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Relating to the effect of a disaster on the calculation of certain tax rates and the procedure for adoption of a tax rate by a taxing unit.
The bill's provisions requiring a disaster to have caused at least one person to be granted a temporary disaster exemption for property located in the taxing unit and excluding epidemics and pandemics as qualifying disasters for taxing units to utilize the higher voter-approval tax rate calculation after a disaster may result in reduced tax revenues for school districts and impact costs to the state through the operation of the school funding formulas.
SB 1438 would place strict limits on current statutory authority allowing certain taxing units to use a higher voter-approved tax rate calculation after a disaster. The bill would only allow a taxing unit to calculate at the higher voter-approved tax rate if any part of the taxing unit is located in a declared disaster area and the disaster caused physical damage to property located in the taxing unit. The bill would also establish limited timeframes for how long the tax rate could remain at this level.
This bill was amended on the floor of the House and minor amendments were adopted which do not change our analysis.
SB 1438 promotes individual liberty by ensuring that a taxing unit may not raise rates due to a declared disaster when no actual physical property damage has been caused by the disaster. Examples of this occurred during the COVID pandemic when certain districts used the disaster declaration to increase the tax rate. Increased tax rates due to disaster are meant to help rebuild infrastructure, which implies actual damage must occur to necessitate rebuilding and justify the temporary rate increase. Texas Action supports SB 1438.
This bill was amended on the floor of the House and minor amendments were adopted which do not change our vote recommendation.