The bill amends Section 26.07 of the Texas Tax Code by adding a new subsection (h) that restricts the use of increased maintenance and operations ad valorem tax revenue. Specifically, it states that any increase in a taxing unit's maintenance and operations tax revenue, which is derived from an election, cannot be used or transferred for the repayment of debt, whether in installment payments or otherwise. However, the bill clarifies that this restriction does not apply to school districts, which may still use funds from the tax increment fund for reinvestment zones as per existing agreements with municipalities or counties.

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 increased tax revenues are not diverted from their intended purpose of funding maintenance and operations, thereby potentially impacting the financial management of taxing units in Texas.

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