HB 99

By: Dean
  H.B. No. 99
  A BILL TO BE ENTITLED
  AN ACT
  relating to the repeal of or limitations on certain state and local
  taxes, including school district maintenance and operations ad
  valorem taxes, the enactment of state and local value added taxes,
  related school finance reform, and directing the comptroller to
  identify alternatives to local ad valorem taxes; imposing taxes.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
  ARTICLE 1.  REPLACING SCHOOL DISTRICT M&O TAX WITH VALUE-ADDED TAX.
         SECTION 1.01.  Repeal of school district M&O authority.
         (1)  Chapter 48, Education Code, and any other relevant
  statutes are amended to prohibit a school district from levying a
  maintenance and operations (M&O) ad valorem tax beginning with the
  2030 tax year.
         (2)  Any provision of law authorizing the collection or
  enforcement of M&O ad valorem taxes by school districts is repealed
  effective January 1, 2030.
         SECTION 1.02.  Value-Added Tax Imposed.
         (1)  Subtitle E, Title 2, Tax Code, is amended by adding
  Chapter 165, Value-Added Tax.
         (2)  A state value-added tax is imposed on the value added to
  goods and services at each stage of production or distribution.
         (3)  The initial rate of the state value-added tax shall be
  6.72% unless otherwise set by legislative act.
         (4)  All revenue generated by the state VAT shall be
  deposited into the Foundation School Fund and used exclusively to
  fund public education operations previously funded by school M&O
  property taxes.
         (5)  The comptroller shall adopt rules, forms, and
  procedures necessary to administer the tax in accordance with
  principles of efficiency, equity, and transparency.
         (6)  The state VAT authorized under this section takes effect
  January 1, 2030.
         SECTION 1.03.  This article takes effect January 1, 2030,
  but only if on or before that date a constitutional amendment to
  prohibit a school district from imposing an ad valorem tax for
  maintenance and operations purposes is approved by the voters.  If
  such a constitutional amendment is not approved by the voters on or
  before that date, this section has no effect.
  ARTICLE 2.  REPEALED PROVISIONS
         SECTION 2.01.  Tax Code.
         (1)  The following provisions of the Tax Code are repealed:
               (a)  Chapter 142;
               (b)  Subtitles E, F, G, H, and J, Title 2; and
               (c)  Subtitle C, Title 3.
         (2)  The repeal of a provision by this section does not
  affect tax liability accruing before the effective date of this
  article.  That liability continues in effect as if this article had
  not been enacted, and the former law is continued in effect for the
  collection of taxes due and for civil and criminal enforcement of
  the liability for those taxes.
         SECTION 2.02.  Education Code.
         (1)  The following provisions of the Education Code are
  repealed:
               (a)  Sections 45.0032, 48.255, 48.2551, 48.2552,
  48.2553, 48.256, 48.257, and 48.275; and
               (b)  Chapter 49.
         (2)  This section takes effect only if Article 1 of this Act
  takes effect.  If Article 1 of this Act does not take effect, this
  section has no effect.
  ARTICLE 3.  COMPTROLLER REVIEW AND RECOMMENDATIONS ON LOCAL
  PROPERTY TAX REPLACEMENT
         SECTION 3.01.  Comptroller Study and Legislative
  Recommendations.
         (1)  The comptroller of public accounts shall conduct a
  comprehensive study of the mechanisms, feasibility, and policy
  impacts of replacing all local property taxes, including those
  levied by counties, municipalities, and special districts, with
  local value-added taxes.
         (2)  The study must include, but is not limited to:
               (a)  Revenue needs and tax capacity of local
  jurisdictions,
               (b)  Rate structures for local VATs sufficient to
  replace current property tax revenues,
               (c)  Administrative models and compliance frameworks,
               (d)  Economic and distributional impacts,
               (e)  Constitutional or statutory amendments required,
  and
               (f)  Covering voter-approved bond payments and debt.
         (3)  In completing the study and review, the comptroller
  should consult with local elected officials from local taxing
  entities.
         (4)  The comptroller shall deliver the report with findings
  and detailed legislative recommendations to the governor,
  lieutenant governor, speaker of the house, and appropriate
  legislative committees no later than December 1, 2026.
         SECTION 3.02.  It is the intent of the legislature to use the
  comptroller's recommendations to draft and introduce legislation
  during the 90th Regular Legislative Session that would eliminate
  all remaining local ad valorem taxes and replace them with local
  value-added taxes, with such law to take effect on January 1, 2030.
         ARTICLE 4.  This Act takes effect on the 91st day after the
  end of the legislative session, except as otherwise provided above.