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 consider additional sales and use taxes. Furthermore, the bill enhances transparency by modifying public notice and hearing requirements related to tax rate adoption, mandating that an election be held if a taxing unit adopts a tax rate that exceeds the voter-approval tax rate.

Additionally, the bill amends the Water Code to refine the calculation of the voter-approval tax rate, changing the heading of Section 49.23601 to "AUTOMATIC ELECTION TO APPROVE TAX RATE" and updating the definition to include the current year's debt service, contract, and operation and maintenance tax rates. It eliminates the previous threshold of "1.08 times" the amount of tax from the preceding year, focusing instead on the tax imposed on a residence homestead appraised at the average value in the district. Several provisions from the Education Code, Local Government Code, and Tax Code are repealed, and the bill specifies that it applies only to ad valorem taxes for tax years beginning on or after January 1, 2026, aiming to streamline tax rate setting while ensuring voter involvement in significant increases.

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 31, Special District Local Laws Code 3828, Special District Local Laws Code 8876, Water Code 6, Tax Code 26, Water Code 49)