89S20002 CS-F     By: LaHood H.B. No. 203       A BILL TO BE ENTITLED   AN ACT   relating to a limit on political subdivision expenditures and the   adoption of ad valorem tax rates.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:   ARTICLE 1. LIMIT ON ANNUAL EXPENDITURES          SECTION 1.01.  Chapter 140, Local Government Code, is   amended by adding Section 140.015 to read as follows:          Sec. 140.015.  LIMIT ON ANNUAL EXPENDITURES. (a) In this   section:                (1)  "Consumer price index" means the average over a   calendar year of the index a political subdivision making a   calculation under Subsection (d) considers to most accurately   report changes in the purchasing power of the dollar for consumers   in this state.                (2)  "Disaster relief cost" means the total amount of a   political subdivision's share of the cost associated with the   following services provided during a disaster declared by the   president of the United States or the governor during the current   calendar year:                      (A)  the removal of debris or wreckage in the   political subdivision, as determined by an estimate:                            (i)  if the disaster is declared by the   president of the United States, made under 42 U.S.C. Section 5173;   or                            (ii)  if the disaster is declared by the   governor but not by the president of the United States, made by the   political subdivision using, to the extent practicable, the methods   used to make a federal estimate under 42 U.S.C. Section 5173; and                      (B)  essential assistance as determined by:                            (i)  if the disaster was declared by the   president of the United States, a federal estimate; or                            (ii)  if the disaster was declared by the   governor but not by the president of the United States, an estimate   made by the political subdivision using, to the extent practicable,   the methods used to make a federal estimate described by   Subparagraph (i).                (3)  "Inflation rate" means the amount, expressed in   decimal form rounded to the nearest thousandth, computed by   determining the percentage change in the consumer price index   applicable to the political subdivision making a calculation under   Subsection (d) for the preceding calendar year as compared to the   consumer price index for the calendar year preceding that calendar   year.                (4)  "Political subdivision" means a county,   municipality, school district, junior college district, hospital   district, other special district, or other subdivision of state   government.                (5)  "Population growth rate" means the rate of growth   of a political subdivision's population during the preceding   calendar year, expressed in decimal form rounded to the nearest   thousandth, determined by the political subdivision using the most   recent population estimates available from the United States Census   Bureau or, if the United States Census Bureau does not publish   population estimates for the political subdivision, other reliable   data sources or estimation methods determined by the political   subdivision.          (b)  This section applies only to a political subdivision   that is authorized by law to impose an ad valorem tax or issue   bonds.          (c)  Except as provided by Subsection (e), a political   subdivision's total expenditures from all available sources of   revenue in a fiscal year may not exceed the greater of:                (1)  the political subdivision's total expenditures   from all available sources of revenue in the preceding fiscal year;   or                (2)  an amount determined by multiplying:                      (A)  the political subdivision's total   expenditures from all available sources of revenue in the preceding   fiscal year; and                      (B)  the sum of one and the rate most recently   determined by the political subdivision under Subsection (d).          (d)  Not later than January 31 of each year, a political   subdivision shall calculate and post on an Internet website   maintained by the political subdivision a rate equal to the product   of the population growth rate and the inflation rate using a form   prescribed by the comptroller.          (e)  A political subdivision's total expenditures from all   available sources of local revenue in a fiscal year may exceed the   amount described by Subsection (c) if at least two-thirds of the   political subdivision's voters approve the additional expenditures   for that fiscal year at an election called for that purpose and held   on a uniform election date.          (f)  For purposes of this section:                (1)  a grant, donation, or gift is not considered an   available source of revenue; and                (2)  a disaster relief cost is not considered an   expenditure.          (g)  The attorney general may bring an action in Travis   County or a county in which a political subdivision is wholly or   partially located to enforce this section.          (h)  In an action under Subsection (g), the attorney general   may seek:                (1)  injunctive relief to prohibit the political   subdivision from violating this section;                (2)  a writ of mandamus compelling the political   subdivision to comply with this section; or                (3)  a declaratory judgment determining the rights and   obligations of the political subdivision under this section.          (i)  A registered voter of a political subdivision may bring   an action against the political subdivision in a county in which the   political subdivision is wholly or partly located for a violation   of this section.          (j)  In an action under Subsection (i), a registered voter of   a political subdivision may seek injunctive relief to prohibit the   political subdivision from violating this section.          (k)  A court may award court costs and reasonable and   necessary attorney's fees to the prevailing party in an action   under Subsection (i).   ARTICLE 2. ADOPTION OF AD VALOREM TAX RATES          SECTION 2.01.  Sections 281.124(d) and (f), Health and   Safety Code, are amended to read as follows:          (d)  If at least two-thirds [a majority] of the registered   voters in the district cast a vote in [votes cast in the election]   favor of the proposition, the tax rate for the specified tax year is   the rate approved by the voters, and that rate is not subject to   Section 26.07, Tax Code. The board shall adopt the tax rate as   provided by Chapter 26, Tax Code.          (f)  Notwithstanding any other law, if at least two-thirds [a   majority] of the registered voters in the district cast a vote in    [votes cast in the election] favor of the proposition, a governing   body with approval authority over the district's budget or tax rate   may not disapprove the tax rate approved by the voters or disapprove   the budget based solely on the tax rate approved by the voters.          SECTION 2.02.  Section 1101.254(f), Special District Local   Laws Code, is amended to read as follows:          (f)  This section does not affect the applicability of   Section 26.07, Tax Code, to the district's tax rate, except that if   at least two-thirds of the registered voters in the district   [voters] approve a tax rate increase under this section, Section   26.07, Tax Code, does not apply to the tax rate for that year.          SECTION 2.03.  Section 3828.157, Special District Local Laws   Code, is amended to read as follows:          Sec. 3828.157.  INAPPLICABILITY OF CERTAIN TAX CODE   PROVISIONS.  Sections 26.04, [26.042,] 26.05, and 26.07, [and   26.075,] Tax Code, do not apply to a tax imposed under Section   3828.153 or 3828.156.          SECTION 2.04.  Section 8876.152(a), Special District Local   Laws Code, is amended to read as follows:          (a)  Sections 26.04, [26.042,] 26.05, 26.06, 26.061, and   26.07, [and 26.075,] Tax Code, do not apply to a tax imposed by the   district.          SECTION 2.05.  Section 26.04(c), Tax Code, is amended to   read as follows:          (c)  After the assessor for the taxing unit submits the   appraisal roll for the taxing unit to the governing body of the   taxing unit as required by Subsection (b), an officer or employee   designated by the governing body shall calculate the no-new-revenue   tax rate and the voter-approval tax rate for the taxing unit, where:                (1)  "No-new-revenue tax rate" means a rate expressed   in dollars per $100 of taxable value calculated according to the   following formula:          NO-NEW-REVENUE TAX RATE = (LAST YEAR'S LEVY - LOST PROPERTY   LEVY) / (CURRENT TOTAL VALUE - NEW PROPERTY VALUE)          ; and                (2)  "Voter-approval tax rate" means a rate expressed   in dollars per $100 of taxable value calculated according to the   following applicable formula:                      (A)  for a special taxing unit:          VOTER-APPROVAL TAX RATE = (NO-NEW-REVENUE MAINTENANCE AND   OPERATIONS RATE x 1.06 [1.08]) + CURRENT DEBT RATE          ; or                      (B)  for a taxing unit other than a special taxing   unit:          VOTER-APPROVAL TAX RATE = (NO-NEW-REVENUE MAINTENANCE AND   OPERATIONS RATE x 1.02 [1.035]) + [(]CURRENT DEBT RATE [+ UNUSED   INCREMENT RATE)]          SECTION 2.06.  Sections 26.041(a), (b), and (c), Tax Code,   are amended to read as follows:          (a)  In the first year in which an additional sales and use   tax is required to be collected, the no-new-revenue tax rate and   voter-approval tax rate for the taxing unit are calculated   according to the following formulas:          NO-NEW-REVENUE TAX RATE = [(LAST YEAR'S LEVY - LOST PROPERTY   LEVY) / (CURRENT TOTAL VALUE - NEW PROPERTY VALUE)] - SALES TAX GAIN   RATE   and          VOTER-APPROVAL TAX RATE FOR SPECIAL TAXING UNIT =   (NO-NEW-REVENUE MAINTENANCE AND OPERATIONS RATE x 1.06 [1.08]) +   (CURRENT DEBT RATE - SALES TAX GAIN RATE)   or          VOTER-APPROVAL TAX RATE FOR TAXING UNIT OTHER THAN SPECIAL   TAXING UNIT = (NO-NEW-REVENUE MAINTENANCE AND OPERATIONS RATE x   1.02 [1.035]) + (CURRENT DEBT RATE [+ UNUSED INCREMENT RATE] - SALES   TAX GAIN RATE)   where "sales tax gain rate" means a number expressed in dollars per   $100 of taxable value, calculated by dividing the revenue that will   be generated by the additional sales and use tax in the following   year as calculated under Subsection (d) by the current total value.          (b)  Except as provided by Subsections (a) and (c), in a year   in which a taxing unit imposes an additional sales and use tax, the   voter-approval tax rate for the taxing unit is calculated according   to the following formula, regardless of whether the taxing unit   levied a property tax in the preceding year:          VOTER-APPROVAL TAX RATE FOR SPECIAL TAXING UNIT = [(LAST   YEAR'S MAINTENANCE AND OPERATIONS EXPENSE x 1.06 [1.08]) / (CURRENT   TOTAL VALUE - NEW PROPERTY VALUE)] + (CURRENT DEBT RATE - SALES TAX   REVENUE RATE)   or          VOTER-APPROVAL TAX RATE FOR TAXING UNIT OTHER THAN SPECIAL   TAXING UNIT = [(LAST YEAR'S MAINTENANCE AND OPERATIONS EXPENSE x   1.02 [1.035]) / (CURRENT TOTAL VALUE - NEW PROPERTY VALUE)] +   (CURRENT DEBT RATE [+ UNUSED INCREMENT RATE] - SALES TAX REVENUE   RATE)   where "last year's maintenance and operations expense" means the   amount spent for maintenance and operations from property tax and   additional sales and use tax revenues in the preceding year, and   "sales tax revenue rate" means a number expressed in dollars per   $100 of taxable value, calculated by dividing the revenue that will   be generated by the additional sales and use tax in the current year   as calculated under Subsection (d) by the current total value.          (c)  In a year in which a taxing unit that has been imposing   an additional sales and use tax ceases to impose an additional sales   and use tax, the no-new-revenue tax rate and voter-approval tax   rate for the taxing unit are calculated according to the following   formulas:          NO-NEW-REVENUE TAX RATE = [(LAST YEAR'S LEVY - LOST PROPERTY   LEVY) / (CURRENT TOTAL VALUE - NEW PROPERTY VALUE)] + SALES TAX LOSS   RATE   and          VOTER-APPROVAL TAX RATE FOR SPECIAL TAXING UNIT = [(LAST   YEAR'S MAINTENANCE AND OPERATIONS EXPENSE x 1.06 [1.08]) / (CURRENT   TOTAL VALUE - NEW PROPERTY VALUE)] + CURRENT DEBT RATE   or          VOTER-APPROVAL TAX RATE FOR TAXING UNIT OTHER THAN SPECIAL   TAXING UNIT = [(LAST YEAR'S MAINTENANCE AND OPERATIONS EXPENSE x   1.02 [1.035]) / (CURRENT TOTAL VALUE - NEW PROPERTY VALUE)] +   [(]CURRENT DEBT RATE [+ UNUSED INCREMENT RATE)]   where "sales tax loss rate" means a number expressed in dollars per   $100 of taxable value, calculated by dividing the amount of sales   and use tax revenue generated in the last four quarters for which   the information is available by the current total value and "last   year's maintenance and operations expense" means the amount spent   for maintenance and operations from property tax and additional   sales and use tax revenues in the preceding year.          SECTION 2.07.  Section 26.05, Tax Code, is amended by adding   Subsection (e-2) to read as follows:          (e-2)  In addition to the relief provided by Subsection (e),   a person that owns taxable property in the taxing unit and that has   a reasonable belief that the taxing unit has not complied with the   requirements of this section or Section 26.04 may submit a   complaint to the attorney general. If the attorney general   determines that the taxing unit has not complied with the   requirements of this section or Section 26.04, the attorney general   may seek declaratory and injunctive relief, including by filing a   petition for a writ of mandamus, to compel the taxing unit to comply   with the requirements of this section or Section 26.04. An action   brought under this subsection must be filed in Travis County or a   county in which any part of the taxing unit is located.          SECTION 2.08.  Sections 26.06(b-1) and (b-3), Tax Code, are   amended to read as follows:          (b-1)  If the proposed tax rate exceeds the no-new-revenue   tax rate and the voter-approval tax rate of the taxing unit, the   notice must contain a statement in the following form:   "NOTICE OF PUBLIC HEARING ON TAX INCREASE          "PROPOSED TAX RATE            $__________ per $100          "NO-NEW-REVENUE TAX RATE      $__________ per $100          "VOTER-APPROVAL TAX RATE      $__________ per $100          "The no-new-revenue tax rate is the tax rate for the (current   tax year) tax year that will raise the same amount of property tax   revenue for (name of taxing unit) from the same properties in both   the (preceding tax year) tax year and the (current tax year) tax   year.          "The voter-approval tax rate is the highest tax rate that   (name of taxing unit) may adopt without holding an election to seek   voter approval of the rate.          "The proposed tax rate is greater than the no-new-revenue tax   rate. This means that (name of taxing unit) is proposing to   increase property taxes for the (current tax year) tax year.          "A public hearing on the proposed tax rate will be held on   (date and time) at (meeting place).          "The proposed tax rate is also greater than the   voter-approval tax rate. If (name of taxing unit) adopts the   proposed tax rate, (name of taxing unit) is required to hold an   election so that the voters may accept or reject the proposed tax   rate. Unless at least two-thirds [If a majority] of the registered    voters in the taxing unit accept [reject] the proposed tax rate, the   tax rate of the (name of taxing unit) will be the voter-approval tax   rate. The election will be held on (date of election). You may   contact the (name of office responsible for administering the   election) for information about voting locations. The hours of   voting on election day are (voting hours).          "Your taxes owed under any of the tax rates mentioned above   can be calculated as follows:          "Property tax amount = tax rate x taxable value of your   property / 100          "(Names of all members of the governing body, showing how   each voted on the proposal to consider the tax increase or, if one   or more were absent, indicating the absences.)          "Visit Texas.gov/PropertyTaxes to find a link to your local   property tax database on which you can easily access information   regarding your property taxes, including information about   proposed tax rates and scheduled public hearings of each entity   that taxes your property.          "The 86th Texas Legislature modified the manner in which the   voter-approval tax rate is calculated to limit the rate of growth of   property taxes in the state."          (b-3)  If the proposed tax rate does not exceed the   no-new-revenue tax rate but exceeds the voter-approval tax rate of   the taxing unit, the notice must contain a statement in the   following form:   "NOTICE OF PUBLIC HEARING ON TAX RATE          "PROPOSED TAX RATE            $__________ per $100          "NO-NEW-REVENUE TAX RATE      $__________ per $100          "VOTER-APPROVAL TAX RATE      $__________ per $100          "The no-new-revenue tax rate is the tax rate for the (current   tax year) tax year that will raise the same amount of property tax   revenue for (name of taxing unit) from the same properties in both   the (preceding tax year) tax year and the (current tax year) tax   year.          "The voter-approval tax rate is the highest tax rate that   (name of taxing unit) may adopt without holding an election to seek   voter approval of the rate.          "The proposed tax rate is not greater than the no-new-revenue   tax rate. This means that (name of taxing unit) is not proposing to   increase property taxes for the (current tax year) tax year.          "A public hearing on the proposed tax rate will be held on   (date and time) at (meeting place).          "The proposed tax rate is greater than the voter-approval tax   rate. If (name of taxing unit) adopts the proposed tax rate, (name   of taxing unit) is required to hold an election so that the voters   may accept or reject the proposed tax rate. Unless at least   two-thirds [If a majority] of the registered voters in the taxing   unit accept [reject] the proposed tax rate, the tax rate of the   (name of taxing unit) will be the voter-approval tax rate. The   election will be held on (date of election). You may contact the   (name of office responsible for administering the election) for   information about voting locations. The hours of voting on   election day are (voting hours).          "Your taxes owed under any of the tax rates mentioned above   can be calculated as follows:          "Property tax amount = tax rate x taxable value of your   property / 100          "(Names of all members of the governing body, showing how   each voted on the proposal to consider the tax rate or, if one or   more were absent, indicating the absences.)          "Visit Texas.gov/PropertyTaxes to find a link to your local   property tax database on which you can easily access information   regarding your property taxes, including information about   proposed tax rates and scheduled public hearings of each entity   that taxes your property.          "The 86th Texas Legislature modified the manner in which the   voter-approval tax rate is calculated to limit the rate of growth of   property taxes in the state."          SECTION 2.09.  Section 26.07(d), Tax Code, is amended to   read as follows:          (d)  If at least two-thirds [a majority] of the registered   voters in the taxing unit cast a vote in [votes cast in the   election] favor of the proposition, the tax rate for the current   year is the rate that was adopted by the governing body.          SECTION 2.10.  Sections 31.12(a) and (c), Tax Code, as   amended by S.B. 850, Acts of the 89th Legislature, Regular Session,   2025, as effective September 1, 2025, are amended to read as   follows:          (a)  A refund of a tax provided by Section 11.35(j),   11.431(b), 11.436(b), 11.438(c), 11.439(b), 23.1243(d), 23.48(d),   23.60(d), 26.05(e), 26.07(g), [26.075(k),] 26.08(d-2), 26.1115(c),   26.112(b), 26.1125(b), 26.1127(b), 26.15(f), 31.061(e), 31.071(c),   31.11, 31.111, or 31.112(c)(3) must be paid not later than the 60th   day after the date the liability for the refund arises as determined   under this section.          (c)  For purposes of this section, liability for a refund   arises:                (1)  if the refund is required by Section 11.35(j), on   the date the collector for the taxing unit learns the refund is   required;                (2)  if the refund is required by Section 11.431(b),   11.436(b), 11.438(c), or 11.439(b), on the date the chief appraiser   notifies the collector for the taxing unit of the approval of the   applicable exemption;                (3)  if the refund is required by Section 23.1243(d),   on the date the chief appraiser notifies the collector for the   taxing unit of the amount of tax to be refunded;                (4)  if the refund is required by Section 23.48(d),   23.60(d), 26.1115(c), 26.112(b), 26.1125(b), or 26.1127(b), on the   date the assessor notifies the collector for the taxing unit of the   decrease in the person's tax liability;                (5)  if the refund is required by Section 26.05(e), on   the date the action to enjoin the collection of taxes imposed by the   taxing unit is finally determined;                (6)  if the refund is required by Section 26.07(g)[, or   26.075(k),] or 26.08(d-2), on the date the assessor for the taxing   unit mails the corrected tax bills under Section 26.07(f)[,   26.075(j),] or 26.08(d-1), as applicable;                (7)  if the refund is required by Section 26.15(f):                      (A)  for a correction to the tax roll made under   Section 26.15(b), on the date the change in the tax roll is   certified to the assessor for the taxing unit under Section 25.25;   or                      (B)  for a correction to the tax roll made under   Section 26.15(c), on the date the change in the tax roll is ordered   by the governing body of the taxing unit;                (8)  if the refund is required by Section 31.061(e), on   the date the taxing unit determines that the amount credited under   Section 31.061(d) exceeds the amount due to the taxing unit;                (9)  if the refund is required by Section 31.071(c), on   the date the challenge, protest, or appeal is finally determined;                (10)  if the refund is required by Section 31.11, on the   date the auditor for the taxing unit determines that the payment was   erroneous or excessive;                (11)  if the refund is required by Section 31.111, on   the date the collector for the taxing unit determines that the   payment was erroneous; or                (12)  if the refund is required by Section   31.112(c)(3), on the date the agreement described by Section   31.112(c) is made.          SECTION 2.11.  Section 33.08(b), Tax Code, is amended to   read as follows:          (b)  The governing body of the taxing unit or appraisal   district, in the manner required by law for official action, may   provide that taxes that become delinquent on or after June 1 under   Section [26.075(j),] 26.15(e), 31.03, 31.031, 31.032, 31.033,   31.04, or 42.42 incur an additional penalty to defray costs of   collection.  The amount of the penalty may not exceed the amount of   the compensation specified in the applicable contract with an   attorney under Section 6.30 to be paid in connection with the   collection of the delinquent taxes.          SECTION 2.12.  Section 49.107(g), Water Code, is amended to   read as follows:          (g)  Sections 26.04, [26.042,] 26.05, 26.061, and 26.07,   [and 26.075,] Tax Code, do not apply to a tax levied and collected   under this section or an ad valorem tax levied and collected for the   payment of the interest on and principal of bonds issued by a   district.          SECTION 2.13.  Section 49.108(f), Water Code, is amended to   read as follows:          (f)  Sections 26.04, [26.042,] 26.05, 26.061, and 26.07,   [and 26.075,] Tax Code, do not apply to a tax levied and collected   for payments made under a contract approved in accordance with this   section.          SECTION 2.14.  Section 49.236(a), Water Code, is amended to   read as follows:          (a)  Before the board adopts an ad valorem tax rate for the   district for debt service, operation and maintenance purposes, or   contract purposes, the board shall give notice of each meeting of   the board at which the adoption of a tax rate will be considered.     The notice must:                (1)  contain a statement in substantially the following   form:   "NOTICE OF PUBLIC HEARING ON TAX RATE          "The (name of the district) will hold a public hearing on a   proposed tax rate for the tax year (year of tax levy) on (date and   time) at (meeting place).  Your individual taxes may increase at a   greater or lesser rate, or even decrease, depending on the tax rate   that is adopted and on the change in the taxable value of your   property in relation to the change in taxable value of all other   property.  The change in the taxable value of your property in   relation to the change in the taxable value of all other property   determines the distribution of the tax burden among all property   owners.          "Visit Texas.gov/PropertyTaxes to find a link to your local   property tax database on which you can easily access information   regarding your property taxes, including information about   proposed tax rates and scheduled public hearings of each entity   that taxes your property.          "(Names of all board members and, if a vote was taken, an   indication of how each voted on the proposed tax rate and an   indication of any absences.)";                (2)  contain the following information:                      (A)  the district's total adopted tax rate for the   preceding year and the proposed tax rate, expressed as an amount per   $100;                      (B)  the difference, expressed as an amount per   $100 and as a percent increase or decrease, as applicable, in the   proposed tax rate compared to the adopted tax rate for the preceding   year;                      (C)  the average appraised value of a residence   homestead in the district in the preceding year and in the current   year; the district's total homestead exemption, other than an   exemption available only to disabled persons or persons 65 years of   age or older, applicable to that appraised value in each of those   years; and the average taxable value of a residence homestead in the   district in each of those years, disregarding any homestead   exemption available only to disabled persons or persons 65 years of   age or older;                      (D)  the amount of tax that would have been   imposed by the district in the preceding year on a residence   homestead appraised at the average appraised value of a residence   homestead in that year, disregarding any homestead exemption   available only to disabled persons or persons 65 years of age or   older;                      (E)  the amount of tax that would be imposed by the   district in the current year on a residence homestead appraised at   the average appraised value of a residence homestead in that year,   disregarding any homestead exemption available only to disabled   persons or persons 65 years of age or older, if the proposed tax   rate is adopted;                      (F)  the difference between the amounts of tax   calculated under Paragraphs (D) and (E), expressed in dollars and   cents and described as the annual percentage increase or decrease,   as applicable, in the tax to be imposed by the district on the   average residence homestead in the district in the current year if   the proposed tax rate is adopted; and                      (G)  if the proposed combined debt service,   operation and maintenance, and contract tax rate requires or   authorizes an election to approve or reduce the tax rate, as   applicable, a description of the purpose of the proposed tax   increase;                (3)  contain a statement in substantially the following   form, as applicable:                      (A)  if the district is a district described by   Section 49.23601:   "NOTICE OF VOTE ON TAX RATE          "If the district adopts a combined debt service, operation   and maintenance, and contract tax rate that would result in the   taxes on the average residence homestead increasing by more than   six [eight] percent, an election must be held to determine whether   to approve the operation and maintenance tax rate under Section   49.23601, Water Code.";                      (B)  if the district is a district described by   Section 49.23602:   "NOTICE OF VOTE ON TAX RATE          "If the district adopts a combined debt service, operation   and maintenance, and contract tax rate that would result in the   taxes on the average residence homestead increasing by more than   two [3.5] percent, an election must be held to determine whether to   approve the operation and maintenance tax rate under Section   49.23602, Water Code."; or                      (C)  if the district is a district described by   Section 49.23603:   "NOTICE OF TAXPAYERS' RIGHT TO ELECTION TO REDUCE TAX RATE          "If the district adopts a combined debt service, operation   and maintenance, and contract tax rate that would result in the   taxes on the average residence homestead increasing by more than   six [eight] percent, the qualified voters of the district by   petition may require that an election be held to determine whether   to reduce the operation and maintenance tax rate to the   voter-approval tax rate under Section 49.23603, Water Code."; and                (4)  include the following statement: "The 86th Texas   Legislature modified the manner in which the voter-approval tax   rate is calculated to limit the rate of growth of property taxes in   the state.".          SECTION 2.15.  Sections 49.23601(a) and (c), Water Code, are   amended to read as follows:          (a)  In this section, "voter-approval tax rate" means the   rate equal to the sum of the following tax rates for the district:                (1)  the current year's debt service tax rate;                (2)  the current year's contract tax rate; and                (3)  the operation and maintenance tax rate that would   impose 1.06 [1.08] times the amount of the operation and   maintenance tax imposed by the district in the preceding year on a   residence homestead appraised at the average appraised value of a   residence homestead in the district in that year, disregarding any   homestead exemption available only to disabled persons or persons   65 years of age or older.          (c)  If the board of a district adopts a combined debt   service, contract, and operation and maintenance tax rate that   would impose more than 1.06 [1.08] times the amount of tax imposed   by the district in the preceding year on a residence homestead   appraised at the average appraised value of a residence homestead   in the district in that year, disregarding any homestead exemption   available only to disabled persons or persons 65 years of age or   older, an election must be held in accordance with the procedures   provided by Sections 26.07(c)-(g), Tax Code, to determine whether   to approve the adopted tax rate.  If the adopted tax rate is not   approved at the election, the district's tax rate is the   voter-approval tax rate.          SECTION 2.16.  Sections 49.23602(a)(2) and (4), Water Code,   are amended to read as follows:                (2)  "Mandatory tax election rate" means the rate   [equal to the sum of the following tax rates for the district:                      [(A)  the rate] that would impose 1.02 [1.035]   times the amount of tax imposed by the district in the preceding   year on a residence homestead appraised at the average appraised   value of a residence homestead in the district in that year,   disregarding any homestead exemption available only to disabled   persons or persons 65 years of age or older[; and                      [(B)  the unused increment rate].                (4)  "Voter-approval tax rate" means the rate equal to   the sum of the following tax rates for the district:                      (A)  the current year's debt service tax rate;                      (B)  the current year's contract tax rate; and                      (C)  the operation and maintenance tax rate that   would impose 1.02 [1.035] times the amount of the operation and   maintenance tax imposed by the district in the preceding year on a   residence homestead appraised at the average appraised value of a   residence homestead in the district in that year, disregarding any   homestead exemption available only to disabled persons or persons   65 years of age or older[; and                      [(D)  the unused increment rate].          SECTION 2.17.  Sections 49.23603(a) and (c), Water Code, are   amended to read as follows:          (a)  In this section, "voter-approval tax rate" means the   rate equal to the sum of the following tax rates for the district:                (1)  the current year's debt service tax rate;                (2)  the current year's contract tax rate; and                (3)  the operation and maintenance tax rate that would   impose 1.06 [1.08] times the amount of the operation and   maintenance tax imposed by the district in the preceding year on a   residence homestead appraised at the average appraised value of a   residence homestead in the district in that year, disregarding any   homestead exemption available only to disabled persons or persons   65 years of age or older.          (c)  If the board of a district adopts a combined debt   service, contract, and operation and maintenance tax rate that   would impose more than 1.06 [1.08] times the amount of tax imposed   by the district in the preceding year on a residence homestead   appraised at the average appraised value of a residence homestead   in the district in that year, disregarding any homestead exemption   available only to disabled persons or persons 65 years of age or   older, the qualified voters of the district by petition may require   that an election be held to determine whether to reduce the tax rate   adopted for the current year to the voter-approval tax rate in   accordance with the procedures provided by Section [Sections 26.075   and] 26.081, Tax Code.          SECTION 2.18.  The following provisions are repealed:                (1)  Section 45.0032(d), Education Code;                (2)  Section 120.007(d), Local Government Code;                (3)  Section 26.012(8-a), Tax Code;                (4)  Section 26.013, Tax Code;                (5)  Section 26.042, Tax Code;                (6)  Section 26.0501(c), Tax Code;                (7)  Section 26.063, Tax Code;                (8)  Section 26.075, Tax Code; and                (9)  Section 49.23602(a)(3), Water Code.   ARTICLE 3. TRANSITION AND EFFECTIVE DATE          SECTION 3.01.  Section 140.015, Local Government Code, as   added by this Act, applies only to a fiscal year of a political   subdivision that begins on or after January 1, 2026.          SECTION 3.02.  As soon as practicable after the effective   date of this Act, the comptroller of public accounts shall   prescribe a form for the publication of the information required by   Section 140.015(d), Local Government Code, as added by this Act.          SECTION 3.03.  The changes in law made by Article 2 of this   Act apply only to ad valorem taxes imposed for an ad valorem tax   year that begins on or after the effective date of this Act.          SECTION 3.04.  This Act takes effect February 1, 2026.