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A BILL TO BE ENTITLED
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AN ACT
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relating to the authority of the attorney general to investigate |
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violations of law by certain local governments and to take action |
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against those local governments to enforce the law. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Chapter 402, Government Code, is amended by |
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adding Subchapter D to read as follows: |
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SUBCHAPTER D. VIOLATIONS OF LAW BY LOCAL GOVERNMENT |
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Sec. 402.101. DEFINITIONS. In this subchapter: |
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(1) "Local government" means a municipality or county. |
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(2) "No-new-revenue tax rate" means the |
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no-new-revenue tax rate calculated under Chapter 26, Tax Code. |
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Sec. 402.102. ATTORNEY GENERAL INVESTIGATION AND ACTION. |
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(a) The attorney general may investigate an alleged violation of |
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law by a local government. |
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(b) The attorney general may bring an action in the name of |
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the state against a local government if the attorney general |
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determines after conducting an investigation under Subsection (a) |
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that the local government violated a law. |
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Sec. 402.103. ENFORCEMENT ACTIONS DURING PENDENCY OF |
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ACTION. During the pendency of an action brought under this |
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subchapter, with respect to a local government defending the |
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action: |
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(1) the comptroller shall withhold payment of any |
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money due to the local government under Section 321.502 or 323.502, |
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Tax Code, as applicable; |
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(2) the local government may not adopt an ad valorem |
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tax rate that exceeds the local government's no-new-revenue tax |
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rate; and |
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(3) the local government may not receive state grant |
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funds and any pending application for such funds shall be denied. |
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Sec. 402.104. BURDEN OF PROOF; INITIAL HEARING. (a) A local |
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government defending an action brought under this subchapter has |
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the burden of proof to establish by a preponderance of the evidence |
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that the local government complied with the law the alleged |
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violation of which is the subject of the action. |
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(b) The court of original jurisdiction shall set an action |
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brought under this subchapter for an initial hearing not later than |
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the 30th day after the date the local government defending the |
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action was served with process for the action. |
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Sec. 402.105. JURISDICTION; APPEAL. (a) The First Business |
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Court Division has exclusive original jurisdiction of an action |
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brought under this subchapter. |
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(b) The Fifteenth Court of Appeals has exclusive appellate |
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jurisdiction of an action brought under this subchapter. A party |
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must appeal the action not later than the 30th day after the date |
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the judgment is signed. |
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Sec. 402.106. RESOLUTION OF ACTION IN FAVOR OF ATTORNEY |
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GENERAL. (a) If the attorney general prevails in an action brought |
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under this chapter: |
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(1) the local government defending the action may not, |
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during the five state fiscal years following the year in which the |
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judgment becomes final: |
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(A) adopt an ad valorem tax rate that exceeds the |
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local government's no-new-revenue tax rate; or |
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(B) receive state grant funds; and |
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(2) the court issuing the final judgment resolving the |
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action shall provide in the judgment that the state is entitled to |
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recover from the local government defending the action a penalty |
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equal to the balance of the suspense account maintained for the |
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local government under Section 321.501 or 323.501, Tax Code, as |
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applicable, that exists on the date the judgment is signed. |
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(b) The comptroller shall, on receipt of a copy of the final |
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judgment in an action brought under this subchapter that includes a |
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provision described by Subsection (a)(2), deposit the balance of |
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the suspense account maintained for the local government defending |
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the action under Section 321.501 or 323.501, Tax Code, as |
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applicable, as of the date the judgment is signed to the credit of |
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the general revenue fund. |
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Sec. 402.107. RESOLUTION OF ACTION IN FAVOR OF LOCAL |
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GOVERNMENT. If a local government prevails in an action brought |
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under this subchapter, the comptroller shall, notwithstanding any |
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other law, immediately send to the local government the balance of |
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the suspense account maintained for the local government under |
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Section 321.501 or 323.501, Tax Code, as applicable, as of the date |
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the judgment resolving the action is signed. |
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SECTION 2. Subchapter D, Chapter 402, Government Code, as |
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added by this Act, applies only to an alleged violation of law that |
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occurs on or after the effective date of this Act. |
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SECTION 3. This Act takes effect September 1, 2025. |