68 Legislative Bills Address Property Taxes
The 77th Texas Legislature passed 68 property tax and related bills that refine the property tax process. These bills address areas of property tax administration, exemptions, appraisal, protests, tax rate adoption, tax collection, and other areas. These 68 bills went to Governor Rick Perry for his approval or veto by June 17. Two bills were vetoed — House Bill (H. B.) 1723 and H. B. 3184
In comparison, 64 property tax bills passed in the 1999 regular legislative session and 63 bills (with one vetoed) passed in the 1997 regular session.
The August issue of STATEMENT will include an insert that will explain each legislative change by Property Tax Code section and changes in related laws for administration, such as open meetings, public records, and other areas.
New legislation also will be addressed at the Comptroller’s regional seminars in July and August. The seminar dates and locations are found on page 10 of this issue.
Each bill is listed below by topic, including the bill's effective date in parenthesis. If the governor vetoed a bill, the word "vetoed" appears across the bill’s description.
H. B. 490 is an omnibus bill that contains numerous provisions on administering and collecting property taxes. It includes the following items on tax administration:
- restricts an individual from serving as an appraisal district director, chief appraiser, or an appraisal review board (ARB) member if the individual owes delinquent taxes for more than 60 days after the individual knew or should have known of the delinquency. This restriction does not apply if the taxes are under an installment payment agreement or a tax deferral/abatement.
- provides that an ARB member may be removed from the board for communicating about a protest outside of the hearing (as outlined in Tax Code Section 41.66) or for participating in a protest in which the member has a conflict (as detailed in Section 41.69).
- specifies that a collection contract with another taxing unit or appraisal district to collect county taxes may exclude special inventory taxes outlined in Tax Code Chapter 23.
- adds that confidential information under Tax Code Section 22.27 may be disclosed to a taxing unit or its legal representative that is collecting delinquent taxes.
- provides that the chief appraiser may correct the appraisal roll for ownership and multiple appraisals. Refunds for corrections of multiple appraisals of a property are limited to taxes paid for the current tax year and the four preceding years. The bill states that the chief appraiser's failure or refusal to change the appraisal roll is not an action subject to review by the ARB, a lawsuit, or a regular protest.
- requires the chief appraiser to have written approval of the appraisal district board of directors to appeal an ARB decision. (Effective September 1, 2001) (See Tax collections for more about H. B. 490.)
Senate Bill (S. B.) 650 addresses composition and membership of an ARB. It increases the number of ARB members for counties with a population of at least 250,000 from 15 to 40 members and for counties with a population of one million from 30 to 75 members. Tax Code Section 6.411 for appointing auxiliary ARB members is repealed. (Effective January 1, 2002)
H. B. 16 extends the filing deadline for a disabled veteran's exemption. A disabled veteran may apply late for the exemption, up to one year after the date the taxes on the property were paid or became delinquent, whichever is earlier. This is the same process that currently exists for homestead exemptions. (Effective September 1, 2001)
H. B. 506 provides that a surviving spouse age 55 or older who has a homestead tax ceiling may transfer the benefit of that ceiling to a different qualified homestead. This is the same process currently for homeowners age 65 or older. (Effective January 1, 2002)
H. B. 824 exempts lands and buildings owned by county fair associations from property taxes. It does not exempt property used in conjunction with pari-mutuel betting. (Effective January 1, 2002)
H. B. 1392 changes the filing of an exemption application for community housing development organizations from annually to one-time. Before acquiring property, the organization may receive a written preliminary determination from the chief appraiser whether property would qualify for exemption. (Effective June 14, 2001)
H. B. 1689 exempts organizations engaged primarily in performing charitable functions. Based on the 1999 constitutional amendment, organizations may qualify as a charitable organization if they are “primarily” engaged in charitable functions. Before the amendment, the law required organizations to be engaged in “purely” charitable functions. Following exemption adoption by a local taxing unit, an organization must obtain a determination letter from the Comptroller that states the organization is engaged primarily in performing charitable functions. The chief appraiser must accept the letter as conclusive evidence that the organization engages primarily in performing charitable functions for the exemption. A new determination letter is required every fifth year after the exemption is granted. (Effective September 1, 2001)
H. B. 2076 allows taxing units, other than school districts, to exempt travel trailers from property taxes. House Joint Resolution (H. J. R.) 44 proposes a constitutional amendment for the exemption. (Effective January 1, 2002, if approved by Texas voters November 6, 2001)
H. B. 3121 requires Texas Natural Resources Conservation Commission to adopt standards to ensure that pollution control determinations are uniform and equal and property used for the production of goods and services are not determined to be exempt. It requires the executive director to follow those standards. The person seeking the exemption or the chief appraiser may challenge the executive director’s determination relative to designating pollution control property. (Effective September 1, 2001)
VETOED H. B. 3184 requires Comptroller's exemption application forms to include a statement to be sworn to before a notary public that each fact contained in the application is true and that the applicant has read and understands the penalties for false statements. (Effective January 1, 2002)
H. B. 3383 requires an organization receiving exemption as a community housing development organization improving property for low-income and moderate-income housing to exhibit that at least a certain percentage of the organization's annual cash flow is expended on social, educational, or economic development services. (Effective January 1, 2002)
S. B. 2 expands the exemption for water conservation initiatives in Tax Code Section 11.32 to include desalination and brush control initiatives. (Effective September 1, 2001)
S. B. 248 exempts motor vehicles (passenger cars or trucks with a shipping weight of 9,000 pounds or less) leased for personal use. “Personal use” means using the vehicle more than 50 percent (based on mileage) for activities not involving production of income. The Comptroller by rule will establish exemption application requirements and procedures to determine whether a vehicle qualifies. The lessee will complete a Comptroller-adopted form certifying under oath that the vehicle is not primarily used for the production of income. The owner (lessor) will maintain the lessee-executed forms for inspection and copying by the appraisal district. The owner will render non-exempt vehicles for taxation and provide the chief appraiser with an additional list of all leased vehicles. The exemption applies only to vehicles subject to a lease entered into on or after January 2, 2001. Cities may opt to tax personal leased vehicles. This bill requires the legislature to act to continue this exemption after tax year 2003. (Effective January 1, 2002)
S. B. 862 addresses the chief appraiser requesting more information for exempting freeport goods and accepting late exemption applications for freeport property. The deadline for an owner to provide copies of inventory records would be before the 31st day after the chief appraiser delivers a written request or before the date the ARB approves the appraisal records, whichever date is later. If the information is not provided, the owner forfeits the right to the exemption for that year. The new law provides a 10-percent penalty, payable to each taxing unit, if the owner provides the information after the 30-day deadline of the written request but before the ARB approves the appraisal records. The penalty is calculated using the difference between taxes imposed on the inventory and taxes that would otherwise have been imposed. A new section would allow owners to apply late for exempting freeport goods, if the owner files the application before the ARB approves the appraisal records. The owner would be liable for a 10-percent penalty for the late application. This late application process is similar to the one in current law for agricultural and timber land appraisal. (Effective September 1, 2001)
S. B. 1189 expands the exemption of public property used for public purposes to include property owned by a nonprofit corporation engaging exclusively in providing chilled water and steam to an institution defined in Health and Safety Code Section 301.031. The corporation's property would be considered as if owned by the state and used for health and education purposes. (Effective May 26, 2001)
S. B. 1574 exempts raw cocoa and green coffee held in Harris County. Senate Joint Resolution (S. J. R.) 47 proposes a constitutional amendment to authorize the legislature to exempt from property taxes raw cocoa and green coffee that is held in Harris County. (Effective January 1, 2002, if approved by Texas voters November 6, 2001)
S. J. R. 6 would authorize the legislature to exempt goods in transit. After holding a public hearing, a taxing unit may elect to tax goods in transit. It expands the freeport exemption that goods, wares, merchandise, and other personal property is not required to leave the state to receive exemption. The law will require that items only be moved within 270 days of being brought into the state or acquired by the owner. (Effective January 1, 2002, if approved by Texas voters November 6, 2001)
H. B. 1100 creates a presumption of use in interstate, international, or foreign commerce for vessels and watercraft located in Texas solely to be converted. The presumption will include vessels and watercraft under construction. Vessels and watercraft under construction will be presumed to be not located in Texas for longer than a temporary period for taxable situs purposes. This presumption will extend to tangible personal property if the owner demonstrates that the property will be incorporated into or attached to an identified vessel. (Effective January 1, 2002)
H. B. 2601 defines "public facility" for purposes of types of leaseholds or possessory interests that may not be listed in the appraisal roll to include: convention centers; visitor centers; sports facilities with permanent seating; concert halls; arenas; or stadiums. The facilities must be owned by a city or town, must serve a public purpose, and provide open access to the public. (Effective January 1, 2001)
H. B. 3123 transfers responsibility to develop standards for qualifying open-space land used for wildlife management from the Comptroller to Texas Parks and Wildlife Department (TPWD). The Comptroller will adopt the TPWD standards, and they are binding on a chief appraiser and an ARB. (Effective September 1, 2001 for 2002 tax year)
S. B. 247 grants confidentiality to certain home address information in appraisal records. The confidentiality applies to peace officers, county jailers, Texas Department of Criminal Justice employees, and commissioned security officers. These individuals may elect to restrict public access to information identifying them. Only the appraisal district, State of Texas, State Comptroller's Office, and taxing units may have access to the information. This bill also provides confidentiality to information identifying violence shelter centers and sexual assault programs. (September 1, 2001)
S. B. 865 changes the time period for Tax Code Section 25.25 corrections to the appraisal roll by an ARB from "at any time before the end of five years after January 1 of a tax year" to "any of the five preceding years." It amends Section 25.25(d) that the ARB may not change a substantially incorrect value in two instances: (1) if the property was subject to a regular earlier protest where the owner offered evidence or argument and the ARB issued a decision on the protest or (2) the appraised value was the result of a written agreement between the owner (or agent) and the appraisal district. (Effective May 28, 2001)
S. B. 1272 provides that land used for growing wholesale florist items in a county with a population of 35,000 or less may receive the special agricultural appraisal under Tax Code Section 23.42. The bill defines a greenhouse as an appurtenance to the land under Section 23.41. These two sections address the type of agricultural appraisal that requires the landowner's primary occupation and primary source of income to be agriculture. (Effective January 1, 2002)
S. B. 863 addresses the refund of taxes, with interest, when required by a court action. If a taxing unit does not refund taxes, with interest, within 60 days after the chief appraiser certifies the action to the unit, the taxing unit shall refund at a greater interest rate, set at 12 percent and calculated from the delinquency date for the taxes until the date the refund is made. In a tax refund lawsuit that is filed on or after the 180th day after the date the chief appraiser certifies a correction to the appraisal roll, the owner is entitled to court costs and reasonable attorney's fees. (Effective June 30, 2001)
S. B. 1095 and S. B. 1737 both add the same changes to Tax Code Section 25.195. The new law provides that when a property owner requests to inspect and receive copies of information for an ARB protest, the information includes any information provided under an appraisal services contract. For property appraised by a private appraisal firm, the owner or owner's agent may inspect and copy at the office of that firm all information pertaining to the property that the firm considered in appraising the property, including appraisal method, calculations, personal notes, correspondence, and working papers. The information request does not include information made confidential under Tax Code Section 22.27. If denied the information, the owner may take that denial to the ARB for the ARB to conduct a special hearing. (S. B. 1095 effective September 1, 2001; S. B. 1737 effective May 26, 2001) (See State comptroller and Tax abatements below for more changes by S. B. 1095)
Tax rate adoption
H. B. 602 gives hospital districts located in a county or counties each with a population of 75,000 or less to impose a sales and use tax to raise revenue. Currently, hospital districts can levy a sales and use tax only for the purpose of lowering property taxes. Hospital districts adopting a sales and use tax are not required to adjust their effective and rollback rates based on the additional sales and use tax revenues. (Effective September 1, 2001)
H. B. 1468 allows taxing units located in a county with a population of less than 500,000 (other than school districts) to exclude from the effective and rollback rate calculations the captured appraised value of real property in a tax increment financing (TIF) fund. (Effective September 1, 2001)
H. B. 1940 sets out prorating an over-65 homestead exemption in situations where the over-65 homeowner on January 1 of the tax year qualifies a subsequent property for a residence homestead exemption during the same year. (Effective January 1, 2002)
H. B. 2226 requires a chief appraiser to submit to each taxing unit a certified list of properties not included in the initial appraisal roll or on the list of properties certified as being under ARB protest. The list includes the market value, appraised value, and taxable value for the preceding year and an estimate of those values for the current year. Until the property on the proposed list is added to a unit's appraisal roll, the unit must include the lower taxable value in its effective and rollback tax rate calculations. (Effective January 1, 2002)
H. B. 2914 repeals the requirement that the Comptroller adopt by rule an additional adjustment to the rollback rate for school districts with the percentage homestead exemption. (Effective September 1, 2001)
H. B. 3343 is the Texas School Employees Uniform Group Health Care Coverage Act. It changes items dealing with school finance, including the tax rate rollback calculation. For tax years 2003 through 2008, a school district will have an additional step in calculating the rollback rate to permit the district to comply with the employer's expenditures for health coverage plans. (Effective September 1, 2001)
H. B. 3526 changes the date when the chief appraiser must certify an estimate of a school district's taxable value from June 15 to June 7. It allows a school district with a fiscal year beginning July 1 to use the June 7 estimate in setting its budget, if the chief appraiser is unable to provide a certified appraisal roll by June 7. (Effective September 1, 2001)
S. B. 1444 excludes certain districts as defined in Water Code Section 49.001 from the truth-in-taxation provisions of Chapter 26 for calculating and publishing effective and rollback tax rates, adopting a tax rate, and holding a rollback election. (Effective June 17, 2001)
H. B. 468 repeals Tax Code Section 32.015, the recording requirements for property tax liens on manufactured homes. Current law required a taxing unit to file with the Texas Department of Housing and Urban Development a notice of the unit’s tax lien only after property taxes become delinquent after January 31 of the year following the tax year. The new law will require persons transporting a manufactured home to obtain a permit, accompanied by proof of no unpaid property taxes on the home. Moving a manufactured home without a permit will be punishable by a fine of $500, payable to the jurisdiction issuing the citation. (Effective September 1, 2001)
H. B. 490 (discussed earlier) amends numerous sections that address collecting taxes. The changes include the following:
- provides that a collector shall notify a taxpayer if a tax payment exceeds the correct amount by $5 or more, accompanied by a refund application form.
- states that, if a collector determines an account had duplicate payments, the collector shall refund to the person who erred in paying and inform the taxing unit's auditor monthly about the refunds.
- repeals the five-year notice of delinquency (required to be mailed in each year divisible by five).
- clarifies language in the tax deferral provisions of Sections 33.06 and 33.065.
- deletes the 15-percent amount for delinquent tax attorneys in Sections 33.07 and 33.08 and refers to the amount specified in the delinquent tax contract between the taxing unit and the attorney.
- addresses the disbursement of delinquent taxes for the old county education district in a county of less than 22,000 population.
- clarifies items in the seizure of personal property, including the definition of personal property and liability issues.
- addresses areas in the foreclosure and sale of properties for delinquent taxes. (Effective September 1, 2001)
H. B. 858 sets out that a deed for property sold by a city for urban redevelopment purposes conveys to the purchaser the right, title, and interest acquired or held by each taxing unit party to judgment of foreclosure, subject to any right of redemption. (Effective June 14, 2001)
H. B. 1393 provides that a taxing unit’s governing body must approve a property tax refund if the amount of refund exceeds $2,500 to be paid by a county with a population of 1.5 million (currently 2.8 million). The tax collector may approve and issue smaller refunds. (Effective September 1, 2001)
H. B. 1876 allows a delinquent tax court master to practice law in the referring court (state district court), if the person is otherwise qualified to do so. (Effective May 24, 2001)
H. B. 2185 states that the collection of a fee for processing a property tax payment by credit card is permissive. Prior law required imposing a fee. (Effective June 11, 2001)
H. B. 2832 requires a tax collector receiving a property tax overpayment of $5 or more the amount above the taxes owed will mail the taxpayer a written notice of the overpayment, accompanied by a refund application form. (Effective January 1, 2002)
H. B. 3364 extends the property tax deferral option to medically disabled persons. (Effective June 14, 2001)
H. B. 3552 requires the Texas Department of Housing and Urban Development to provide the county tax assessor-collector with a monthly (currently quarterly) report listing manufactured housing installations in the county. (Effective September 1, 2001)
S. B. 256 amends "costs" listed in Tax Code Section 34.21 for a foreclosure sale to include personnel and overhead costs paid by the purchasing taxing unit for maintaining, preserving, safekeeping, managing, and reselling the property. (Effective May 22, 2001)
S. B. 1736 requires a taxing unit’s governing body to waive both penalties and interest on a delinquent property tax if an act or omission of the unit or one of its officers resulted in the delinquency. For the waiver, the taxpayer must pay the tax not later than the third anniversary of the date the taxpayer knows or should know of the delinquency. Prior law allowed the governing body the option of waiving interest and that the taxes had to be paid within 21 days. (Effective June 30, 2001)
Tax increment financing (TIF).
H. B. 612 establishes a central registry with the Comptroller for reinvestment zones designated under Tax Code Chapter 311. Cities designating a reinvestment zone or approving a project plan or zone financing plan must provide specific information to the Comptroller not later than April 1 of year following zone designation or plan approval, including amendments or modifications. The Comptroller will provide assistance, on request, to cities concerning reinvestment zones and TIF. The Comptroller will submit a report on reinvestment zones and plans to the Texas Legislature and Governor not later than December 31 of each even-numbered year. (Effective June 11, 2001)
H. B. 1053 authorizes city and county governments in counties with a population of 2.5 million or more to create development zones in economically depressed areas. Zone funding may be based on a variety of options, including property tax contribution in the form of tax increments. (Effective June 16, 2001)
H. B. 2682 allows a city with territory in three counties and a population of less than 120,000 to enter into or amend an existing TIF agreement with a school district located within the TIF reinvestment zone. The contract is to dedicate revenue to the school district for acquiring, constructing, or reconstructing an educational facility. (Effective September 1, 2001)
H. B. 3006 grants additional authority for appointing reinvestment zone directors to taxing units that pay into the TIF fund. (Effective September 1, 2001)
S. B. 274 prohibits the hospital districts in Bexar, El Paso, Harris, and Nueces Counties from participating in a TIF. The prohibition applies to projects approved on or after September 1, 2001, and to any amendments to TIF agreements after that date that increase the hospital district’s increment contribution. (Effective September 1, 2001)
Tax abatement agreements.
H. B. 1027 deletes real property whose property value is adversely affected by the release of a hazardous substance or contaminant, according to the two preceding appraisals by the appraisal office, from the list of criteria to determine eligibility for certain municipal tax abatements. (Effective September 1, 2001)
H. B. 1194 allows tax abatement or TIF eligibility to continue on a property when a property owner subsequently serves as a member of the governing body or planning commission of the granting municipality. (Effective September 1, 2001)
H. B. 1448 states that cities and counties may enter into tax abatement agreements with the owner of a leasehold interest in tax-exempt real property for exempting a portion of tangible personal property located on the tax-exempt real property. (Effective June 13, 2001)
H. B. 1449 repeals the September 1, 2001 sunset provision for Chapter 312 (Tax Abatements), includes a new September 1, 2009 date, and prohibits school districts from executing tax abatement agreements. It requires the Comptroller on December 31 in even-numbered years to provide to the Texas Legislature and Governor a reinvestment zone/tax abatement report. (Effective June 15, 2001)
H. B. 2782 allows a city or county, if provided for in their tax abatement guidelines, to impose a fee, not to exceed $1,000, on a property owner in connection with a tax abatement application or request. (Effective June 15, 2001)
H. B. 3001 allows that an abatement agreement takes effect on January 1 of the next tax year following the substantial completion of improvements or repairs required by the agreement. (Effective September 1, 2001)
S. B. 985 states that cities may enter into tax abatement agreements with the owner of a leasehold interest in real property for exempting a portion of tangible personal property located on the real property for a period not exceeding 10 years, on condition that the leasehold owner makes specific improvements or repairs to the real property. It also exempts the value of real property leaseholds in neighborhood empowerment zones. (Effective June 15, 2001))
S. B. 986 provides for the recapture of lost property taxes if a property owner in certain tax abatement agreements fails to comply with the agreement requires on job creation or property value. (Effective June 13, 2001)
S. B. 1095 (mentioned earlier) changes who and when to send information to the Comptroller for the central registry of reinvestment zones. The chief appraiser will send information by July 1 when a taxing unit in the appraisal district has designated a reinvestment zone or executed a tax abatement agreement. Current law required the taxing unit to send the information by April 1. (Effective September 1, 2001)
S. B. 1710 removes the 90-day deadline for other taxing units to execute an abatement agreement with a property owner after the city has entered into an agreement with that property owner. (Effective September 1, 2001)
H. B. 1200 enacts the Texas Economic Development Act (Tax Code Chapter 313) allowing local-option school district property tax relief to corporations creating additional jobs and investing certain minimum amounts in tangible personal property and improvements in new and existing operations. (Effective January 1, 2002, with tax abatement extension effective September 1, 2001)
VETOED H. B. 1723 creates a county employment development board in rural counties (population of 50,000 or less). The board of local officials establishes and operates employment-related programs for job training, continuing education, and so on within the county. Program funds are from a county sales tax of one-eighth of one percent and/or a county property tax, not to exceed three cents per $100 of value. (Effective September 1, 2001)
H. B. 2746 addresses emergency services and rural fire prevention districts and overlapping territory. (Effective June 16, 2001)
S. B. 1095 (mentioned earlier) removes the requirement that the Comptroller's Technical Advisory Committee for the property value study must meet at least semi-annually. It also sets out a process for correcting a certified value for railroad rolling stock. (Effective September 1, 2001)
H. B. 337 provides that the Texas Alcoholic Beverage Commission or its administrator may cancel or deny a permit or license for the retail sale of alcoholic beverages for delinquent property taxes due on the business or licensed premises. The person/business is presumed delinquent if the person/business is placed on the delinquent tax roll under Tax Code Section 33.03, has received a notice of delinquency under Section 33.04, and has not paid as required by Section 42.08. (Effective September 1, 2001)
H. B. 394 requires that a person who conducts a "going out of business" sale must file an original inventory with the chief appraiser for the county in which the person's principal place of business is located, along with a $20 filing fee. Current law had required this inventory list to be filed with the county clerk. Within five business days of this filing, the chief appraiser sends notice to the state comptroller, county clerk, and tax collector of each taxing unit taxing the property. The chief appraiser (rather than the county clerk) will issue a "going out of business" permit. The permit holder files 30-day and final inventory lists with the chief appraiser. (Effective September 1, 2001)
H. B. 1869 addresses notices when a person acquires a manufactured home through financing. The notices include information about paying current taxes and applying for homestead exemptions. It defines a manufactured home that is permanently attached to real property (secured to a foundation and connected to a utility) to be taxed as real property. It amends Tax Code Section 32.014 on the tax lien on manufactured homes. (Effective September 1, 2001 for Section 1 and January 1, 2002 for all other sections)
H. J. R. 75 proposes a constitutional amendment to eliminate obsolete, archaic, redundant, and unnecessary provisions and to clarify, update, and harmonize certain provisions of the Texas Constitution. (Effective if approved by Texas voters November 6, 2001)
S. B. 1168 allows the county commissioners to call for a referendum on flood control taxes and funded projects. The referendum would ask the question of increasing flood control taxes, decreasing flood control taxes, or funding an existing or proposed project. (Effective May 22, 2001)