Governor Abbott, Lt. Governor Patrick, and Speaker Bonnen announced on Jan. 31st the filing of the Texas Property Tax Reform and Relief Act (SB 2/HB2). Sen. Paul Bettencourt (R-Houston) & Rep. Dustin Burrows (R-Lubbock) authored the respective bills with identical language. Provisions in the bills are intended to increase transparency in the property tax calculations, make it easier for property taxpayers to navigate the appraisal review board process, and empower citizens to have a direct say in significant increases in property tax rates, according to press releases from the House and Senate. Overall the bills will make changes to the tax rate process, prohibits a taxing unit from adopting a tax rate before certain requirement are met, makes certain changes to the appraisal and tax rate process, and makes changes to the rollback tax rate calculation and ballot language for ISD’s.
The bills as filed changes the rollback rate from 8% to 2.5% for all taxing districts with more than $15 million in combined property and sales tax revenue. The school district rollback rate calculation would also be adjusted to reflect the 2.5% revenue cap and if a district wishes to exceed the 2.5% revenue increase, the bills modify the required ballot language if an election is required.
The “no-new-revenue rate” as set forth in the bills (currently the “effective tax rate”) is the property tax rate in the current year that would raise the same revenue for the taxing jurisdiction as the previous year, given the current year’s property values. The rollback rate is the amount of increase above the no-new-revenue tax rate a jurisdiction may increase property tax rates without a vote to limit the property tax rate growth. Additionally, rollback elections would be held on the uniform November election day and adjusts the property tax calendar accordingly. To clarify, a proposed tax rate that is greater than the “no-new-revenue rate” represents a tax increase.
The bills also create a Property Tax Administration Advisory Board in the Texas Comptroller’s office to oversee the entire property tax process.