HB 19

By: Meyer
  H.B. No. 19
  A BILL TO BE ENTITLED
  AN ACT
  relating to the issuance and repayment of debt by local
  governments, including the adoption of an ad valorem tax rate and
  the use of ad valorem tax revenue for the repayment of debt.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 44.004(c), Education Code, is amended to
  read as follows:
         (c)  The notice of public meeting to discuss and adopt the
  budget and the proposed tax rate may not be smaller than one-quarter
  page of a standard-size or a tabloid-size newspaper, and the
  headline on the notice must be in 18-point or larger type. Subject
  to Subsection (d), the notice must:
               (1)  contain a statement in the following form:
  "NOTICE OF PUBLIC MEETING TO DISCUSS BUDGET AND PROPOSED TAX RATE
         "The (name of school district) will hold a public meeting at
  (time, date, year) in (name of room, building, physical location,
  city, state).  The purpose of this meeting is to discuss the school
  district's budget that will determine the tax rate that will be
  adopted.  Public participation in the discussion is invited."  The
  statement of the purpose of the meeting must be in bold type. In
  reduced type, the notice must state: "The tax rate that is
  ultimately adopted at this meeting or at a separate meeting at a
  later date may not exceed the proposed rate shown below unless the
  district publishes a revised notice containing the same information
  and comparisons set out below and holds another public meeting to
  discuss the revised notice."  In addition, in reduced type, the
  notice must state: "Visit Texas.gov/PropertyTaxes to find a link to
  your local property tax database on which you can easily access
  information regarding your property taxes, including information
  about proposed tax rates and scheduled public hearings of each
  entity that taxes your property.";
               (2)  contain a section entitled "Comparison of Proposed
  Budget with Last Year's Budget," which must show the difference,
  expressed as a percent increase or decrease, as applicable, in the
  amounts budgeted for the preceding fiscal year and the amount
  budgeted for the fiscal year that begins in the current tax year for
  each of the following:
                     (A)  maintenance and operations;
                     (B)  debt service; and
                     (C)  total expenditures;
               (3)  contain a section entitled "Total Appraised Value
  and Total Taxable Value," which must show the total appraised value
  and the total taxable value of all property and the total appraised
  value and the total taxable value of new property taxable by the
  district in the preceding tax year and the current tax year as
  calculated under Section 26.04, Tax Code;
               (4)  contain a statement of the total amount of the
  outstanding and unpaid bonded indebtedness of the school district;
               (5)  contain a section entitled "Comparison of Proposed
  Rates with Last Year's Rates," which must:
                     (A)  show in rows the tax rates described by
  Subparagraphs (i)-(iii), expressed as amounts per $100 valuation of
  property, for columns entitled "Maintenance & Operations,"
  "Interest & Sinking Fund," and "Total," which is the sum of
  "Maintenance & Operations" and "Interest & Sinking Fund":
                           (i)  the school district's "Last Year's
  Rate";
                           (ii)  the "Rate to Maintain Same Level of
  Maintenance & Operations Revenue & Pay Debt Service," which:
                                 (a)  in the case of "Maintenance &
  Operations," is the tax rate that, when applied to the current
  taxable value for the district, as certified by the chief appraiser
  under Section 26.01, Tax Code, and as adjusted to reflect changes
  made by the chief appraiser as of the time the notice is prepared,
  would impose taxes in an amount that, when added to state funds to
  be distributed to the district under Chapter 48, would provide the
  same amount of maintenance and operations taxes and state funds
  distributed under Chapter 48 per student in average daily
  attendance for the applicable school year that was available to the
  district in the preceding school year; and
                                 (b)  in the case of "Interest & Sinking
  Fund," is the tax rate that, when applied to the current taxable
  value for the district, as certified by the chief appraiser under
  Section 26.01, Tax Code, and as adjusted to reflect changes made by
  the chief appraiser as of the time the notice is prepared, and when
  multiplied by the district's anticipated collection rate, would
  impose taxes in an amount that, when added to state funds to be
  distributed to the district under Chapter 46 and any excess taxes
  collected to service the district's debt during the preceding tax
  year but not used for that purpose during that year, would provide
  the minimum dollar amount required to be paid to service the
  district's debt; and
                           (iii)  the "Proposed Rate";
                     (B)  contain fourth and fifth columns aligned with
  the columns required by Paragraph (A) that show, for each row
  required by Paragraph (A):
                           (i)  the "Local Revenue per Student," which
  is computed by multiplying the district's total taxable value of
  property, as certified by the chief appraiser for the applicable
  school year under Section 26.01, Tax Code, and as adjusted to
  reflect changes made by the chief appraiser as of the time the
  notice is prepared, by the total tax rate, and dividing the product
  by the number of students in average daily attendance in the
  district for the applicable school year; and
                           (ii)  the "State Revenue per Student," which
  is computed by determining the amount of state aid received or to be
  received by the district under Chapters 43, 46, and 48 and dividing
  that amount by the number of students in average daily attendance in
  the district for the applicable school year; and
                     (C)  contain an asterisk after each calculation
  for "Interest & Sinking Fund" and a footnote to the section that, in
  reduced type, states "The Interest & Sinking Fund tax revenue is
  used to pay for bonded indebtedness on construction, equipment, or
  both.  The bonds, and the tax rate necessary to pay those bonds,
  were approved by the voters of this district.";
               (6)  contain a section entitled "Comparison of Proposed
  Levy with Last Year's Levy on Average Residence," which must:
                     (A)  show in rows the information described by
  Subparagraphs (i)-(iv), rounded to the nearest dollar, for columns
  entitled "Last Year" and "This Year":
                           (i)  "Average Market Value of Residences,"
  determined using the same group of residences for each year;
                           (ii)  "Average Taxable Value of Residences,"
  determined after taking into account the limitation on the
  appraised value of residences under Section 23.23, Tax Code, and
  after subtracting all homestead exemptions applicable in each year,
  other than exemptions available only to disabled persons or persons
  65 years of age or older or their surviving spouses, and using the
  same group of residences for each year;
                           (iii)  "Last Year's Rate Versus Proposed
  Rate per $100 Value"; and
                           (iv)  "Taxes Due on Average Residence,"
  determined using the same group of residences for each year; and
                     (B)  contain the following information: "Increase
  (Decrease) in Taxes" expressed in dollars and cents, which is
  computed by subtracting the "Taxes Due on Average Residence" for
  the preceding tax year from the "Taxes Due on Average Residence" for
  the current tax year;
               (7)  contain the following statement in bold print:
  "Under state law, the dollar amount of school taxes imposed on the
  residence of a person 65 years of age or older or of the surviving
  spouse of such a person, if the surviving spouse was 55 years of age
  or older when the person died, may not be increased above the amount
  paid in the first year after the person turned 65, regardless of
  changes in tax rate or property value.";
               (8)  contain the following statement in bold print:
  "Notice of Voter-Approval Rate: The highest tax rate the district
  can adopt before requiring voter approval at an election is (the
  school district voter-approval rate determined under Section
  26.08, Tax Code).  This election will be automatically held if the
  district adopts a rate in excess of the voter-approval rate of (the
  school district voter-approval rate)."; and
               (9)  contain a section entitled "Fund Balances," which
  must include the estimated amount of interest and sinking fund
  balances and the estimated amount of maintenance and operation or
  general fund balances remaining at the end of the current fiscal
  year that are not encumbered with or by corresponding debt
  obligation, less estimated funds necessary for the operation of the
  district before the receipt of the first payment under Chapter 48 in
  the succeeding school year.
         SECTION 2.  Subchapter A, Chapter 41, Election Code, is
  amended by adding Section 41.0051 to read as follows:
         Sec. 41.0051.  ELECTION TO ISSUE BONDS OR INCREASE AD
  VALOREM TAX RATE.  (a)  An election to authorize the issuance of
  general obligation bonds or to approve an increase in an ad valorem
  tax rate shall be held on the November uniform election date.
         (b)  Notwithstanding Section 41.0011, an election described
  by Subsection (a) may not be held as an emergency election under
  that section.
         (c)  If a law outside this code requires an election
  described by Subsection (a) to be held on a date other than the
  November uniform election date, the authority administering the
  election shall set the election date to comply with this section.
         SECTION 3.  Subchapter A, Chapter 1201, Government Code, is
  amended by adding Section 1201.006 to read as follows:
         Sec. 1201.006.  LIMIT ON LOCAL GOVERNMENT DEBT.  (a)
  Notwithstanding any other law, including a provision in a municipal
  charter, a political subdivision may not authorize additional debt
  if the resulting annual debt service exceeds the limitation imposed
  by this section.  The maximum annual debt service in any fiscal year
  on debt payable from property taxes may not exceed 20 percent of an
  amount equal to the average of the amount of property tax
  collections for the three preceding fiscal years.
         SECTION 4.  Chapter 1253, Government Code, is amended by
  adding Section 1253.004 to read as follows:
         Sec. 1253.004.  ALLOCATION OF PROCEEDS.  A political
  subdivision shall allocate the proceeds from the issuance of
  general obligation bonds authorized by the voters in the percentage
  or amount stated in the ballot proposition to authorize the
  issuance.
         SECTION 5.  Section 1431.001(2), Government Code, is amended
  to read as follows:
               (2)  "Eligible countywide district" means a flood
  control district [or a hospital district] the boundaries of which
  are substantially coterminous with the boundaries of a county with
  a population of three million or more [or a hospital district
  created in a county with a population of more than 1.2 million that
  was not included in the boundaries of a hospital district before
  September 1, 2003].
         SECTION 6.  Section 1431.002, Government Code, is amended by
  adding Subsection (d) to read as follows:
         (d)  Except as provided by this subsection, the governing
  body of an issuer may not authorize an anticipation note to pay a
  contractual obligation to be incurred if a bond proposition to
  authorize the issuance of bonds for the same purpose was submitted
  to the voters during the preceding five years and failed to be
  approved.  The governing body of an issuer may authorize an
  anticipation note that the governing body is otherwise prohibited
  from authorizing under this subsection in a case described by
  Section 271.045(a)(1), Local Government Code.
         SECTION 7.  Section 1431.003(b), Government Code, is amended
  to read as follows:
         (b)  Notwithstanding anything in this chapter to the
  contrary and except as provided by Section 1431.002(d), the
  governing body may exercise the authority granted to the governing
  body of an issuer with regard to issuance of obligations under
  Chapter 1371, except that the prohibition in that chapter on the
  repayment of an obligation with ad valorem taxes does not apply to
  an issuer exercising the authority granted by this section.
         SECTION 8.  Sections 271.043(7) and (7-a), Local Government
  Code, are amended to read as follows:
               (7)  "Issuer" means a municipality or[,] county[, or
  hospital district established under Chapter 281, Health and Safety
  Code].
               (7-a)  "Public work" [for an issuer that is a
  municipality or county:
                     [(A)]  means any of the following public
  improvements as authorized by law:
                     (A) [(i)]  a street, road, highway, bridge,
  sidewalk, or parking structure;
                     (B) [(ii)]  a landfill;
                     (C) [(iii)]  an airport;
                     (D) [(iv)] a utility system, water supply
  project, water treatment plant, wastewater treatment plant, or
  water or wastewater conveyance facility;
                     (E) [(v)]  a wharf or dock; or
                     (F) [(vi)]  a flood control and drainage
  project[;
                           [(vii)  a public safety facility, including
  a police station, fire station, emergency shelter, jail, or
  juvenile detention facility;
                           [(viii)  a judicial facility;
                           [(ix)  an administrative office building
  housing the governmental functions of the municipality or county;
                           [(x)  an animal shelter;
                           [(xi)  a library; or
                           [(xii)  a park or recreation facility that
  is generally accessible to the public and is part of the municipal
  or county park system;
                     [(B)  means the rehabilitation, expansion,
  reconstruction, or maintenance of an existing stadium, arena, civic
  center, convention center, or coliseum that is owned and operated
  by the municipality or county or by an entity created to act on
  behalf of the municipality or county; and
                     [(C)  does not include:
                           [(i)  a facility for which more than 50
  percent of the average annual usage is or is intended to be for
  professional or semi-professional sports;
                           [(ii)  a new stadium, arena, civic center,
  convention center, or coliseum that is or is intended to be leased
  by a single for-profit tenant for more than 180 days in a single
  calendar year; or
                           [(iii)  a hotel].
         SECTION 9.  Section 271.045, Local Government Code, is
  amended by amending Subsections (a) and (b) and adding Subsections
  (f) and (g) to read as follows:
         (a)  The governing body of an issuer may authorize
  certificates only as necessary to pay a contractual obligation:
               (1)  to be incurred for the construction, renovation,
  repair, or improvement of a public work that the governing body
  determines is necessary:
                     (A)  to comply with a state or federal law or rule,
  but only if the issuer has been officially notified of
  noncompliance with the law or rule [(1) construction of any public
  work];
                     (B)  to mitigate the impact of a public health
  emergency in the jurisdiction of the issuer that poses an imminent
  danger to the physical health or safety of the residents of the
  issuer;
                     (C)  to finance the cleanup, mitigation, or
  remediation of a natural disaster in the jurisdiction of the issuer
  subject to a state of disaster declared by:
                           (i)  the governor under Section 418.014,
  Government Code, in the fiscal year that the certificates are
  authorized; or
                           (ii)  the presiding officer of the governing
  body of the issuer under Section 418.108, Government Code, in the
  fiscal year that the certificates are authorized; or
                     (D)  to comply with a court order [(2) purchase of
  materials, supplies, equipment, machinery, buildings, land, and
  rights-of-way for authorized needs and purposes]; or
               (2)  for professional services necessary for a public
  work described by Subdivision (1) [(3) payment of contractual
  obligations for professional services, including services provided
  by tax appraisers, engineers, architects, attorneys, map makers,
  auditors, financial advisors, and fiscal agents].
         (b)  If necessary because of a change order for a contractual
  obligation incurred for the construction, renovation, repair, or
  improvement of a public work [orders], the governing body of an
  issuer may authorize the issuance of certificates [may be
  authorized] in an amount not to exceed 15 [25] percent of the [a]
  contractual obligation [incurred for the construction of public
  works], but certificates may be delivered only in the amount
  necessary to discharge the contractual obligation [obligations].
         (f)  The governing body of an issuer that authorizes the
  issuance of a certificate shall enter into a contract for the
  construction, renovation, repair, or improvement of the public work
  for which the issuance is authorized not later than the 180th day
  after the date the governing body authorizes the issuance.
         (g)  The governing body of an issuer that authorizes a
  certificate to pay a contractual obligation under Subsection
  (a)(1)(B) shall adopt a resolution describing the conditions and
  circumstances of the public health emergency and making a
  determination that the emergency exists.
         SECTION 10.  Section 271.0461, Local Government Code, is
  amended to read as follows:
         Sec. 271.0461.  ADDITIONAL PURPOSE FOR CERTIFICATES:
  DEMOLITION OF DANGEROUS STRUCTURES [OR RESTORATION OF HISTORIC
  STRUCTURES].  Certificates may be issued by any municipality for
  the payment of contractual obligations to be incurred in
  demolishing dangerous structures [or restoring historic
  structures] and may be sold for cash, subject to the restrictions
  and other conditions of Section 271.050.
         SECTION 11.  Sections 271.047(c) and (d), Local Government
  Code, are amended to read as follows:
         (c)  A certificate may not mature over a period greater than
  30 [40] years from the date of the certificate and may not bear
  interest at a rate greater than that allowed by Chapter 1204,
  Government Code.
         (d)  Except as provided by this subsection, the governing
  body of an issuer may not authorize a certificate to pay a
  contractual obligation to be incurred if a bond proposition to
  authorize the issuance of bonds for the same purpose was submitted
  to the voters during the preceding five [three] years and failed to
  be approved. A governing body may authorize a certificate that the
  governing body is otherwise prohibited from authorizing under this
  subsection[:
               [(1)]  in a case described by Section 271.045(a)(1)
  [Sections 271.056(1)-(3); and
         [(2)  to comply with a state or federal law, rule, or
  regulation if the political subdivision has been officially
  notified of noncompliance with the law, rule, or regulation].
         SECTION 12.  Sections 271.049(c) and (d), Local Government
  Code, are amended to read as follows:
         (c)  If before the date tentatively set for the authorization
  of the issuance of the certificates or if before the authorization,
  the municipal secretary or clerk if the issuer is a municipality, or
  the county clerk if the issuer is a county, receives a petition
  signed by at least two [five] percent of the registered [qualified]
  voters of the issuer protesting the issuance of the certificates,
  the issuer may not authorize the issuance of the certificates
  unless the issuance is approved at an election ordered, held, and
  conducted in the manner provided for bond elections under Chapter
  1251, Government Code.
         (d)  This section does not apply to certificates issued for
  the purposes described by Section 271.045(a)(1) [Sections
  271.056(1)-(4)].
         SECTION 13.  Section 271.0525(c), Local Government Code, is
  amended to read as follows:
         (c)  A petition to protest the issuance of refinancing
  certificates under this section must be signed by at least two
  percent of the registered [a number of qualified] voters of the
  county [, residing in the county, equal to at least five percent of
  the number of votes cast in that county for governor in the most
  recent general election at which that office was filled].
         SECTION 14.  Section 271.057(a), Local Government Code, is
  amended to read as follows:
         (a)  Except as provided by Subsection (b), a contract let
  under this subchapter for the construction, renovation, repair, or
  improvement of public works or the purchase of materials,
  equipment, supplies, or machinery and for which competitive bidding
  is required by this subchapter must be let to the lowest responsible
  bidder and, as the governing body determines, may be let on a
  lump-sum basis or unit price basis.
         SECTION 15.  Section 271.059, Local Government Code, is
  amended to read as follows:
         Sec. 271.059.  CONTRACTOR'S BONDS. If a contract is for the
  construction, renovation, repair, or improvement of public works
  and is required by this subchapter to be submitted to competitive
  bidding, the successful bidder must execute a good and sufficient
  payment bond and performance bond.  The bonds must each be:
               (1)  in the full amount of the contract price; and
               (2)  executed, in accordance with Chapter 2253,
  Government Code, with a surety company authorized to do business in
  this state.
         SECTION 16.  Section 26.012(3), Tax Code, is amended to read
  as follows:
               (3)  "Current debt service" means the minimum dollar
  amount required to be expended for debt service for the current
  year.
         SECTION 17.  Section 26.04(e), Tax Code, is amended to read
  as follows:
         (e)  By August 7 or as soon thereafter as practicable, the
  designated officer or employee shall submit the rates to the
  governing body.  The designated officer or employee shall post
  prominently on the home page of the taxing unit's Internet website
  in the form prescribed by the comptroller:
               (1)  the no-new-revenue tax rate, the voter-approval
  tax rate, and an explanation of how they were calculated;
               (2)  the estimated amount of interest and sinking fund
  balances and the estimated amount of maintenance and operation or
  general fund balances remaining at the end of the current fiscal
  year that are not encumbered with or by corresponding existing debt
  obligation; and
               (3)  a schedule of the taxing unit's debt obligations
  showing:
                     (A)  the minimum dollar amount of principal and
  interest required to [that will] be paid to service the taxing
  unit's debts in the next year from property tax revenue, including
  payments of lawfully incurred contractual obligations providing
  security for the payment of the principal of and interest on bonds
  and other evidences of indebtedness issued on behalf of the taxing
  unit by another political subdivision and, if the taxing unit is
  created under Section 52, Article III, or Section 59, Article XVI,
  Texas Constitution, payments on debts that the taxing unit
  anticipates to incur in the next calendar year;
                     (B)  the amount by which taxes imposed for debt
  are to be increased because of the taxing unit's anticipated
  collection rate; and
                     (C)  the total of the amounts listed in Paragraphs
  (A)-(B), less any amount collected in excess of the previous year's
  anticipated collections certified as provided in Subsection (b).
         SECTION 18.  Section 26.05, Tax Code, is amended by adding
  Subsections (a-1) and (a-2) to read as follows:
         (a-1)  The governing body of a taxing unit may approve a rate
  described by Subsection (a)(1) that exceeds the rate for the taxing
  unit as determined under that subsection only if:
               (1)  the rate is proposed to be approved by a motion
  that:
                     (A)  states the rate determined under Subsection
  (a)(1);
                     (B)  states the proposed rate;
                     (C)  states the difference between the proposed
  rate and the rate determined under Subsection (a)(1); and
                     (D)  describes the purpose for which the excess
  revenue collected from the proposed rate will be used; and
               (2)  the motion is approved by at least 60 percent of
  the members of the governing body.
         (a-2)  If the governing body of a taxing unit approves a rate
  described by Subsection (a)(1) under Subsection (a-1) for a tax
  year, the rate approved under Subsection (a-1) is considered to be
  the current debt rate of the taxing unit for that tax year.  The
  officer or employee designated by the governing body to calculate
  the voter-approval tax rate of the taxing unit under this chapter
  shall recalculate that rate to account for the new current debt
  rate, and that recalculated voter-approval tax rate is considered
  to be the voter-approval tax rate of the taxing unit for that tax
  year.
         SECTION 19.  Section 26.07, Tax Code, is amended by adding
  Subsection (h) to read as follows:
         (h)  Notwithstanding any other law, an increase in a taxing
  unit's maintenance and operations tax revenue derived from an
  election under this chapter may not be used or transferred to repay
  debt in installment payments or otherwise.
         SECTION 20.  The following provisions are repealed:
               (1)  Section 271.046, Local Government Code;
               (2)  Sections 26.012(7)(A)(ii)(d), (g), and (h), Tax
  Code; and
               (3)  Section 26.012(9), Tax Code.
         SECTION 21.  (a)  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.
         (b)  The changes in law made by this Act apply only to an
  anticipation note or certificate of obligation issued on or after
  the effective date of this Act.  An anticipation note or certificate
  of obligation issued before the effective date of this Act is
  governed by the law in effect on the date the anticipation note or
  certificate was issued, and the former law is continued in effect
  for that purpose.
         (c)  The changes in law made by the Act apply only to an
  election ordered on or after the effective date of this Act.  An
  election ordered before the effective date of this Act is governed
  by the law in effect on the date the election was ordered, and that
  law is continued in effect for that purpose.
         SECTION 22.  (a)  Except as otherwise provided by this Act,
  this Act takes effect September 1, 2025.
         (b)  The following provisions take effect January 1, 2026:
               (1)  Section 44.004(c), Education Code, as amended by
  this Act;
               (2)  Section 41.0051, Election Code, as added by this
  Act;
               (3)  Section 1201.006, Government Code, as added by
  this Act;
               (4)  Section 26.012(3), Tax Code, as amended by this
  Act;
               (5)  Section 26.04(e), Tax Code, as amended by this
  Act; and
               (6)  Sections 26.05(a-1) and (a-2), Tax Code, as added
  by this Act.