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A BILL TO BE ENTITLED
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AN ACT
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relating to the calculation of certain ad valorem tax rates of a |
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taxing unit and the manner in which a proposed ad valorem tax rate |
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that exceeds the voter-approval tax rate is approved; making |
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conforming changes. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 26.013, Tax Code, is amended by adding |
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Subsection (c) to read as follows: |
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(c) This subsection applies only to a junior college |
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district, a hospital district, or a taxing unit, other than a school |
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district, for which the maintenance and operations tax rate |
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proposed for the current tax year is 2.5 cents or less per $100 of |
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taxable value. Notwithstanding Subsection (b)(2), for each tax |
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year before the 2026 tax year, the foregone revenue amount of a |
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taxing unit to which this subsection applies is considered to be |
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zero. This subsection expires December 31, 2028. |
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SECTION 2. Section 26.04(c), Tax Code, is amended to read as |
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follows: |
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(c) After the assessor for the taxing unit submits the |
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appraisal roll for the taxing unit to the governing body of the |
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taxing unit as required by Subsection (b), an officer or employee |
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designated by the governing body shall calculate the no-new-revenue |
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tax rate and the voter-approval tax rate for the taxing unit, where: |
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(1) "No-new-revenue tax rate" means a rate expressed |
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in dollars per $100 of taxable value calculated according to the |
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following formula: |
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NO-NEW-REVENUE TAX RATE = (LAST YEAR'S LEVY - LOST PROPERTY |
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LEVY) / (CURRENT TOTAL VALUE - NEW PROPERTY VALUE) |
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; and |
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(2) "Voter-approval tax rate" means a rate expressed |
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in dollars per $100 of taxable value calculated according to the |
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following [applicable] formula: |
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[(A) for a special taxing unit: |
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[VOTER-APPROVAL TAX RATE = (NO-NEW-REVENUE MAINTENANCE AND |
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OPERATIONS RATE x 1.08) + CURRENT DEBT RATE |
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[; or |
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[(B) for a taxing unit other than a special |
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taxing unit:] |
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VOTER-APPROVAL TAX RATE = (NO-NEW-REVENUE MAINTENANCE AND |
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OPERATIONS RATE x 1.025 [1.035]) + (CURRENT DEBT RATE + UNUSED |
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INCREMENT RATE) |
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SECTION 3. Sections 26.041(a), (b), and (c), Tax Code, are |
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amended to read as follows: |
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(a) In the first year in which an additional sales and use |
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tax is required to be collected, the no-new-revenue tax rate and |
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voter-approval tax rate for the taxing unit are calculated |
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according to the following formulas: |
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NO-NEW-REVENUE TAX RATE = [(LAST YEAR'S LEVY - LOST PROPERTY |
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LEVY) / (CURRENT TOTAL VALUE - NEW PROPERTY VALUE)] - SALES TAX GAIN |
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RATE |
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and |
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[VOTER-APPROVAL TAX RATE FOR SPECIAL TAXING UNIT = |
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(NO-NEW-REVENUE MAINTENANCE AND OPERATIONS RATE x 1.08) + (CURRENT |
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DEBT RATE - SALES TAX GAIN RATE) |
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[or] |
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VOTER-APPROVAL TAX RATE [FOR TAXING UNIT OTHER THAN SPECIAL |
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TAXING UNIT] = (NO-NEW-REVENUE MAINTENANCE AND OPERATIONS RATE x |
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1.025 [1.035]) + (CURRENT DEBT RATE + UNUSED INCREMENT RATE - SALES |
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TAX GAIN RATE) |
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where "sales tax gain rate" means a number expressed in dollars per |
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$100 of taxable value, calculated by dividing the revenue that will |
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be generated by the additional sales and use tax in the following |
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year as calculated under Subsection (d) by the current total value. |
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(b) Except as provided by Subsections (a) and (c), in a year |
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in which a taxing unit imposes an additional sales and use tax, the |
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voter-approval tax rate for the taxing unit is calculated according |
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to the following formula, regardless of whether the taxing unit |
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levied a property tax in the preceding year: |
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[VOTER-APPROVAL TAX RATE FOR SPECIAL TAXING UNIT = [(LAST |
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YEAR'S MAINTENANCE AND OPERATIONS EXPENSE x 1.08) / (CURRENT TOTAL |
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VALUE - NEW PROPERTY VALUE)] + (CURRENT DEBT RATE - SALES TAX |
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REVENUE RATE) |
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[or] |
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VOTER-APPROVAL TAX RATE [FOR TAXING UNIT OTHER THAN SPECIAL |
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TAXING UNIT] = [(LAST YEAR'S MAINTENANCE AND OPERATIONS EXPENSE x |
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1.025 [1.035]) / (CURRENT TOTAL VALUE - NEW PROPERTY VALUE)] + |
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(CURRENT DEBT RATE + UNUSED INCREMENT RATE - SALES TAX REVENUE RATE) |
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where "last year's maintenance and operations expense" means the |
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amount spent for maintenance and operations from property tax and |
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additional sales and use tax revenues in the preceding year, and |
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"sales tax revenue rate" means a number expressed in dollars per |
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$100 of taxable value, calculated by dividing the revenue that will |
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be generated by the additional sales and use tax in the current year |
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as calculated under Subsection (d) by the current total value. |
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(c) In a year in which a taxing unit that has been imposing |
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an additional sales and use tax ceases to impose an additional sales |
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and use tax, the no-new-revenue tax rate and voter-approval tax |
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rate for the taxing unit are calculated according to the following |
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formulas: |
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NO-NEW-REVENUE TAX RATE = [(LAST YEAR'S LEVY - LOST PROPERTY |
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LEVY) / (CURRENT TOTAL VALUE - NEW PROPERTY VALUE)] + SALES TAX LOSS |
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RATE |
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and |
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[VOTER-APPROVAL TAX RATE FOR SPECIAL TAXING UNIT = [(LAST |
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YEAR'S MAINTENANCE AND OPERATIONS EXPENSE x 1.08) / (CURRENT TOTAL |
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VALUE - NEW PROPERTY VALUE)] + CURRENT DEBT RATE |
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[or] |
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VOTER-APPROVAL TAX RATE [FOR TAXING UNIT OTHER THAN SPECIAL |
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TAXING UNIT] = [(LAST YEAR'S MAINTENANCE AND OPERATIONS EXPENSE x |
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1.025 [1.035]) / (CURRENT TOTAL VALUE - NEW PROPERTY VALUE)] + |
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(CURRENT DEBT RATE + UNUSED INCREMENT RATE) |
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where "sales tax loss rate" means a number expressed in dollars per |
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$100 of taxable value, calculated by dividing the amount of sales |
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and use tax revenue generated in the last four quarters for which |
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the information is available by the current total value and "last |
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year's maintenance and operations expense" means the amount spent |
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for maintenance and operations from property tax and additional |
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sales and use tax revenues in the preceding year. |
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SECTION 4. Section 26.042(a), Tax Code, as amended by H.B. |
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30, Acts of the 89th Legislature, Regular Session, 2025, and |
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effective January 1, 2026, is amended to read as follows: |
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(a) Notwithstanding Sections 26.04 and 26.041, the |
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governing body of a taxing unit other than a school district [or a |
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special taxing unit] may direct the designated officer or employee |
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to calculate the voter-approval tax rate of the taxing unit in the |
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manner provided by Subsection (a-2) if any part of the taxing unit |
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is located in an area declared a disaster area during the current |
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tax year by the governor or by the president of the United States |
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and at least one person is granted an exemption under Section 11.35 |
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for property located in the taxing unit. The designated officer or |
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employee shall continue calculating the voter-approval tax rate in |
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the manner provided by this subsection until the earlier of: |
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(1) the first tax year in which the total taxable value |
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of property taxable by the taxing unit as shown on the appraisal |
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roll for the taxing unit submitted by the assessor for the taxing |
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unit to the governing body exceeds the total taxable value of |
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property taxable by the taxing unit on January 1 of the tax year in |
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which the disaster occurred; or |
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(2) the third tax year after the tax year in which the |
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disaster occurred. |
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SECTION 5. Section 26.042(a-2), Tax Code, as added by H.B. |
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30, Acts of the 89th Legislature, Regular Session, 2025, and |
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effective January 1, 2026, is amended to read as follows: |
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(a-2) The voter-approval tax rate the governing body of the |
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taxing unit may direct the designated officer or employee to |
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calculate under Subsection (a) is equal to the lesser of: |
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(1) the voter-approval tax rate calculated according |
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to the following formula: |
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VOTER-APPROVAL TAX RATE = (NO-NEW-REVENUE MAINTENANCE AND |
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OPERATIONS RATE X 1.08) + CURRENT DEBT RATE [in the manner provided |
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for a special taxing unit] |
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; or |
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(2) the voter-approval tax rate calculated according |
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to the following formula: |
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VOTER-APPROVAL TAX RATE = (NO-NEW-REVENUE MAINTENANCE AND |
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OPERATIONS RATE X 1.025 [1.035]) + (CURRENT DEBT RATE + UNUSED |
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INCREMENT RATE + DISASTER RELIEF RATE) |
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SECTION 6. Section 26.042(c), Tax Code, is amended to read |
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as follows: |
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(c) For purposes of Subsection (b), "adjusted |
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voter-approval tax rate" means the voter-approval tax rate a taxing |
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unit would have calculated in the last year for which Subsection (a) |
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applied to the taxing unit if in each tax year Subsection (a) |
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applied to the taxing unit the taxing unit adopted a tax rate equal |
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to the greater of: |
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(1) the tax rate actually adopted by the taxing unit |
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for that tax year, if that tax rate was approved by the voters at an |
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election held under Section 26.07; or |
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(2) the taxing unit's voter-approval tax rate for that |
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tax year, calculated in the manner provided by Section 26.04 [for a |
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taxing unit other than a special taxing unit]. |
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SECTION 7. Section 26.063(a), Tax Code, is amended to read |
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as follows: |
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(a) This section applies only to a taxing unit: |
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(1) other than [that is: |
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[(A) a taxing unit other than a special taxing |
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unit; or |
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[(B)] a municipality with a population of [less |
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than] 30,000 or more [, regardless of whether it is a special taxing |
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unit]; |
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(2) that is required to provide notice under Section |
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26.06(b-1) or (b-3); and |
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(3) for which the de minimis rate exceeds the |
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voter-approval tax rate. |
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SECTION 8. Section 26.07(b), Tax Code, is amended to read as |
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follows: |
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(b) If the governing body of a [special taxing unit or a] |
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municipality with a population of 30,000 or more adopts a tax rate |
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that exceeds the taxing unit's voter-approval tax rate, or the |
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governing body of a taxing unit other than a [special taxing unit or |
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a] municipality with a population of [less than] 30,000 or more |
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[regardless of whether it is a special taxing unit] adopts a tax |
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rate that exceeds the greater of the taxing unit's voter-approval |
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tax rate or de minimis rate, the registered voters of the taxing |
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unit at an election held for that purpose must determine whether to |
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approve the adopted tax rate. |
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SECTION 9. Sections 26.075(a) and (b), Tax Code, are |
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amended to read as follows: |
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(a) This section applies only to a taxing unit other than: |
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(1) [a special taxing unit; |
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[(2)] a school district; or |
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(2) [(3)] a municipality with a population of 30,000 |
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or more. |
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(b) This section applies to a taxing unit only in a tax year |
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in which the taxing unit's: |
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(1) de minimis rate exceeds the taxing unit's |
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voter-approval tax rate; and |
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(2) adopted tax rate is: |
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(A) equal to or lower than the taxing unit's de |
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minimis rate; and |
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(B) greater than the [greater of the] taxing |
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unit's[: |
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[(i)] voter-approval tax rate [calculated |
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as if the taxing unit were a special taxing unit; or |
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[(ii) voter-approval tax rate]. |
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SECTION 10. Section 49.057, Water Code, is amended by |
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amending Subsection (b) and adding Subsection (j) to read as |
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follows: |
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(b) The board shall adopt an annual budget. The board of a |
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developed district[, as defined by Section 49.23602,] shall include |
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as an appendix to the budget the district's: |
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(1) audited financial statements; |
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(2) bond transcripts; and |
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(3) engineer's reports required by Section 49.106. |
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(j) In this section, "developed district" means a district |
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that has financed, completed, and issued bonds to pay for all land, |
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works, improvements, facilities, plants, equipment, and appliances |
|
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necessary to serve at least 95 percent of the projected build-out of |
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the district in accordance with the purposes for its creation or the |
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purposes authorized by the constitution, this code, or any other |
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law. |
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SECTION 11. Section 49.236(a), Water Code, is amended to |
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read as follows: |
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(a) Before the board adopts an ad valorem tax rate for the |
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district for debt service, operation and maintenance purposes, or |
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contract purposes, the board shall give notice of each meeting of |
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the board at which the adoption of a tax rate will be considered. |
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The notice must: |
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(1) contain a statement in substantially the following |
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form: |
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"NOTICE OF PUBLIC HEARING ON TAX RATE |
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"The (name of the district) will hold a public hearing on a |
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proposed tax rate for the tax year (year of tax levy) on (date and |
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time) at (meeting place). Your individual taxes may increase at a |
|
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greater or lesser rate, or even decrease, depending on the tax rate |
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that is adopted and on the change in the taxable value of your |
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property in relation to the change in taxable value of all other |
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property. The change in the taxable value of your property in |
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relation to the change in the taxable value of all other property |
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determines the distribution of the tax burden among all property |
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owners. |
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"Visit Texas.gov/PropertyTaxes to find a link to your local |
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property tax database on which you can easily access information |
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regarding your property taxes, including information about |
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proposed tax rates and scheduled public hearings of each entity |
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that taxes your property. |
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"(Names of all board members and, if a vote was taken, an |
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indication of how each voted on the proposed tax rate and an |
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indication of any absences.)"; |
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(2) contain the following information: |
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(A) the district's total adopted tax rate for the |
|
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preceding year and the proposed tax rate, expressed as an amount per |
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$100; |
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(B) the difference, expressed as an amount per |
|
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$100 and as a percent increase or decrease, as applicable, in the |
|
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proposed tax rate compared to the adopted tax rate for the preceding |
|
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year; |
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(C) the average appraised value of a residence |
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homestead in the district in the preceding year and in the current |
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year; the district's total homestead exemption, other than an |
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exemption available only to disabled persons or persons 65 years of |
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age or older, applicable to that appraised value in each of those |
|
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years; and the average taxable value of a residence homestead in the |
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district in each of those years, disregarding any homestead |
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exemption available only to disabled persons or persons 65 years of |
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age or older; |
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(D) the amount of tax that would have been |
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imposed by the district in the preceding year on a residence |
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homestead appraised at the average appraised value of a residence |
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homestead in that year, disregarding any homestead exemption |
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available only to disabled persons or persons 65 years of age or |
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older; |
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(E) the amount of tax that would be imposed by the |
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district in the current year on a residence homestead appraised at |
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the average appraised value of a residence homestead in that year, |
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disregarding any homestead exemption available only to disabled |
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persons or persons 65 years of age or older, if the proposed tax |
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rate is adopted; |
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(F) the difference between the amounts of tax |
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calculated under Paragraphs (D) and (E), expressed in dollars and |
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cents and described as the annual percentage increase or decrease, |
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as applicable, in the tax to be imposed by the district on the |
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average residence homestead in the district in the current year if |
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the proposed tax rate is adopted; and |
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(G) if the proposed combined debt service, |
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operation and maintenance, and contract tax rate requires [or |
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authorizes] an election to approve [or reduce] the tax rate, [as |
|
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applicable,] a description of the purpose of the proposed tax |
|
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increase; |
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(3) contain a statement in substantially the following |
|
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form[, as applicable: |
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[(A) if the district is a district described by |
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Section 49.23601]: |
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"NOTICE OF VOTE ON TAX RATE |
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"If the district adopts a combined debt service, operation |
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and maintenance, and contract tax rate that would result in the |
|
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taxes on the average residence homestead increasing by more than |
|
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2.5 [eight] percent, an election must be held to determine whether |
|
|
to approve the operation and maintenance tax rate under Section |
|
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49.23601, Water Code."; |
|
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[(B) if the district is a district described by |
|
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Section 49.23602: |
|
|
["NOTICE OF VOTE ON TAX RATE |
|
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["If the district adopts a combined debt service, operation |
|
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and maintenance, and contract tax rate that would result in the |
|
|
taxes on the average residence homestead increasing by more than |
|
|
3.5 percent, an election must be held to determine whether to |
|
|
approve the operation and maintenance tax rate under Section |
|
|
49.23602, Water Code."; or |
|
|
[(C) if the district is a district described by |
|
|
Section 49.23603: |
|
|
["NOTICE OF TAXPAYERS' RIGHT TO ELECTION TO REDUCE TAX RATE |
|
|
["If the district adopts a combined debt service, operation |
|
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and maintenance, and contract tax rate that would result in the |
|
|
taxes on the average residence homestead increasing by more than |
|
|
eight percent, the qualified voters of the district by petition may |
|
|
require that an election be held to determine whether to reduce the |
|
|
operation and maintenance tax rate to the voter-approval tax rate |
|
|
under Section 49.23603, Water Code.";] and |
|
|
(4) include the following statement: "The 86th Texas |
|
|
Legislature modified the manner in which the voter-approval tax |
|
|
rate is calculated to limit the rate of growth of property taxes in |
|
|
the state.". |
|
|
SECTION 12. The heading to Section 49.23601, Water Code, is |
|
|
amended to read as follows: |
|
|
Sec. 49.23601. AUTOMATIC ELECTION TO APPROVE TAX RATE [FOR |
|
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LOW TAX RATE DISTRICTS]. |
|
|
SECTION 13. Sections 49.23601(a) and (c), Water Code, are |
|
|
amended to read as follows: |
|
|
(a) In this section, "voter-approval tax rate" means the |
|
|
rate equal to the sum of the following tax rates for the district: |
|
|
(1) the current year's debt service tax rate; |
|
|
(2) the current year's contract tax rate; and |
|
|
(3) the operation and maintenance tax rate that would |
|
|
impose 1.025 [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. |
|
|
(c) If the board of a district adopts a combined debt |
|
|
service, contract, and operation and maintenance tax rate that |
|
|
would impose more than 1.025 [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, an election must be held in accordance with the procedures |
|
|
provided by Sections 26.07(c)-(g), Tax Code, to determine whether |
|
|
to approve the adopted tax rate. If the adopted tax rate is not |
|
|
approved at the election, the district's tax rate is the |
|
|
voter-approval tax rate. |
|
|
SECTION 14. The following provisions are repealed: |
|
|
(1) Section 26.012(19), Tax Code; |
|
|
(2) Section 49.23601(b), Water Code; |
|
|
(3) Section 49.23602, Water Code; and |
|
|
(4) Section 49.23603, Water Code. |
|
|
SECTION 15. This Act applies only to ad valorem taxes |
|
|
imposed for an ad valorem tax year that begins on or after the |
|
|
effective date of this Act. |
|
|
SECTION 16. This Act takes effect January 1, 2026. |