The bill amends Section 26.07 of the Texas Tax Code by adding a new subsection (h), which prohibits taxing units from using or transferring any increase in maintenance and operations ad valorem tax revenue, resulting from a tax rate approved in an election, for the purpose of repaying debt. This restriction applies to installment payments or any other form of debt repayment. However, the bill clarifies that school districts are exempt from this prohibition when using funds from a tax increment fund for a reinvestment zone, as long as it aligns with agreements made with the governing body of the municipality or county that designated the zone.

The new provision will only apply to ad valorem taxes imposed for tax years beginning on or after the effective date of the Act, which is set for January 1, 2026. This change aims to ensure that increases in tax revenue are utilized for their intended purposes rather than being diverted to debt repayment.

Statutes affected:
Introduced: Tax Code 26.07 (Tax Code 26)