What does the new Senate Bill 2 mean for Texas property owners? Dealing with tax rates has been something that is puzzling and also challenging to understand. Not everyone who owns a property knows everything about taxes and petitions.

You don’t need to worry too much. This is why research and reading related articles online will help give you clarification.

This article aims to help you know what the petition to reduce the tax rate of taxing units is all about.

reduce tax

Both business and home property owners have the right to know how and when to file petitions.

If you want to learn what is under the new Texas Property Tax Reform, then continue reading below.

The Petition to Reduce Tax Rate of Taxing Unit and Who It Affects

The Senate Bill 2 (SB 2) or the Texas Property Tax Reform and Transparency Act of 2019 are under an update. This is through the help of the passing of the Texas Legislature in 2019.

Section 26.075 of the SB 2 talks about where de minimis rate or the 10% rate applies to. The de minimis rate works as follows:

  • A city that as a population of 30,000 or less needs to calculate a de minimis rate.
  • If the tax rate exceeds more than the city’s voter-approval tax rate, an election is in order.
  • The election needs to approve the adopted tax rate in regards to the November uniform tax rate.
  • A city with 30,000 population or less can adopt rates exceeding voter-approval tax rates. It is possible depending on the facts presented. Voters need to petition for a tax approval election. This means they won’t hold an automatic election.
  • City voters need to submit a petition for a tax approval election.

Explaining the De Minimis Rate and Its Scope

Encountering the de minimis rate can be confusing. An easier way to determine the de minimis rate is to look at a city’s population.

When a city us under 30,000 population with a de minimis rate exceeding 3.5% voter-approval rate, the rules should be as follows:

  • Adopted rate > de minimis rate = Automatic election in November.
  • Adopted rate =/< de minimis rate = Petition for election.
  • This can happen when the de minimis rate is more than the 3.5% voter-approval tax rate.
  • It can also happen when there is an 8% voter-approval tax rate applicable to a taxing unit.
  • Adopted rate < de minimis rate = No automatic r petition election needed.

Under What Circumstances Should City Voters Submit a Petition?

A city can submit a petition for an election if the de minimis rate exceeds the voter-approval rate. They can also do this when the adopted rate of the city is equal to or lower than the de minimis rate.

This also applies to adopted rates more than the voter-approval tax rates of the city.

A higher voter-approval rate means a 3.5% rate with an unused added rate. Petitions can also arise from cities with a special taxing unit. This means that they should have a calculated voter-approval tax rate via the taxing unit. The voter-approval tax rate of taxing units is usually around 8%.

What Happens When the Adopted Rate Is Lesser Than the Voter-approval Tax Rates?

When the adopted rate is lesser than voter-approval tax rates, there’s no need for a petition. This also goes for adopted rates that are lower than the special taxing unit tax rates.

If a smaller city has a de minimis rate exceeding 3.5%, the adopted rate is possible. This means that the city can adopt a rate all the way up without any automatic election in November.

The city in question needs to make sure that the de minimis rate is more than the 3.5% voter-approval tax rate.

But the current law is still applicable to these smaller cities. When the adopted rate of the city is higher than the 8% voter-approval rate, the petition for election goes on. The adopted rate of the city should be higher than the 8% voter-approval rate but lower than the de minimis rate.

How Should a City Undergo a Petition and Election Process?

Now that the petition for an election is underway, there are a few things to make sure of. The petition can only be valid for the following reasons:

  • When there is a need for the election to reduce the current adopted tax rate of the city.
  • When the petition has the signature of at least 3% of the registered city voters. The voters also need to be on the recent list of voters.
  • When the city council receives the petition not later than the 90th day after the adoption of the tax rate.

When Is a Petition Deemed Valid?

The city council determines the validity of the petition. This will last not later than the 20th after the submission of the petition.

If the petition is valid, the election will be on the next agreed date of the majority. The date needs to give enough time for the city to follow the requirements.

There should also be ballots during the election. It should state if they should be voting for or against the following:

“Reducing the tax rate in (name of the city) for the current year from (insert tax rate adopted for the current year) to (insert voter-approval tax rate).”

If a property owner has already paid taxes from a previous tax rate, the city needs to issue a refund. This can happen when a tax rate that has already “been paid” is “reduced” after the petition.

The refund will come from the difference between the taxes “paid” and the current reduced tax rate.

 

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