Relating to the calculation of the voter-approval tax rate for certain municipalities that receive municipal hotel occupancy tax revenue and other money from a local park board of trustees.

89(R) HB 5596 - Senate Committee Report version - Bill Text

By: Leo Wilson (Senate Sponsor - Middleton)

H.B. No. 5596

(In the Senate - Received from the House May 19, 2025;

May 21, 2025, read first time and referred to Committee on Economic

Development; May 22, 2025, reported adversely, with favorable

Committee Substitute by the following vote: Yeas 3, Nays 2;

May 22, 2025, sent to printer.)
Click here to see the committee vote

COMMITTEE SUBSTITUTE FOR H.B. No. 5596

By: Sparks

A BILL TO BE ENTITLED

AN ACT

relating to the calculation of the voter-approval tax rate for

certain municipalities that receive municipal hotel occupancy tax

revenue and other money from a local park board of trustees.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 26.012, Tax Code, is amended by adding

Subdivisions (9-a), (16-a), and (16-b) to read as follows:

(9-a)

"Eligible coastal municipality" means a

municipality described by Section 351.001(3)(A) that has created a

park board of trustees under Section 306.011, Local Government

Code.

(16-a) "Misspent hotel occupancy tax revenue" means an

amount equal to the sum of:

(A)

the amount of revenue received under Chapter

351 by an eligible coastal municipality during the preceding tax

year that was spent by the municipality for a purpose not authorized

by Chapter 351; and

(B)

the amount of money not described by

Paragraph (A) that was received by an eligible coastal municipality

from the municipality's park board of trustees and spent by the

municipality during the preceding tax year.

(16-b)

"Misspent hotel occupancy tax revenue rate"

means the rate expressed in dollars per $100 of taxable value

calculated according to the following formula:

MISSPENT HOTEL OCCUPANCY TAX REVENUE RATE = MISSPENT

HOTEL OCCUPANCY TAX REVENUE / CURRENT TOTAL VALUE

SECTION 2. Section 26.04(c), Tax Code, is amended to read as

follows:

(c) After the assessor for the taxing unit submits the

appraisal roll for the taxing unit to the governing body of the

taxing unit as required by Subsection (b), an officer or employee

designated by the governing body shall calculate the no-new-revenue

tax rate and the voter-approval tax rate for the taxing unit, where:

(1) "No-new-revenue tax rate" means a rate expressed

in dollars per $100 of taxable value calculated according to the

following formula:

NO-NEW-REVENUE TAX RATE = (LAST YEAR'S LEVY - LOST

PROPERTY LEVY) / (CURRENT TOTAL VALUE - NEW PROPERTY

VALUE)

; and

(2) "Voter-approval tax rate" means a rate expressed

in dollars per $100 of taxable value calculated according to the

following applicable formula:

(A) for a special taxing unit:

VOTER-APPROVAL TAX RATE = (NO-NEW-REVENUE MAINTENANCE

AND OPERATIONS RATE x 1.08) + CURRENT DEBT RATE

; [
or
]

(B)
for an eligible coastal municipality:

VOTER-APPROVAL TAX RATE = (NO-NEW-REVENUE MAINTENANCE

AND OPERATIONS RATE x 1.035) + (CURRENT DEBT RATE +

UNUSED INCREMENT RATE - MISSPENT HOTEL OCCUPANCY TAX

REVENUE RATE)

; or

(C)
for a taxing unit other than a special taxing

unit
or eligible coastal municipality
:

VOTER-APPROVAL TAX RATE = (NO-NEW-REVENUE MAINTENANCE

AND OPERATIONS RATE x 1.035) + (CURRENT DEBT RATE +

UNUSED INCREMENT RATE)

SECTION 3. Sections 26.041(a), (b), and (c), Tax Code, are

amended to read as follows:

(a) In the first year in which an additional sales and use

tax is required to be collected, the no-new-revenue tax rate and

voter-approval tax rate for the taxing unit are calculated

according to the following formulas:

NO-NEW-REVENUE TAX RATE = [(LAST YEAR'S LEVY - LOST

PROPERTY LEVY) / (CURRENT TOTAL VALUE - NEW PROPERTY

VALUE)] - SALES TAX GAIN RATE

and

VOTER-APPROVAL TAX RATE FOR SPECIAL TAXING UNIT =

(NO-NEW-REVENUE MAINTENANCE AND OPERATIONS RATE x

1.08) + (CURRENT DEBT RATE - SALES TAX GAIN RATE)

or

VOTER-APPROVAL TAX RATE FOR ELIGIBLE COASTAL

MUNICIPALITY = (NO-NEW-REVENUE MAINTENANCE AND

OPERATIONS RATE x 1.035) + (CURRENT DEBT RATE + UNUSED

INCREMENT RATE - SALES TAX GAIN RATE - MISSPENT HOTEL

OCCUPANCY TAX REVENUE RATE)

or

VOTER-APPROVAL TAX RATE FOR TAXING UNIT OTHER THAN

SPECIAL TAXING UNIT
OR ELIGIBLE COASTAL MUNICIPALITY
=

(NO-NEW-REVENUE MAINTENANCE AND OPERATIONS RATE x

1.035) + (CURRENT DEBT RATE + UNUSED INCREMENT RATE -

SALES TAX GAIN RATE)

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) by the current total value.

(b) Except as provided by Subsections (a) and (c), in a year

in which a taxing unit imposes an additional sales and use tax, the

voter-approval tax rate for the taxing unit is calculated according

to the following formula, regardless of whether the taxing unit

levied a property tax in the preceding year:

VOTER-APPROVAL TAX RATE FOR SPECIAL TAXING UNIT =

[(LAST YEAR'S MAINTENANCE AND OPERATIONS EXPENSE x

1.08) / (CURRENT TOTAL VALUE - NEW PROPERTY VALUE)] +

(CURRENT DEBT RATE - SALES TAX REVENUE RATE)

or

VOTER-APPROVAL TAX RATE FOR ELIGIBLE COASTAL

MUNICIPALITY = [(LAST YEAR'S MAINTENANCE AND

OPERATIONS EXPENSE x 1.035) / (CURRENT TOTAL VALUE -

NEW PROPERTY VALUE)] + (CURRENT DEBT RATE + UNUSED

INCREMENT RATE - SALES TAX REVENUE RATE - MISSPENT

HOTEL OCCUPANCY TAX REVENUE RATE)

or

VOTER-APPROVAL TAX RATE FOR TAXING UNIT OTHER THAN

SPECIAL TAXING UNIT
OR ELIGIBLE COASTAL MUNICIPALITY
=

[(LAST YEAR'S MAINTENANCE AND OPERATIONS EXPENSE x

1.035) / (CURRENT TOTAL VALUE - NEW PROPERTY VALUE)] +

(CURRENT DEBT RATE + UNUSED INCREMENT RATE - SALES TAX

REVENUE RATE)

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) 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 no-new-revenue tax rate and voter-approval tax

rate for the taxing unit are calculated according to the following

formulas:

NO-NEW-REVENUE TAX RATE = [(LAST YEAR'S LEVY - LOST

PROPERTY LEVY) / (CURRENT TOTAL VALUE - NEW PROPERTY

VALUE)] + SALES TAX LOSS RATE

and

VOTER-APPROVAL TAX RATE FOR SPECIAL TAXING UNIT =

[(LAST YEAR'S MAINTENANCE AND OPERATIONS EXPENSE x

1.08) / (CURRENT TOTAL VALUE - NEW PROPERTY VALUE)] +

CURRENT DEBT RATE

or

VOTER-APPROVAL TAX RATE FOR ELIGIBLE COASTAL

MUNICIPALITY = [(LAST YEAR'S MAINTENANCE AND

OPERATIONS EXPENSE x 1.035) / (CURRENT TOTAL VALUE -

NEW PROPERTY VALUE)] + (CURRENT DEBT RATE + UNUSED

INCREMENT RATE - MISSPENT HOTEL OCCUPANCY TAX REVENUE

RATE)

or

VOTER-APPROVAL TAX RATE FOR TAXING UNIT OTHER THAN

SPECIAL TAXING UNIT
OR ELIGIBLE COASTAL MUNICIPALITY
=

[(LAST YEAR'S MAINTENANCE AND OPERATIONS EXPENSE x

1.035) / (CURRENT TOTAL VALUE - NEW PROPERTY VALUE)] +

(CURRENT DEBT RATE + UNUSED INCREMENT RATE)

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.

SECTION 4. This Act applies only to ad valorem taxes imposed

for an ad valorem tax year that begins on or after the effective

date of this Act.

SECTION 5. This Act takes effect January 1, 2026.

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