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.