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A BILL TO BE ENTITLED
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AN ACT
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relating to the repeal of or limitations on certain state and local |
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taxes, including school district maintenance and operations ad |
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valorem taxes, the enactment of state and local value added taxes, |
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related school finance reform, and directing the comptroller to |
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identify alternatives to local ad valorem taxes; imposing taxes. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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ARTICLE 1. REPLACING SCHOOL DISTRICT M&O TAX WITH VALUE-ADDED TAX. |
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SECTION 1.01. Repeal of school district M&O authority. |
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(1) Chapter 48, Education Code, and any other relevant |
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statutes are amended to prohibit a school district from levying a |
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maintenance and operations (M&O) ad valorem tax beginning with the |
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2030 tax year. |
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(2) Any provision of law authorizing the collection or |
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enforcement of M&O ad valorem taxes by school districts is repealed |
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effective January 1, 2030. |
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SECTION 1.02. Value-Added Tax Imposed. |
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(1) Subtitle E, Title 2, Tax Code, is amended by adding |
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Chapter 165, Value-Added Tax. |
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(2) A state value-added tax is imposed on the value added to |
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goods and services at each stage of production or distribution. |
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(3) The initial rate of the state value-added tax shall be |
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6.72% unless otherwise set by legislative act. |
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(4) All revenue generated by the state VAT shall be |
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deposited into the Foundation School Fund and used exclusively to |
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fund public education operations previously funded by school M&O |
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property taxes. |
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(5) The comptroller shall adopt rules, forms, and |
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procedures necessary to administer the tax in accordance with |
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principles of efficiency, equity, and transparency. |
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(6) The state VAT authorized under this section takes effect |
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January 1, 2030. |
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SECTION 1.03. This article takes effect January 1, 2030, |
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but only if on or before that date a constitutional amendment to |
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prohibit a school district from imposing an ad valorem tax for |
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maintenance and operations purposes is approved by the voters. If |
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such a constitutional amendment is not approved by the voters on or |
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before that date, this section has no effect. |
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ARTICLE 2. REPEALED PROVISIONS |
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SECTION 2.01. Tax Code. |
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(1) The following provisions of the Tax Code are repealed: |
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(a) Chapter 142; |
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(b) Subtitles E, F, G, H, and J, Title 2; and |
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(c) Subtitle C, Title 3. |
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(2) The repeal of a provision by this section does not |
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affect tax liability accruing before the effective date of this |
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article. That liability continues in effect as if this article had |
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not been enacted, and the former law is continued in effect for the |
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collection of taxes due and for civil and criminal enforcement of |
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the liability for those taxes. |
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SECTION 2.02. Education Code. |
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(1) The following provisions of the Education Code are |
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repealed: |
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(a) Sections 45.0032, 48.255, 48.2551, 48.2552, |
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48.2553, 48.256, 48.257, and 48.275; and |
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(b) Chapter 49. |
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(2) This section takes effect only if Article 1 of this Act |
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takes effect. If Article 1 of this Act does not take effect, this |
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section has no effect. |
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ARTICLE 3. COMPTROLLER REVIEW AND RECOMMENDATIONS ON LOCAL |
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PROPERTY TAX REPLACEMENT |
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SECTION 3.01. Comptroller Study and Legislative |
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Recommendations. |
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(1) The comptroller of public accounts shall conduct a |
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comprehensive study of the mechanisms, feasibility, and policy |
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impacts of replacing all local property taxes, including those |
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levied by counties, municipalities, and special districts, with |
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local value-added taxes. |
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(2) The study must include, but is not limited to: |
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(a) Revenue needs and tax capacity of local |
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jurisdictions, |
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(b) Rate structures for local VATs sufficient to |
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replace current property tax revenues, |
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(c) Administrative models and compliance frameworks, |
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(d) Economic and distributional impacts, |
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(e) Constitutional or statutory amendments required, |
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and |
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(f) Covering voter-approved bond payments and debt. |
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(3) In completing the study and review, the comptroller |
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should consult with local elected officials from local taxing |
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entities. |
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(4) The comptroller shall deliver the report with findings |
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and detailed legislative recommendations to the governor, |
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lieutenant governor, speaker of the house, and appropriate |
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legislative committees no later than December 1, 2026. |
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SECTION 3.02. It is the intent of the legislature to use the |
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comptroller's recommendations to draft and introduce legislation |
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during the 90th Regular Legislative Session that would eliminate |
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all remaining local ad valorem taxes and replace them with local |
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value-added taxes, with such law to take effect on January 1, 2030. |
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ARTICLE 4. This Act takes effect on the 91st day after the |
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end of the legislative session, except as otherwise provided above. |