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Title 1. Property Tax Code
Subtitle D. Appraisal and Assessment

Chapter 26. Assessment

Sec. 26.01. Submission of Rolls to Taxing Units.
Sec. 26.011. Repealed.
Sec. 26.012. Definitions.
Sec. 26.02. Assessment Ratios Prohibited.
Sec. 26.03. Treatment of Captured Appraised Value and Tax Increment.
Sec. 26.04. Submission of Roll to Governing Body; Effective and Rollback Tax Rates.
Sec. 26.041. Tax Rate of Unit Imposing Additional Sales and Use Tax.
Sec. 26.042. Repealed.
Sec. 26.043. Effective Tax Rate in City Imposing Mass Transit Sales and Use Tax.
Sec. 26.044. Effective Tax Rate to Pay for State Criminal Justice Mandate.
Sec. 26.0441. Tax Rate Adjustment for Indigent Health Care.
Sec. 26.045. Rollback Relief for Pollution Control Requirements.
Sec. 26.05. Tax Rate.
Sec. 26.051. Evidence of Unrecorded Tax Rate Adoption.
Sec. 26.052. Simplified Tax Rate Notice for Taxing Units with Low Tax Levies.
Sec. 26.06. Notice, Hearing, and Vote on Tax Increase.
Sec. 26.065. Supplemental Notice of Hearing on Tax Rate Increase.
Sec. 26.07. Election to Repeal Increase.
Sec. 26.08. Election to Ratify School Taxes.
Sec. 26.081. Petition Signatures.
Sec. 26.085. Election to Limit Dedication of School Funds to Junior College.
Sec. 26.09. Calculation of Tax.
Sec. 26.10. Prorating Taxes-Loss of Exemption.
Sec. 26.11. Prorating Taxes-Acquisition by Government.
Sec. 26.111. Prorating Taxes-Acquisition by Charitable Organization.
Sec. 26.112. Calculation of Taxes on Residence Homestead of Elderly or Disabled Person.
Sec. 26.113. Prorating Taxes-Acquisition by Nonprofit Organization.
Sec. 26.12. Units Created During Tax Year.
Sec. 26.13. Taxing Unit Consolidation During Tax Year.
Sec. 26.135. Tax Dates for Certain School Districts.
Sec. 26.14. Annexation of Property During Tax Year.
Sec. 26.15. Correction of Tax Roll.

Sec. 26.01. Submission of Rolls to Taxing Units.

(a) By July 25, the chief appraiser shall prepare and certify to the assessor for each taxing unit participating in the district that part of the appraisal roll for the district that lists the property taxable by the unit. The part certified to the assessor is the appraisal roll for the unit. The chief appraiser shall consult with the assessor for each taxing unit and notify each unit in writing by April 1 of the form in which the roll will be provided to each unit.

(b) When a chief appraiser submits an appraisal roll for county taxes to a county assessor-collector, the chief appraiser also shall certify the appraisal district appraisal roll to the comptroller. However, the comptroller by rule may provide for submission of only a summary of the appraisal roll. The chief appraiser shall certify the district appraisal roll or the summary of that roll in the form and manner prescribed by the comptroller's rule.

(c) The chief appraiser shall prepare and certify to the assessor for each taxing unit a listing of those properties which are taxable by that unit but which are under protest and therefore not included on the appraisal roll approved by the appraisal review board and certified by the chief appraiser. This listing shall include the appraised market value, productivity value (if applicable), and taxable value as determined by the appraisal district and shall also include the market value, taxable value, and productivity value (if applicable) as claimed by the property owner filing the protest if available. If the property owner does not claim a value and the appraised value of the property in the current year is equal to or less than its value in the preceding year, the listing shall include a reasonable estimate of the market value, taxable value, and productivity value (if applicable) that would be assigned to the property if the taxpayer's claim is upheld. If the property owner does not claim a value and the appraised value of the property is higher than its appraised value in the preceding year, the listing shall include the appraised market value, productivity value (if applicable) and taxable value of the property in the preceding year, except that if there is a reasonable likelihood that the appraisal review board will approve a lower appraised value for the property than its appraised value in the preceding year, the chief appraiser shall make a reasonable estimate of the taxable value that would be assigned to the property if the property owner's claim is upheld. The taxing unit shall use the lower value for calculations as prescribed in Sections 26.04 and 26.041 of this code.

(d) The chief appraiser shall prepare and certify to the assessor for each taxing unit a list of those properties of which the chief appraiser has knowledge that are reasonably likely to be taxable by that unit but that are not included on the appraisal roll certified to the assessor under Subsection (a) or included on the listing certified to the assessor under Subsection (c). The chief appraiser shall include on the list for each property the market value, appraised value, and kind and amount of any partial exemptions as determined by the appraisal district for the preceding year and a reasonable estimate of the market value, appraised value, and kind and amount of any partial exemptions for the current year. Until the property is added to the appraisal roll, the assessor for the taxing unit shall include each property on the list in the calculations prescribed by Sections 26.04 and 26.041, and for that purpose shall use the lower market value, appraised value, or taxable value, as appropriate, included on or computed using the information included on the list for the property.

(e) By June 7, the chief appraiser shall prepare and certify to the assessor for each school district participating in the appraisal district an estimate of the taxable value of school district property. The chief appraiser shall assist each school district in determining values of school district property for the school district's budgetary purposes.

Amended by 1981 Tex. Laws (1st C.S.), p. 162, ch. 13, Sec. 114; amended by 1983 Tex. Laws, p. 4615, ch. 786, Sec. 1; amended by 1983 Tex. Laws, p. 4826, ch. 851, Sec. 17; amended by 1983 Tex. Laws, p. 4946, ch. 884, Sec. 3; amended by 1985 Tex. Laws, p. 2498, ch. 312, Sec. 6; amended by 1987 Tex. Laws, ch. 947, Sec. 1; amended by 1991 Tex. Laws (2nd C.S.), p. 35, ch. 6, Sec. 44; amended 1997 Tex. Laws, p. 3941, ch. 1040, Sec. 67; amended by 1999 Tex. Laws, p. 3214, ch. 643, Sec. 2; amended by 2001 Tex. Laws, p. 1688, ch. 898; Sec. 2 and p. 2262, ch. 1087, Sec. 1.

Cross References:
Appraisal roll for appraisal district, see Sec. 25.24.
Appraisal roll certification, see Rule Sec. 9.3059.
Adding railroad rolling stock to county appraisal roll, see Sec. 24.39.
Property still under protest, see Sec. 41.12.
Suit to compel compliance with deadlines, see Sec. 43.04.

Sec. 26.011. Expired in 1987.

Expired Jan. 1, 1987, pursuant to 1981 Tex. Laws (1st C.S.), p. 163, ch. 13, Sec. 115.

Notes:
Section 26.011 on limited increases in reappraised value is unconstitutional. Op. Tex. Att'y Gen. No. JM-43 (1983).

Sec. 26.012. Definitions.

In this chapter:

(1) "Additional sales and use tax" means an additional sales and use tax imposed by:

(A) a city under Section 321.101(b);

(B) a county under Chapter 323; or

(C) a hospital district, other than a hospital district created on or after September 1, 2001, that:

(i) imposes the sales and use tax under Subchapter I, Chapter 286, Health and Safety Code; or

(ii) imposes the sales and use tax under Subchapter L, Chapter 285, Health and Safety Code.

(2) "Collection rate" means the amount, expressed as a percentage, calculated by:

(A) adding together estimates of the following amounts:

(i) the total amount of taxes to be levied in the current year and collected before July 1 of the next year, including any penalties and interest on those taxes that will be collected during that period;

(ii) any additional taxes imposed under Chapter 23 collected between July 1 of the current year and June 30 of the following year; and

(iii) the total amount of delinquent taxes levied in any preceding year that will be collected between July 1 of the current year and June 30 of the following year, including any penalties and interest on those taxes that will be collected during that period; and

(B) dividing the amount calculated under Paragraph (A) by the total amount of taxes that will be levied in the current year.

(3) "Current debt" means debt service for the current year.

(4) "Current debt rate" means a rate expressed in dollars per $100 of taxable value and calculated according to the following formula:


ex26012a

(5) "Current junior college levy" means the amount of taxes the governing body proposes to dedicate in the current year to a junior college district under Section 45.105(e), Education Code.

(6) "Current total value" means the total taxable value of property listed on the appraisal roll for the current year, including all appraisal roll supplements and corrections as of the date of the calculation, less the taxable value of property exempted for the current tax year for the first time under Section 11.31, except that:

(A) the current total value for a school district excludes:

(i) the total value of homesteads that qualify for a tax limitation as provided by Section 11.26; and

(ii) new property value of property that is subject to an agreement entered into under Chapter 313; and

(B) the current total value for a county, municipality, or junior college district excludes the total value of homesteads that qualify for a tax limitation provided by Section 11.261.

(7) "Debt" means a bond, warrant, certificate of obligation, or other evidence of indebtedness owed by a taxing unit that is payable solely from property taxes in installments over a period of more than one year, not budgeted for payment from maintenance and operations funds, and secured by a pledge of property taxes, or a payment made under contract to secure indebtedness of a similar nature issued by another political subdivision on behalf of the taxing unit.

(8) "Debt service" means the total amount expended or to be expended by a taxing unit from property tax revenues to pay principal of and interest on debts or other payments required by contract to secure the debts and, if the unit is created under Section 52, Article III, or Section 59, Article XVI, Texas Constitution, payments on debts that the unit anticipates incurring in the next calendar year.

(9) "Effective maintenance and operations rate" means a rate expressed in dollars per $100 of taxable value and calculated according to the following formula:


ex26012b

(10) "Excess collections" means the amount, if any, by which debt taxes collected in the preceding year exceeded the amount anticipated in the preceding year's calculation of the rollback rate, as certified by the collector under Section 26.04(b) of this code.

(11) "Last year's debt levy" means the total of:

(A) the amount of taxes that would be generated by multiplying the total taxable value of property on the appraisal roll for the preceding year, including all appraisal roll supplements and corrections, other than corrections made pursuant to Section 25.25(d) of this code, as of the date of calculation, by the debt rate adopted by the governing body in the preceding year under Section 26.05(a)(1) of this code; and

(B) the amount of debt taxes refunded by the taxing unit in the preceding year for tax years before that year.

(12) "Last year's junior college levy" means the amount of taxes dedicated by the governing body in the preceding year for use of a junior college district under Section 45.105(e), Education Code.

(13) "Last year's levy" means the total of:

(A) the amount of taxes that would be generated by multiplying the total tax rate adopted by the governing body in the preceding year by the total taxable value of property on the appraisal roll for the preceding year, including:

(i) taxable value that was reduced in an appeal under Chapter 42; and

(ii) all appraisal roll supplements and corrections other than corrections made pursuant to Section 25.25(d), as of the date of the calculation, except that last year's taxable value for a school district excludes the total value of homesteads that qualified for a tax limitation as provided by Section 11.26 and last year's taxable value for a county, municipality, or junior college district excludes the total value of homesteads that qualified for a tax limitation as provided by Section 11.261; and

(B) the amount of taxes refunded by the taxing unit in the preceding year for tax years before that year.

(14) "Last year's total value" means the total taxable value of property listed on the appraisal roll for the preceding year, including all appraisal roll supplements and corrections, other than corrections made pursuant to Section 25.25(d), as of the date of the calculation, except that:

(A) last year's taxable value for a school district excludes the total value of homesteads that qualified for a tax limitation as provided by Section 11.26; and

(B) last year's taxable value for a county, municipality, or junior college district excludes the total value of homesteads that qualified for a tax limitation as provided by Section 11.261.

(15) "Lost property levy" means the amount of taxes levied in the preceding year on property value that was taxable in the preceding year but is not taxable in the current year because the property is exempt in the current year under a provision of this code other than Section 11.251, the property has qualified for special appraisal under Chapter 23 of this code in the current year, or the property is located in territory that has ceased to be a part of the unit since the preceding year.

(16) "Maintenance and operations" means any lawful purpose other than debt service for which a taxing unit may spend property tax revenues.

(17) "New property value" means:

(A) the total taxable value of property added to the appraisal roll in the current year by annexation and improvements listed on the appraisal roll that were made after January 1 of the preceding tax year, including personal property located in new improvements that was brought into the unit after January 1 of the preceding tax year;

(B) property value that is included in the current total value for the tax year succeeding a tax year in which any portion of the value of the property was excluded from the total value because of the application of a tax abatement agreement to all or a portion of the property, less the value of the property that was included in the total value for the preceding tax year; and

(C) for purposes of an entity created under Section 52, Article III, or Section 59, Article XVI, Texas Constitution, property value that is included in the current total value for the tax year succeeding a tax year in which the following occurs:

(i) the subdivision of land by plat;

(ii) the installation of water, sewer, or drainage lines; or

(iii) the paving of undeveloped land.

Added by 1987 Tex. Laws, ch. 947, Sec. 2; amended by 1989 Tex. Laws, p. 192, ch. 2, Sec. 14.27 and 14.28; p. 379, ch. 66, Sec. 4; and p. 1751, ch. 534, Sec. 3; amended by 1993 Tex. Laws, p. 1325, ch. 285, Sec. 3 and by p. 2737, ch. 696, Sec. 1; amended by 1995 Tex. Laws, ch. 506, Sec. 1 to 3; amended by 1997 Tex. Laws, p. 373 and 556, ch. 165, Secs., 6.77, 29.01, and 29.02; and p. 4085, ch. 1070, Sec. 53; amended by 2001 Tex. Laws, p. 2953, ch. 1290, Sec. 15 and p. 5069, ch. 1505, Sec. 3; Amended by Acts 2003, 78th Leg., ch. 396, 3, eff. Jan. 1, 2004.

Cross References:
County sales and use tax under VTCS art. 2353e, see Sec. 323.001, Tax Code.
Economic Development Act for Appraisal Limitation, see Chapter 313, Tax Code.

Notes:
Additional city sales and use tax under VTCS art. 1066c, see now Sec. 321.101, Tax Code.

Sec. 26.02. Assessment Ratios Prohibited.

The assessment of property for taxation on the basis of a percentage of its appraised value is prohibited. All property shall be assessed on the basis of 100 percent of its appraised value.

Acts 1979, 66th Leg., p. 2277, ch. 841, Sec. 1, eff. Jan. 1, 1981. Amended by Acts 1983, 68th Leg., p. 4827, ch. 851, Sec. 18, eff. Aug. 29, 1983.

Cross References:
Assessed value defined, see Sec. 1.04(9).

Notes:
City and school district illegally assessed taxpayer's property where they assessed it at 90% of its value and assessed other property at about 64% of its value. An "assessment ratio" includes the actual "ratio of assessment" found by the court or jury on "level of appraisal" and is not limited to a predetermined assessment ratio set by the taxing authority. Moreover, "assessment ratio" is equivalent to "average level of assessment" and allows relief from unequal taxation regardless of the use of an assessment ratio established in advance. Finally, the assessment ratio established the taxable value for relief even if the district disregarded the requirement that all property be assessed at full value. City of Dallas v. Union Tower Corporation, 703 S.W.2d 275 (Tex. App.-Dallas 1985, writ ref'd n.r.e.).

Sec. 26.03. Treatment of Captured Appraised Value and Tax Increment.

(a) In this section, "captured appraised value," "reinvestment zone," "tax increment," and "tax increment fund" have the meanings assigned by Chapter 311.

(b) This section does not apply to a school district.

(c) The portion of the captured appraised value of real property taxable by a taxing unit that corresponds to the portion of the tax increment of the unit from that property that the unit has agreed to pay into the tax increment fund for a reinvestment zone and that is not included in the calculation of "new property value" as defined by Section 26.012 is excluded from the value of property taxable by the unit in any tax rate calculation under this chapter.

(d) The portion of the tax increment of a taxing unit that the unit has agreed to pay into the tax increment fund for a reinvestment zone is excluded from the amount of taxes imposed or collected by the unit in any tax rate calculation under this chapter, except that the portion of the tax increment is not excluded if in the same tax rate calculation there is no portion of captured appraised value excluded from the value of property taxable by the unit under Subsection (c) for the same reinvestment zone.

Cross References:
Tax Increment Financing Act, see Chapter 311, Tax Code.

Sec. 26.04. Submission of Roll to Governing Body; Effective; Effective and Rollback Tax Rates.

(a) On receipt of the appraisal roll, the assessor for a taxing unit shall determine the total appraised value, the total assessed value, and the total taxable value of property taxable by the unit. He shall also determine, using information provided by the appraisal office, the appraised, assessed, and taxable value of new property.

(b) The assessor shall submit the appraisal roll for the unit showing the total appraised, assessed, and taxable values of all property and the total taxable value of new property to the governing body of the unit by August 1 or as soon thereafter as practicable. By August 1 or as soon thereafter as practicable, the taxing unit's collector shall certify an estimate of the collection rate for the current year to the governing body. If the collector certified an anticipated collection rate in the preceding year and the actual collection rate in that year exceeded the anticipated rate, the collector shall also certify the amount of debt taxes collected in excess of the anticipated amount in the preceding year.

(c) An officer or employee designated by the governing body shall calculate the effective tax rate and the rollback tax rate for the unit, where:

(1) "Effective tax rate" means a rate expressed in dollars per $100 of taxable value calculated according to the following formula:


ex2604a

; and

(2) "Rollback tax rate" means a rate expressed in dollars per $100 of taxable value and calculated according to the following formula:


ex2604b

(d) The effective tax rate for a county is the sum of the effective tax rates calculated for each type of tax the county levies and the rollback tax rate for a county is the sum of the rollback tax rates calculated for each type of tax the county levies.

(e) By August 7 or as soon thereafter as practicable, the designated officer or employee shall submit the rates to the governing body. He shall deliver by mail to each property owner in the unit or publish in a newspaper in the form prescribed by the comptroller:

(1) the effective tax rate, the rollback 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;

(3) a schedule of the unit's debt obligations showing:

(A) the amount of principal and interest that will be paid to service the 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 unit by another political subdivision and, if the unit is created under Section 52, Article III, or Section 59, Article XVI, Texas Constitution, payments on debts that the 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 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);

(4) the amount of additional sales and use tax revenue anticipated in calculations under Section 26.041;

(5) a statement that the adoption of a tax rate equal to the effective tax rate would result in an increase or decrease, as applicable, in the amount of taxes imposed by the unit as compared to last year's levy, and the amount of the increase or decrease;

(6) in the year that a taxing unit calculates an adjustment under Subsection (i) or (j), a schedule that includes the following elements:

(A) the name of the unit discontinuing the department, function, or activity;

(B) the amount of property tax revenue spent by the unit listed under Paragraph (A) to operate the discontinued department, function, or activity in the 12 months preceding the month in which the calculations required by this chapter are made; and

(C) the name of the unit that operates a distinct department, function, or activity in all or a majority of the territory of a taxing unit that has discontinued operating the distinct department, function, or activity; and

(7) in the year following the year in which a taxing unit raised its rollback rate as required by Subsection (j), a schedule that includes the following elements:

(A) the amount of property tax revenue spent by the unit to operate the department, function, or activity for which the taxing unit raised the rollback rate as required by Subsection (j) for the 12 months preceding the month in which the calculations required by this chapter are made; and

(B) the amount published by the unit in the preceding tax year under Subdivision (6)(B).

(e-1) The notice requirements imposed by Subsections (e)(1)-(6) do not apply to a school district.

(f) If as a result of consolidation of taxing units a taxing unit includes territory that was in two or more taxing units in the preceding year, the amount of taxes imposed in each in the preceding year is combined for purposes of calculating the effective and rollback tax rates under this section.

(g) A person who owns taxable property is entitled to an injunction prohibiting the taxing unit in which the property is taxable from adopting a tax rate if the assessor or designated officer or employee of the unit, as applicable, has not complied with the computation or publication requirements of this section and the failure to comply was not in good faith.

(h) For purposes of this section, the anticipated collection rate of a taxing unit is the percentage relationship that the total amount of estimated tax collections for the current year bears to the total amount of taxes imposed for the current year. The total amount of estimated tax collections for the current year is the sum of the collector's estimate of:

(1) the total amount of property taxes imposed in the current year that will be collected before July 1 of the following year, including any penalties and interest on those taxes that will be collected during that period; and

(2) the total amount of delinquent property taxes imposed in previous years that will be collected on or after July 1 of the current year and before July 1 of the following year, including any penalties and interest on those taxes that will be collected during that period.

(i) This subsection applies to a taxing unit that has agreed by written contract to transfer a distinct department, function, or activity to another taxing unit and discontinues operating that distinct department, function, or activity if the operation of that department, function, or activity in all or a majority of the territory of the taxing unit is continued by another existing taxing unit or by a new taxing unit. The rollback tax rate of a taxing unit to which this subsection applies in the first tax year in which a budget is adopted that does not allocate revenue to the discontinued department, function, or activity is calculated as otherwise provided by this section, except that last year's levy used to calculate the effective maintenance and operations rate of the unit is reduced by the amount of maintenance and operations tax revenue spent by the taxing unit to operate the department, function, or activity for the 12 months preceding the month in which the calculations required by this chapter are made and in which the unit operated the discontinued department, function, or activity. If the unit did not operate that department, function, or activity for the full 12 months preceding the month in which the calculations required by this chapter are made, the unit shall reduce last year's levy used for calculating the effective maintenance and operations rate of the unit by the amount of the revenue spent in the last full fiscal year in which the unit operated the discontinued department, function, or activity.

(j) This subsection applies to a taxing unit that had agreed by written contract to accept the transfer of a distinct department, function, or activity from another taxing unit and operates a distinct department, function, or activity if the operation of a substantially similar department, function, or activity in all or a majority of the territory of the taxing unit has been discontinued by another taxing unit, including a dissolved taxing unit. The rollback tax rate of a taxing unit to which this subsection applies in the first tax year after the other taxing unit discontinued the substantially similar department, function, or activity in which a budget is adopted that allocates revenue to the department, function, or activity is calculated as otherwise provided by this section, except that last year's levy used to calculate the effective maintenance and operations rate of the unit is increased by the amount of maintenance and operations tax revenue spent by the taxing unit that discontinued operating the substantially similar department, function, or activity to operate that department, function, or activity for the 12 months preceding the month in which the calculations required by this chapter are made and in which the unit operated the discontinued department, function, or activity. If the unit did not operate the discontinued department, function, or activity for the full 12 months preceding the month in which the calculations required by this chapter are made, the unit may increase last year's levy used to calculate the effective maintenance and operations rate by an amount not to exceed the amount of property tax revenue spent by the discontinuing unit to operate the discontinued department, function, or activity in the last full fiscal year in which the discontinuing unit operated the department, function, or activity.

(k) to (q) Expired.

Amended by 1981 Tex. Laws (1st C.S.), p. 163, ch. 13, Sec. 116; amended by 1983 Tex. Laws, p. 2165, ch. 400, Sec. 1; amended by 1983 Tex. Laws, p. 5376, ch. 987, Sec. 3; amended by 1983 Tex. Laws, p. 5402, ch. 1001, Sec. 1; amended by 1985 Tex. Laws, ch. 657, Secs. 1 and 2; amended by 1985 Tex. Laws (1st C.S.), p. 30, ch. 1, Sec. 2; amended by 1986 Tex. Laws (3rd C.S.), ch. 10, art. 1, Sec. 36; amended by 1987 Tex. Laws, ch. 699, Sec. 1, ch. 849, Sec. 2, ch. 947, Sec. 3, and ch. 988, Sec. 1; amended by 1991 Tex. Laws (2nd C.S.), p. 36, ch. 6, Sec. 45; amended by 1993 Tex. Laws, p. 168, ch. 81, Sec. 2 and by p. 2331, ch. 611, Secs. 1 and 2; amended by 1997 Tex. Laws, p. 557, ch. 165, Secs. 29.01 and 29.03; p. 4086, ch. 1070, Sec. 54; amended by 1999 Tex. Laws, p. 2510, ch. 398, Sec. 2; p. 4595, ch. 1358, Sec. 1; and p. 5370, ch. 1561, Sec. 1.

Cross References:
Constitutional requirement, see art. VIII, Sec. 21, Tex. Const.
Improvement defined, see Sec. 1.04(3).
Annexation of property, see Sec. 26.14.
Exemptions generally, see ch. 11.
Special appraisal generally, see ch. 23.
Correction of appraisal roll, see Sec. 25.25.
Adoption of tax rate, see Sec. 26.05.
Notice, hearing, and vote on proposed tax increase, see Sec. 26.06.
Election to repeal tax rate increase for school districts, see Sec. 26.08.
Election to repeal tax rate increase for all other taxing units, see Sec. 26.07.
Election to repeal tax rate increase for certain junior colleges, see Sec. 26.085.
Taxing unit consolidation, see Sec. 26.13.
County sales and use tax under VTCS art. 2353e, see Sec. 323.001, Tax Code.
Additional city sales and use tax under VTCS art. 1066c, see Sec. 321.101, Tax Code.

Notes:
Publication of a unit's unencumbered fund balances to taxpayers that included only property taxes left over from the previous years' maintenance and operations, and debt service funds, did not meet the statutory requirements for adequate taxpayer notification because it did not disclose non-property tax revenue taxpayers needed to know about to evaluate a tax increase proposal. The statute requires a taxing unit to report all of its estimated unencumbered fund balances regardless of the revenue source. Gilbert v. El Paso County Hospital District, 38 S.W.3d 85 (Tex. 2001).

A taxpayer or taxpayer group must present evidence that the debt calculations in the effective rate calculation do not accurately represent the actual bonded indebtedness of a taxing unit in challenging the accuracy of the effective rate calculation. Corpus Christi Taxpayer's Association v. City of Corpus Christi, 716 S.W.2d 578 (Tex. App.-Corpus Christi 1986, writ ref'd n.r.e.).

Failure of taxing unit to fully comply with law governing increases in effective tax rate did not nullify tax levy where there was substantial compliance and a tender by the taxpayer. Houston Lighting & Power Co. v. Dickinson Independent School District, 641 S.W.2d 302 (Tex. App.-Houston 1982, writ ref'd n.r.e.).

A county education district must calculate and publish an effective tax rate and rollback tax rate. Op. Tex. Att'y Gen. No. DM-155 (1992).

Persons designated by the governing body to calculate a county effective tax rate do not need to register with the Board of Tax Professional Examiners unless the county tax assessor-collector requires such registration. Op. Tex. Att'y Gen. No. JM-1020 (1988).

The county assessor calculates the effective tax rate for each of the county's funds and adds them together for the county's total effective rate; the county must exceed eight percent of the total county effective rate, not one of its components, before local voters can invoke the tax rate rollback provisions; and, the county is not required to apportion any tax increase among the funds. Op. Tex. Att'y Gen. No. JM-677 (1987).

The county commissioners are not authorized to accept a rollback election petition unless the rate adopted exceeds the effective tax rate by more than eight percent, plus the amount necessary for indigent health care costs specifically protected by statute from such rollback; and, the assessor is not empowered to recalculate the effective tax rate for any inaccuracy after the tax plan is in effect, unless a taxpayer timely files an injunction. Op. Tex. Att'y Gen. No. JM-641 (1987).

The phrase "taxable value that is exempt in the current year" in Section 26.04(c)(3) refers to value exempted because of granting both partial and total exemptions in the current year. Op. Tex. Att'y Gen. No. MW-495 (1982).

The correct method of determining "the amount of taxes imposed in the preceding year on taxable value that is exempt in the current year" is determined by multiplying the amount of the exemption granted in the current year on taxable value taxed in the preceding year by the preceding year's tax rate. Id.

If the exemption is a partial exemption or a total exemption, the number used in the calculation is simply the amount granted. If the exemption granted is a percentage exemption granted pursuant to art. VIII, Sec. 1-b of the Texas Constitution, then the amount of the exemption granted is equal to that percentage multiplied by the preceding year's market value. Id.

Sec. 26.041. Tax Rate of Unit Imposing Additional Sales and Use Tax.

(a) In the first year in which an additional sales and use tax is required to be collected, the effective tax rate and rollback tax rate for the unit are calculated according to the following formulas:


ex26041a

and


ex26041b

where "sales tax gain rate" means a number expressed in dollars per $100 of taxable value, calculated by dividing the revenue that will be generated by the additional sales and use tax in the following year as calculated under Subsection (d) of this section by the current total value.

(b) Except as provided by Subsections (a) and (c) of this section, in a year in which a taxing unit imposes an additional sales and use tax the rollback tax rate for the unit is calculated according to the following formula, regardless of whether the unit levied a property tax in the preceding year:


ex26041c

where "last year's maintenance and operations expense" means the amount spent for maintenance and operations from property tax and additional sales and use tax revenues in the preceding year, and "sales tax revenue rate" means a number expressed in dollars per $100 of taxable value, calculated by dividing the revenue that will be generated by the additional sales and use tax in the current year as calculated under Subsection (d) of this section by the current total value.

(c) In a year in which a taxing unit that has been imposing an additional sales and use tax ceases to impose an additional sales and use tax the effective tax rate and rollback tax rate for the unit are calculated according to the following formulas:


ex26041d

where "sales tax loss rate" means a number expressed in dollars per $100 of taxable value, calculated by dividing the amount of sales and use tax revenue generated in the last four quarters for which the information is available by the current total value and "last year's maintenance and operations expense" means the amount spent for maintenance and operations from property tax and additional sales and use tax revenues in the preceding year.

(d) In order to determine the amount of additional sales and use tax revenue for purposes of this section, the designated officer or employee shall use the sales and use tax revenue for the last preceding four quarters for which the information is available as the basis for projecting the additional sales and use tax revenue for the current tax year. If the rate of the additional sales and use tax is increased or reduced, the projection to be used for the first tax year after the effective date of the sales and use tax change shall be adjusted to exclude any revenue gained or lost because of the sales and use tax rate change. If the unit did not impose an additional sales and use tax for the last preceding four quarters, the designated officer or employee shall request the comptroller of public accounts to provide to the officer or employee a report showing the estimated amount of taxable sales and uses within the unit for the previous four quarters as compiled by the comptroller, and the comptroller shall comply with the request. The officer or employee shall prepare the estimate of the additional sales and use tax revenue for the first year of the imposition of the tax by multiplying the amount reported by the comptroller by the appropriate additional sales and use tax rate and by multiplying that product by .95.

(e) If a city that imposes an additional sales and use tax receives payments under the terms of a contract executed before January 1, 1986, in which the city agrees not to annex certain property or a certain area and the owners or lessees of the property or of property in the area agree to pay at least annually to the city an amount determined by reference to all or a percentage of the property tax rate of the city and all or a part of the value of the property subject to the agreement or included in the area subject to the agreement, the governing body, by order adopted by a majority vote of the governing body, may direct the designated officer or employee to add to the effective and rollback tax rates the amount that, when applied to the total taxable value submitted to the governing body, would produce an amount of taxes equal to the difference between the total amount of payments for the tax year under contracts described by this subsection under the rollback tax rate calculated under this section and the total amount of payments for the tax year that would have been obligated to the city if the city had not adopted an additional sales and use tax.

(f) An estimate made by the comptroller under Subsection (d) of this section need not be adjusted to take into account any projection of additional revenue attributable to increases in the total value of items taxable under the state sales and use tax because of amendments of Chapter 151, Tax Code.

(g) If the rate of the additional sales and use tax is increased, the designated officer or employee shall make two projections, in the manner provided by Subsection (d) of this section, of the revenue generated by the additional sales and use tax in the following year. The first projection must take into account the increase and the second projection must not take into account the increase. The officer or employee shall then subtract the amount of the result of the second projection from the amount of the result of the first projection to determine the revenue generated as a result of the increase in the additional sales and use tax. In the first year in which an additional sales and use tax is increased, the effective tax rate for the unit is the effective tax rate before the increase minus a number the numerator of which is the revenue generated as a result of the increase in the additional sales and use tax, as determined under this subsection, and the denominator of which is the current total value minus the new property value.

(h) If the rate of the additional sales and use tax is decreased, the designated officer or employee shall make two projections, in the manner provided by Subsection (d) of this section, of the revenue generated by the additional sales and use tax in the following year. The first projection must take into account the decrease and the second projection must not take into account the decrease. The officer or employee shall then subtract the amount of the result of the first projection from the amount of the result of the second projection to determine the revenue lost as a result of the decrease in the additional sales and use tax. In the first year in which an additional sales and use tax is decreased, the effective tax rate for the unit is the effective tax rate before the decrease plus a number the numerator of which is the revenue lost as a result of the decrease in the additional sales and use tax, as determined under this subsection, and the denominator of which is the current total value minus the new property value.

(i) Any amount derived from the sales and use tax that is or will be distributed by a county to the recipient of an economic development grant made under Chapter 381, Local Government Code, is not considered to be sales and use tax revenue for purposes of this section.

(j) Any amount derived from the sales and use tax that is retained by the comptroller under Section 4 or 5, Chapter 1507, Acts of the 76th Legislature, Regular Session, 1999 (Article 5190.14, Vernon's Texas Civil Statutes), is not considered to be sales and use tax revenue for purposes of this section.

Amended by 1981 Tex. Laws (1st C.S.), p. 163, ch. 13, Sec. 116; amended by 1983 Tex. Laws, p. 2165, ch. 400, Sec. 1; amended by 1983 Tex. Laws, p. 5376, ch. 987, Sec. 3; amended by 1983 Tex. Laws, p. 5402, ch. 1001, Sec. 1; amended by 1985 Tex. Laws, ch. 657, Secs. 1 and 2; amended by 1985 Tex. Laws (1st C.S.), p. 30, ch. 1, Sec. 2; amended by 1986 Tex. Laws (3rd C.S.), ch. 10, art. 1, Sec. 36; amended by 1987 Tex. Laws, ch. 699, Sec. 1, ch. 849, Sec. 2, ch. 947, Sec. 3, and ch. 988, Sec. 1; amended by 1991 Tex. Laws (2nd C.S.), p. 36, ch. 6, Sec. 45; amended by 1993 Tex. Laws, p. 168, ch. 81, Sec. 2 and by p. 2331, ch. 611, Secs. 1 and 2; amended by 1997 Tex. Laws, p. 557, ch. 165, Secs. 29.01 and 29.03; p. 4086, ch. 1070, Sec. 54; amended by 1999 Tex. Laws, p. 2510, ch. 398, Sec. 2; p. 4595, ch. 1358, Sec. 1; and p. 5370, ch. 1561, Sec. 1.

Cross References:
Constitutional requirement, see art. VIII, Sec. 21, Tex. Const.
Improvement defined, see Sec. 1.04(3).
Annexation of property, see Sec. 26.14.
Exemptions generally, see ch. 11.
Special appraisal generally, see ch. 23.
Correction of appraisal roll, see Sec. 25.25.
Adoption of tax rate, see Sec. 26.05.
Notice, hearing, and vote on proposed tax increase, see Sec. 26.06.
Election to repeal tax rate increase for school districts, see Sec. 26.08.
Election to repeal tax rate increase for all other taxing units, see Sec. 26.07.
Election to repeal tax rate increase for certain junior colleges, see Sec. 26.085.
Taxing unit consolidation, see Sec. 26.13.
County sales and use tax, see Sec. 323.001, Tax Code.
Additional city sales and use tax, see Sec. 321.101, Tax Code.

Sec. 26.042. Repealed in 1988.

Notes:
References to Sec. 26.042 should see Sec. 26.041.

Sec. 26.043. Effective Tax Rate in City Imposing Mass Transit Sales and Use Tax

(a) In the tax year in which a city has set an election on the question of whether to impose a local sales and use tax under Subchapter H, Chapter 453, Transportation Code, the officer or employee designated to make the calculations provided by Section 26.04 may not make those calculations until the outcome of the election is determined. If the election is determined in favor of the imposition of the tax, the representative shall subtract from the city's rollback and effective tax rates the amount that, if applied to the city's current total value, would impose an amount equal to the amount of property taxes budgeted in the current tax year to pay for expenses related to mass transit services.

(b) In a tax year to which this section applies, a reference in this chapter to the city's effective or rollback tax rate refers to that rate as adjusted under this section.

(c) For the purposes of this section, "mass transit services" does not include the construction, reconstruction, or general maintenance of municipal streets.

Added by 1986 Tex. Laws (3rd C.S.), ch. 10, art. 1, Sec. 35; amended by 1987 Tex. Laws, ch. 947, Sec. 6; amended by 1991 Tex. Laws, p. 2606, ch. 736, Sec. 1; amended by 1997 Tex. Laws, p. 560, ch. 165, Sec. 29.05.

Sec. 26.044. Effective Tax Rate to Pay for State Criminal Justice Mandate.

(a) The first time that a county adopts a tax rate after September 1, 1991, in which the state criminal justice mandate applies to the county, the effective maintenance and operation rate for the county is increased by the rate calculated according to the following formula:


ex26044a

(b) In the second and subsequent years that a county adopts a tax rate, if the amount spent by the county for the state criminal justice mandate increased over the previous year, the effective maintenance and operation rate for the county is increased by the rate calculated according to the following formula:


ex26044b

(c) The county shall include a notice of the increase in the effective maintenance and operation rate provided by this section, including a description and amount of the state criminal justice mandate, in the information published under Section 26.04(e) and Section 26.06(b) of this code.

(d) In this section, "state criminal justice mandate" means the amount spent by the county in the previous 12 months providing for the maintenance and operation cost of keeping inmates in county-paid facilities after they have been sentenced to the institutional division of the Texas Department of Criminal Justice as certified by the county auditor based on information provided by the county sheriff, minus the amount received from state revenue for reimbursement of such costs.

Added by 1991 Tex. Laws (2nd C.S.), p. 204, ch. 10, Sec. 11.10.

Sec. 26.0441. Tax Rate Adjustment for Indigent Health Care.

(a) In the first tax year in which a taxing unit adopts a tax rate after January 1, 2000, and in which the enhanced minimum eligibility standards for indigent health care established under Section 61.006, Health and Safety Code, apply to the taxing unit, the effective maintenance and operations rate for the taxing unit is increased by the rate computed according to the following formula:


e260441a

(b) In each subsequent tax year, if the taxing unit's enhanced indigent health care expenses exceed the amount of those expenses for the preceding year, the effective maintenance and operations rate for the taxing unit is increased by the rate computed according to the following formula:


e260441b

(c) The taxing unit shall include a notice of the increase in its effective maintenance and operations rate provided by this section, including a brief description and the amount of the enhanced indigent health care expenditures, in the information published under Section 26.04(e) and, if applicable, Section 26.06(b).

(d) In this section, "enhanced indigent health care expenditures" for a tax year means the amount spent by the taxing unit for the maintenance and operation costs of providing indigent health care at the increased minimum eligibility standards established under Section 61.006, Health and Safety Code, effective on or after January 1, 2000, in the period beginning on July 1 of the year preceding the tax year for which the tax is adopted and ending on June 30 of the tax year for which the tax is adopted, less the amount of state assistance received by the taxing unit in accordance with Chapter 61, Health and Safety Code, that is attributable to those costs.

Added by 1999 Tex. Laws, p. 4664, ch. 1377, Sec. 1.27.

Cross References:
Current total value, see Sec. 26.012(6).
Indigent health care expenses, see Chapter 61, Health and Safety Code.
Maintenance and operations funds, see Sec. 26.012(16).
Rollback tax rate, see Sec. 26.04(c).

Note:
A county hospital district could legally levy and collect taxes to provide medical services to its indigent citizens, even if it closed its hospital and leased its facilities to a private entity to continue to provide the medical services. The hospital closure did not relieve the district of its obligations to provide medical services to its indigents. Op. Tex. Att'y Gen. No. JC-220 (2000).

Sec. 26.045. Rollback Relief for Pollution Control Requirements.

(a) The rollback tax rate for a political subdivision of this state is increased by the rate that, if applied to the total current value, would impose an amount of taxes equal to the amount the political subdivision will spend out of its maintenance and operation funds under Section 26.012(16), Tax Code, to pay for a facility, device, or method for the control of air, water, or land pollution that is necessary to meet the requirements of a permit issued by the Texas Natural Resource Conservation Commission.

(b) In this section, "facility, device, or method for control of air, water, or land pollution" means any land, structure, building, installation, excavation, machinery, equipment, or device, and any attachment or addition to or reconstruction, replacement, or improvement of that property, that is used, constructed, acquired, or installed wholly or partly to meet or exceed rules or regulations adopted by any environmental protection agency of the United States or this state for the prevention, monitoring, control, or reduction of air, water, or land pollution.

(c) To receive an adjustment to the rollback tax rate under this section, a political subdivision shall present information to the executive director of the Texas Natural Resource Conservation Commission in a permit application or in a request for any exemption from a permit that would otherwise be required detailing:

(1) the anticipated environmental benefits from the installation of the facility, device, or method for the control of air, water, or land pollution;

(2) the estimated cost of the pollution control facility, device, or method; and

(3) the purpose of the installation of the facility, device, or method, and the proportion of the installation that is pollution control property.

(d) Following submission of the information required by Subsection (c), the executive director of the Texas Natural Resource Conservation Commission shall determine if the facility, device, or method is used wholly or partly as a facility, device, or method for the control of air, water, or land pollution. If the executive director determines that the facility, device, or method is used wholly or partly to control pollution, the director shall issue a letter to the political subdivision stating that determination and the portion of the cost of the installation that is pollution control property.

(e) The Texas Natural Resource Conservation Commission may charge a political subdivision seeking a determination that property is pollution control property an additional fee not to exceed its administrative costs for processing the information, making the determination, and issuing the letter required by this section. The commission may adopt rules to implement this section.

(f) A political subdivision of the state seeking an adjustment in its rollback tax rate under this section shall provide to its tax assessor a copy of the letter issued by the executive director of the Texas Natural Resource Conservation Commission under Subsection (d). The tax assessor shall accept the copy of the letter from the executive director as conclusive evidence that the facility, device, or method is used wholly or partly as pollution control property and shall adjust the rollback tax rate for the political subdivision as provided for by Subsection (a).

Added by 1993 Tex. Laws, p. 1326, ch. 285, Sec. 4.

Cross References:
Current total value, see Sec. 26.012(6).
Maintenance and operations funds, see Sec. 26.012(16).
Pollution control property exemption, see Sec. 11.31.
Rollback tax rate, see Sec. 26.04(c).