJC/MEW-D
 
  By: Toth H.B. No. 5046
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to an increase in the amount of the exemption of residence
  homesteads from ad valorem taxation by a school district, an
  adjustment in the amount of the limitation on school district ad
  valorem taxes imposed on the residence homesteads of the elderly or
  disabled to reflect increases in the exemption amount, and the
  protection of school districts against the 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 $70,000 [$40,000] of the appraised value of the
  adult's residence homestead, 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.
         SECTION 2.  Section 11.26, Tax Code, is amended by amending
  Subsections (a), (a-10), and (o) and adding Subsection (a-11) 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 tax year, the
  amount of the limitation provided by this section is the amount of
  tax the school district imposed for the 2014 tax year less an amount
  equal to the amount determined by multiplying $10,000 times the tax
  rate of the school district for the 2015 tax year, plus any 2015 tax
  attributable to improvements made in 2014, other than improvements
  made to comply with governmental regulations or repairs.]
         (a-10)  For purposes of this section, "maximum compressed
  rate" means the maximum compressed rate of a school district as
  calculated under Section 48.2551, Education Code. Notwithstanding
  the other provisions of this section, if in the 2024 or a subsequent
  tax year an individual qualifies for a limitation on tax increases
  provided by this section on the individual's residence homestead,
  the amount of the limitation provided by this section on the
  homestead is equal to the amount computed by:
               (1)  multiplying the taxable value of the homestead in
  the preceding tax year by a tax rate equal to the difference between
  the school district's maximum compressed rate for the preceding tax
  year and the district's maximum compressed rate for the current tax
  year;
               (2)  subtracting the amount computed under Subdivision
  (1) from the amount of tax the district imposed on the homestead in
  the preceding tax year; [and]
               (3)  adding any tax imposed in the current tax year
  attributable to improvements made in the preceding tax year as
  provided by Subsection (b) to the amount computed under Subdivision
  (2);
               (4)  multiplying the amount of any increase in the
  current tax year as compared to the preceding tax year in the amount
  of the exemption to which the individual is entitled under Section
  11.13(b) by the school district's tax rate for the current tax year;
  and
               (5)  subtracting the amount computed under Subdivision
  (4) from the amount computed under Subdivision (3).
         (a-11)  This subsection applies only to an individual who in
  the 2024 tax year qualifies for a limitation under this section and
  for whom the 2021 tax year or an earlier tax year was the first tax
  year the individual or the individual's spouse qualified for an
  exemption under Section 11.13(c). The amount of the limitation
  provided by this section on the residence homestead of an
  individual to which this subsection applies for the 2024 tax year is
  the amount of the limitation as computed under Subsection (a-10) of
  this section less an amount equal to the product of $15,000 and the
  tax rate of the school district for the 2022 tax year. This
  subsection expires January 1, 2025.
         (o)  Notwithstanding Subsections (a)[, (a-3),] and (b), an
  improvement to property that would otherwise constitute an
  improvement under Subsection (b) is not treated as an improvement
  under that subsection if the improvement is a replacement structure
  for a structure that was rendered uninhabitable or unusable by a
  casualty or by wind or water damage.  For purposes of appraising the
  property in the tax year in which the structure would have
  constituted an improvement under Subsection (b), the replacement
  structure is considered to be an improvement under that subsection
  only if:
               (1)  the square footage of the replacement structure
  exceeds that of the replaced structure as that structure existed
  before the casualty or damage occurred; or
               (2)  the exterior of the replacement structure is of
  higher quality construction and composition than that of the
  replaced structure.
         SECTION 3.  Section 46.071, Education Code, is amended by
  amending Subsections (a-1) and (b-1) and adding Subsections (a-2),
  (b-2), and (c-2) to read as follows:
         (a-1)  For [Beginning with] the 2022-2023 and 2023-2024
  school years [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, 2021,
  if any increase in the residence homestead exemption under Section
  1-b(c), Article VIII, Texas Constitution, as proposed by the 87th
  Legislature, 3rd Called Session, 2021, had not occurred.
         (a-2)  Beginning with the 2024-2025 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, 2023, if any increase in 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 88th Legislature,
  Regular Session, 2023, had not occurred.
         (b-1)  Subject to Subsections (c-1), (d), and (e),
  additional state aid under this section for [beginning with] the
  2022-2023 and 2023-2024 school years [year] is equal to the amount
  by which the loss of local interest and sinking revenue for debt
  service attributable to any increase in the residence homestead
  exemption under Section 1-b(c), Article VIII, Texas Constitution,
  as proposed by the 87th Legislature, 3rd Called Session, 2021, is
  not offset by a gain in state aid under this chapter.
         (b-2)  Subject to Subsections (c-2), (d), and (e),
  additional state aid under this section beginning with the
  2024-2025 school year is equal to the amount by which the loss of
  local interest and sinking revenue for debt service attributable to
  any increase in 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 88th Legislature, Regular Session, 2023, is not
  offset by a gain in state aid under this chapter.
         (c-2)  For the purpose of determining state aid under
  Subsections (a-2) and (b-2), local interest and sinking revenue for
  debt service is limited to revenue required to service debt
  eligible under this chapter as of September 1, 2024, 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 4.  Section 48.2542, Education Code, is amended to
  read as follows:
         Sec. 48.2542.  ADDITIONAL STATE AID FOR ADJUSTMENT OF
  LIMITATION ON TAX INCREASES ON HOMESTEAD OF ELDERLY OR DISABLED.  
  Notwithstanding any other provision of this chapter, if a school
  district is not fully compensated through state aid or the
  calculation of excess local revenue under this chapter based on the
  determination of the district's taxable value of property under
  Subchapter M, Chapter 403, Government Code, the district is
  entitled to additional state aid in the amount necessary to fully
  compensate the district for the amount of ad valorem tax revenue
  lost due to a reduction of the amount of the limitation on tax
  increases provided by Sections 11.26(a-10) and (a-11) [11.26(a-4),
  (a-5), (a-6), (a-7), (a-8), (a-9), and (a-10)], Tax Code, as
  applicable.
         SECTION 5.  Effective January 1, 2025, Section 48.2542,
  Education Code, is amended to read as follows:
         Sec. 48.2542.  ADDITIONAL STATE AID FOR ADJUSTMENT OF
  LIMITATION ON TAX INCREASES ON HOMESTEAD OF ELDERLY OR DISABLED.  
  Notwithstanding any other provision of this chapter, if a school
  district is not fully compensated through state aid or the
  calculation of excess local revenue under this chapter based on the
  determination of the district's taxable value of property under
  Subchapter M, Chapter 403, Government Code, the district is
  entitled to additional state aid in the amount necessary to fully
  compensate the district for the amount of ad valorem tax revenue
  lost due to a reduction of the amount of the limitation on tax
  increases provided by Section 11.26(a-10) [Sections 11.26(a-4),
  (a-5), (a-6), (a-7), (a-8), (a-9), and (a-10)], Tax Code[, as
  applicable].
         SECTION 6.  Section 48.2543, Education Code, is amended to
  read as follows:
         Sec. 48.2543.  ADDITIONAL STATE AID FOR HOMESTEAD
  EXEMPTION.  (a)  For [Beginning with] the 2022-2023 and 2023-2024
  school years [year], a school district is entitled to additional
  state aid to the extent that state and local revenue under this
  chapter and Chapter 49 is less than the state and local revenue that
  would have been available to the district under this chapter and
  Chapter 49 as those chapters existed on September 1, 2021, if any
  increase in the residence homestead exemption under Section 1-b(c),
  Article VIII, Texas Constitution, as proposed by the 87th
  Legislature, 3rd Called Session, 2021, had not occurred.
         (a-1)  Beginning with the 2024-2025 school year, a school
  district is entitled to additional state aid to the extent that
  state and local revenue under this chapter and Chapter 49 is less
  than the state and local revenue that would have been available to
  the district under this chapter and Chapter 49 as those chapters
  existed on September 1, 2023, if any increase in 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 88th Legislature,
  Regular Session, 2023, 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 2021 tax year is used for the purpose of
  determining additional state aid under Subsection (a); and
               (2)  the 2023 tax year is used for the purpose of
  determining additional state aid under Subsection (a-1).
         SECTION 7.  Section 48.2556(a), Education Code, is amended
  to read as follows:
         (a)  For purposes of allowing the chief appraiser of each
  appraisal district and the assessor for each school district to
  make the calculations required by Sections 11.26(a-10) and (a-11),
  Tax Code, the [The] agency shall post [the following information]
  on the agency's Internet website [for purposes of allowing the
  chief appraiser of each appraisal district and the assessor for
  each school district to make the calculations required by Sections
  11.26(a-5), (a-6), (a-7), (a-8), (a-9), and (a-10), Tax Code:
               [(1)]  each school district's maximum compressed rate,
  as determined under Section 48.2551, for each tax year beginning
  with the 2022 [2019] tax year[; and
               [(2)  each school district's tier one maintenance and
  operations tax rate, as provided by Section 45.0032(a), for the
  2018 tax year].
         SECTION 8.  Effective January 1, 2025, Section 48.2556(a),
  Education Code, is amended to read as follows:
         (a)  For purposes of allowing the chief appraiser of each
  appraisal district and the assessor for each school district to
  make the calculations required by Section 11.26(a-10), Tax Code,
  the [The] agency shall post [the following information] on the
  agency's Internet website [for purposes of allowing the chief
  appraiser of each appraisal district and the assessor for each
  school district to make the calculations required by Sections
  11.26(a-5), (a-6), (a-7), (a-8), (a-9), and (a-10), Tax Code:
               [(1)]  each school district's maximum compressed rate,
  as determined under Section 48.2551, for the current [each] tax
  year and the preceding [beginning with the 2019] tax year[; and
               [(2)  each school district's tier one maintenance and
  operations tax rate, as provided by Section 45.0032(a), for the
  2018 tax year].
         SECTION 9.  Section 403.302, Government Code, is amended by
  amending Subsection (j-1) and adding Subsection (j-2) to read as
  follows:
         (j-1)  In the final certification of the study under
  Subsection (j), the comptroller shall separately identify the final
  taxable value for each school district as adjusted to account for
  the reduction of the amount of the limitation on tax increases
  provided by Section 11.26(a-10) [Sections 11.26(a-4), (a-5),
  (a-6), (a-7), (a-8), (a-9), and (a-10)], Tax Code[, as applicable].
         (j-2)  In the final certification of the study under
  Subsection (j), the comptroller shall separately identify the final
  taxable value for each school district as adjusted to account for
  the reduction of the amount of the limitation on tax increases
  provided by Section 11.26(a-11), Tax Code.  This subsection expires
  January 1, 2025.
         SECTION 10.  Sections 11.26(a-1), (a-2), (a-3), (a-4),
  (a-5), (a-6), (a-7), (a-8), and (a-9), Tax Code, are repealed.
         SECTION 11.  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, 2024.
         SECTION 12.  Except as otherwise provided by this Act, this
  Act takes effect January 1, 2024, but only if the constitutional
  amendment proposed by the 88th Legislature, Regular Session, 2023,
  to increase the amount of the exemption of residence homesteads
  from ad valorem taxation by a school district and to adjust the
  amount of the limitation on school district ad valorem taxes
  imposed on the residence homesteads of the elderly or disabled to
  reflect increases in the exemption amount is approved by the
  voters. If that amendment is not approved by the voters, this Act
  has no effect.