H.B. No. 139 proposes significant amendments to the Special District Local Laws Code and the Tax Code, focusing on the calculation and approval process for ad valorem tax rates. The bill removes references to Sections 26.042 and 26.075 of the Tax Code from the applicability of tax provisions for specific districts. It clarifies the formulas for determining the "no-new-revenue tax rate" and "voter-approval tax rate," ensuring that these calculations incorporate additional sales and use taxes. Furthermore, the bill enhances transparency in the tax rate adoption process by modifying public notice and hearing requirements, and it introduces a new definition for "developed district," establishing conditions for elections when proposed tax rates exceed certain thresholds.

In addition to these changes, the bill amends the Water Code to refine the calculation of the voter-approval tax rate, which is intended to limit property tax growth in Texas. The heading of Section 49.23601 is updated to "AUTOMATIC ELECTION TO APPROVE TAX RATE," and the definition of "voter-approval tax rate" is expanded to include the current year's debt service, contract, and operation and maintenance tax rates. The previous cap on the operation and maintenance tax rate has been removed, and now mandates an election if the adopted tax rate surpasses the voter-approval tax rate. The bill also repeals several outdated provisions from the Education Code, Local Government Code, and Tax Code, and it specifies that these changes will apply to ad valorem taxes for tax years starting on or after January 1, 2026.

Statutes affected:
Introduced: Special District Local Laws Code 3828.157, Special District Local Laws Code 8876.152, Tax Code 26.04, Tax Code 26.041, Tax Code 26.07, Tax Code 31.112, Water Code 6.30, Water Code 49.107, Water Code 49.108, Water Code 49.236, Water Code 49.23601 (Tax Code 26, Water Code 49, Special District Local Laws Code 8876, Tax Code 31, Special District Local Laws Code 3828, Water Code 6)