Texas Gov. Greg Abbott signed the Texas Property Tax Reform and Transparency Act of 2019 into law last month. The new legislation, long a priority of Texas lawmakers, introduces measures that will reduce the tax burden on property owners.
One of the ways it does this is by requiring voter approval before a taxing unit can increase its property tax revenue. Section 26.07 of the Tax Code states the requirements for an election to approve a new tax rate for a taxing unit that is not a school district.
Here’s what it says.
When are elections for the approval of a tax rate held?
Section 26.07 goes into detail about the requirements and procedures for an election to approve a new tax rate. This only applies to taxing units that are not school districts.
The registered voters of a taxing unit will hold an election for the approval of a new tax rate if:
- The governing body of a special taxing unit adopts a tax rate that is higher than the voter-approval tax rate
- The governing body of a municipality with a population of 30,000 or more adopts a tax rate that is higher than the voter-approval tax rate
- The governing body of a taxing unit that is not a special taxing unit adopts a tax rate that is higher than the greater of the voter-approval tax rate or the de minimis rate
- The governing body of a municipality with a population lower than 30,000 adopts a tax rate that is higher than the greater of the voter-approval tax rate or the de minimis rate
An election to approve the tax rate adopted by a governing body is not necessary when there is an increase in expenditure in response to a disaster. These disasters include hurricanes, floods, tornados, wildfires, and other natural calamities, excluding drought.
To qualify for this exemption, the disaster must have made a significant impact on the taxing unit. The governor must have declared a part of the area covered by the taxing unit as a disaster area. The tax rate in question is for the year following the one in which the disaster occurred.
How is an election to approve a new tax rate conducted?
The election will be held in the taxing unit on a date prescribed by the Election Code. Specifically, it will be on the first Tuesday after the first Monday in November of the applicable tax year. The order for the election must be issued not later than 71 days before the election.
For the election, the ballots must state the adopted tax rate, the tax rate for the previous tax year, and the difference between the voter-approval tax rate and the adopted tax rate.
What happens after the election?
If a majority of the votes favors the proposition, the tax rate for the current tax year is the rate that was adopted. If a majority of the votes rejects the proposition, the tax rate for the current tax year is the voter-approval tax rate.
If the election results in the adopted tax rate being rejected and the tax bills have already been mailed, the tax assessor will mail corrected tax bills. The new bills will include an explanation for the corrected bill.
If a property owner has already paid taxes using the adopted tax rate and the election results in the adopted tax rate being rejected, the taxing unit will issue a refund. The refund will be the difference between the taxes paid and the actual amount due based on the voter-approval tax rate.
The taxing unit will issue the refund immediately as long as the difference is at least $1. If the difference is less than $1, the taxing unit will refund the amount on request of the taxpayer.
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