Bill Text: TX HB705 | 2019-2020 | 86th Legislature | Comm Sub

---

Bill Title: Relating to the substitution of a local sales and use tax for maintenance and operations property taxes imposed by certain local governments; authorizing the imposition of a tax.

Spectrum: Partisan Bill (Republican 4-0)

Status: (Introduced - Dead) 2019-03-21 - Considered in Calendars [HB705 Detail]

Download: Texas-2019-HB705-Comm_Sub.html

---

86R16512 CJC-D
By: Geren, Krause, Darby, et al. H.B. No. 705
Substitute the following for H.B. No. 705:
By: Bohac C.S.H.B. No. 705

A BILL TO BE ENTITLED
AN ACT
relating to the substitution of a local sales and use tax for
maintenance and operations property taxes imposed by certain local
governments; authorizing the imposition of a tax.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle C, Title 3, Tax Code, is amended by
adding Chapter 328 to read as follows:
CHAPTER 328. SUPPLEMENTAL LOCAL SALES AND USE TAX
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 328.0001. DEFINITIONS. In this chapter:
(1) "Lost property tax revenue" means the estimated
amount of property tax revenue to be received by a qualifying local
government for maintenance and operations purposes for the tax year
in which the local government adopts an ordinance or order
described by Subdivision (2)(A).
(2) "Qualifying local government" means a
municipality or county that:
(A) before June 30 of a year:
(i) adopts an ordinance or order providing
that, beginning January 1 of the following year, the local
government will not impose a property tax for purposes of funding
maintenance and operations expenditures and instead elects to
impose a supplemental sales and use tax for those purposes; and
(ii) forwards a certified copy of the
ordinance or order described by Subparagraph (i) to the
comptroller; or
(B) in a preceding year, adopted and forwarded to
the comptroller an ordinance or order described by Paragraph (A)
but has not subsequently adopted an ordinance or order abolishing
the supplemental sales and use tax imposed by the government.
(3) "Supplemental sales and use tax" means a sales and
use tax authorized by this chapter.
Sec. 328.0002. APPLICABILITY OF OTHER LAW. (a) Except as
otherwise provided by this chapter:
(1) Chapter 321 applies to a supplemental sales and
use tax imposed by a municipality; and
(2) Chapter 323 applies to a supplemental sales and
use tax imposed by a county.
(b) The following provisions do not apply to a supplemental
sales and use tax:
(1) Sections 321.101 and 323.101;
(2) Subchapter E, Chapter 321, Subchapter E, Chapter
323, and the other provisions of Chapters 321 and 323 relating to an
election;
(3) Sections 321.506-321.508; and
(4) Section 323.505.
(c) A supplemental sales and use tax is not an additional
sales and use tax for purposes of Section 321.101 or any other law.
Sec. 328.0003. EFFECT ON COMBINED LOCAL TAX RATE. The rate
of a supplemental sales and use tax may not be considered for
purposes of determining the combined local tax rate in any area.
SUBCHAPTER B. IMPOSITION OF TAX
Sec. 328.0051. TAX AUTHORIZED. (a) Subject to Section
328.0052, a qualifying local government by adoption of an ordinance
or order may adopt, increase, reduce, or abolish the supplemental
sales and use tax. The tax is in addition to any other sales and use
tax authorized by law, but may be imposed only during a period
during which the qualifying local government does not impose a
property tax for purposes of funding the local government's
maintenance and operations expenditures.
(b) Except as provided by Subchapter C, a qualifying local
government is not required to call an election to adopt, increase,
reduce, or abolish the supplemental sales and use tax.
Sec. 328.0052. TAX RATE; INCREASE, REDUCTION, OR ABOLITION
OF TAX. (a) The supplemental sales and use tax rate may not exceed
two percent.
(b) Subject to Subsection (a), in the first year in which a
qualifying local government imposes the supplemental sales and use
tax, the rate of the tax is equal to a rate that, when applied to the
estimated cumulative sales price of the sale, use, storage, or
other consumption of taxable items within the local government
during that year, would produce an amount equal to the local
government's lost property tax revenue. The ordinance or order
authorizing the tax and adopted under Section 328.0051 must specify
the tax rate.
(c) A qualifying local government that imposes the
supplemental sales and use tax may by adoption of an ordinance or
order annually increase or reduce the rate of the tax. An increase
in the rate of the tax is subject to the limitation prescribed by
Subsection (a). A reduction in the rate of the tax may not impair
any outstanding debt or other obligation payable from the tax.
(d) A qualifying local government that imposes the
supplemental sales and use tax may by adoption of an ordinance or
order abolish the tax if there is no outstanding debt secured by the
tax.
(e) A certified copy of an ordinance or order described by
this section must be forwarded to the comptroller before June 30 of
the year preceding the January 1 on which the action approved in the
ordinance or order is to take effect.
Sec. 328.0053. SALES AND USE TAX EFFECTIVE DATE. The
adoption, increase, reduction, or abolition of the supplemental
sales and use tax takes effect on the next January 1 that is at least
six months after the date the qualifying local government forwards
to the comptroller the copy of the ordinance or order adopting,
increasing, reducing, or abolishing the tax, as applicable.
SUBCHAPTER C. PETITION FOR ELECTION
Sec. 328.0101. PETITION FOR ELECTION. (a) The registered
voters of a municipality or county may petition the governing body
of the municipality or county to call an election on the question of
adoption by the municipality or county of a supplemental sales and
use tax.
(b) A petition under this section must be:
(1) signed by at least 20 percent of the registered
voters of the municipality or county; and
(2) submitted to the governing body of the
municipality or county.
(c) The governing body of the municipality or county shall
validate the petition not later than the 30th day after the date the
petition is submitted to the governing body.
Sec. 328.0102. ELECTION. On receipt of a valid petition
under Section 328.0101, the governing body of the municipality or
county shall adopt an ordinance or order calling an election on the
question of adoption by the municipality or county of a
supplemental sales and use tax.
Sec. 328.0103. ELECTION DATE. An election under this
subchapter must be held on the next uniform election date that
occurs after the date on which the governing body of the
municipality or county adopts the ordinance or order calling the
election and that allows sufficient time to comply with the
requirements of other law.
Sec. 328.0104. BALLOT. At the election, the ballot shall be
prepared to permit voting for or against the proposition:
"Requiring (name of municipality or county) to adopt a supplemental
sales and use tax on the earliest date allowed by law to allow (name
of municipality or county) to reduce its maintenance and operations
property tax rate to zero."
Sec. 328.0105. ELECTION RESULTS. If a majority of the
voters voting in the election favor the proposition, the governing
body of the municipality or county shall take the actions necessary
to become a qualifying local government on the earliest date
practicable under this chapter.
SUBCHAPTER D. USE OF TAX REVENUE
Sec. 328.0151. USE OF TAX REVENUE. Revenue from a
supplemental sales and use tax is for the use and benefit of the
qualifying local government imposing the tax and may be used for any
purpose for which the general funds of the local government may be
used.
SECTION 2. Section 26.04, Tax Code, is amended by adding
Subsection (c-1) to read as follows:
(c-1) Notwithstanding Subsection (c), the officer or
employee designated by the governing body of a municipality or
county that imposes a supplemental sales and use tax under Chapter
328 shall calculate only the municipality's or county's current
debt rate.
SECTION 3. Section 26.05, Tax Code, is amended by adding
Subsection (h) to read as follows:
(h) For purposes of this chapter, the tax rate of a
municipality or county that imposes a supplemental sales and use
tax under Chapter 328 is the municipality's or county's current debt
rate.
SECTION 4. Chapter 26, Tax Code, is amended by adding
Section 26.0521 to read as follows:
Sec. 26.0521. TAX RATE NOTICE OF MUNICIPALITY OR COUNTY
IMPOSING SUPPLEMENTAL SALES AND USE TAX. A municipality or county
that imposes a supplemental sales and use tax under Chapter 328:
(1) shall provide notice of the municipality's or
county's tax rate in the manner provided by Section 26.052 for the
proposed tax rate of a taxing unit to which that section applies;
and
(2) is exempt from notice and publication requirements
and is not subject to an injunction to the same extent as provided
by Section 26.052(b) for a taxing unit to which that section
applies.
SECTION 5. Section 26.09, Tax Code, is amended by adding
Subsection (f) to read as follows:
(f) For purposes of calculating the tax imposed on property
by a municipality or county that imposes a supplemental sales and
use tax under Chapter 328, the tax rate of the municipality or
county is considered to be the municipality's or county's current
debt rate.
SECTION 6. Notwithstanding Sections 328.0001(2),
328.0052(e), and 328.0053, Tax Code, as added by this Act:
(1) in 2019, a municipality or county may adopt an
ordinance or order adopting a supplemental sales and use tax and
forward a certified copy of the ordinance or order to the
comptroller of public accounts before December 1 of that year; and
(2) a supplemental sales and use tax adopted by a
municipality or county under Subdivision (1) of this section takes
effect January 1, 2020.
SECTION 7. 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 September 1, 2019.