87R9991 TYPED     By: Goldman H.B. No. 1900       A BILL TO BE ENTITLED   AN ACT   relating to municipalities and counties that adopt budgets that   defund law enforcement agencies.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:   ARTICLE 1. DEFUNDING LOCAL GOVERNMENTS          SECTION 1.01.  Chapter 140, Local Government Code, is   amended by adding Section 140.013 to read as follows:          Sec. 140.013.  DEFUNDING LOCAL GOVERNMENT. (a) A defunding   local government is a municipality or county:                (1)  that adopts a budget for a fiscal year that, in   comparison to the local government's preceding fiscal year,   reduces:                      (A)  the appropriation to the local government's   law enforcement agency;                      (B)  the number of peace officers the local   government's law enforcement agency is authorized to employ;                      (C)  funding for peace officer overtime   compensation for the local government's law enforcement agency; or                      (D)  funding for the recruitment and training of   new peace officers to fill each vacant peace officer position in the   local government's law enforcement agency; and                (2)  for which the criminal justice division of the   governor's office issues a written determination finding that the   local government has taken an action described by Subdivision (1).          (a-1)  In making a determination of whether a local   government is a defunding local government according to the budget   adopted for the first fiscal year beginning on or after September 1,   2021, the criminal justice division of the governor's office shall   compare the funding and personnel in that budget to the funding and   personnel in the budget of the preceding fiscal year or the second   preceding fiscal year, whichever is greater. This subsection   expires September 1, 2023.          (b)  A local government is considered to be a defunding local   government until the criminal justice division of the governor's   office issues a written determination finding that the local   government has reversed the reductions, adjusted for inflation,   described in Subsection (a)(1).          (c)  The criminal justice division of the governor's office   shall:                (1)  compute the inflation rate used to make   determinations under Subsection (b) each state fiscal year using a   price index that accurately reports changes in the purchasing power   of the dollar for local governments in this state; and                (2)  publish the inflation rate in the Texas Register.   ARTICLE 2. ANNEXATION BY AND DISANNEXATION FROM DEFUNDING   MUNICIPALITIES          SECTION 2.01.  Subchapter Z, Chapter 42, Local Government   Code, is amended by adding Section 42.905 to read as follows:          Sec. 42.905.  EFFECT OF DISANNEXATION FROM DEFUNDING   MUNICIPALITY. (a) For purposes of this section, a "defunding   municipality" means a home-rule municipality that is a defunding   local government under Section 140.013.          (b)  If an area is disannexed from a defunding municipality   as a result of an election required to be held under Section   43.1465, the area is released from the defunding municipality's   extraterritorial jurisdiction and is not included in any other   municipality's extraterritorial jurisdiction.          (c)  A resident in the area may file with a municipality that   is eligible to include the area in its extraterritorial   jurisdiction under this chapter a petition for the area to become a   part of the municipality's extraterritorial jurisdiction. The   petition must:                (1)  comply with Chapter 277, Election Code;                (2)  be signed by more than 50 percent of the registered   voters of the area described by the petition as of the preceding   uniform election date;                (3)  satisfy the signature requirement described by   Subdivision (2) not later than the 180th day after the date the   first signature for the petition is obtained; and                (4)  include a map of and describe the area.          (d)  Except as provided by Subsection (e), on receipt of a   valid petition and if the area has not already been included in the   extraterritorial jurisdiction of another municipality, the   municipality may by ordinance include the area in its   extraterritorial jurisdiction.          (e)  If the municipality receiving a petition under this   section is the defunding municipality that disannexed the area as   described by Subsection (b), the defunding municipality may include   the area in the defunding municipality's extraterritorial   jurisdiction under this section only if the inclusion is approved   by a majority of votes in an election on the issue held in the area.          (f)  If the area is not included in a municipality's   extraterritorial jurisdiction on or after the second anniversary of   the date that the area was disannexed as described by Subsection   (b), a municipality, other than the defunding municipality that   disannexed the area, that is eligible to include the area in its   extraterritorial jurisdiction under this chapter may by ordinance   include the area in its extraterritorial jurisdiction without the   consent of the area.          SECTION 2.02.  Subchapter A, Chapter 43, Local Government   Code, is amended by adding Section 43.004 to read as follows:          Sec. 43.004.  ANNEXATION BY DEFUNDING MUNICIPALITY   PROHIBITED. (a) For purposes of this section, a "defunding   municipality" means a home-rule municipality that is a defunding   local government under Section 140.013.          (b)  A defunding municipality may not annex an area during   the period beginning on the date that the criminal justice division   of the governor's office issues the written determination that the   municipality is a defunding local government and ending on the 10th   anniversary of the date on which the criminal justice division of   the governor's office issues a written determination in accordance   with Section 140.013(b) finding that the defunding municipality has   reversed the reductions described by Section 140.013(a)(1).          SECTION 2.03.  Subchapter G, Chapter 43, Local Government   Code, is amended by adding Section 43.1465 to read as follows:          Sec. 43.1465.  DISANNEXATION FROM DEFUNDING MUNICIPALITY.   (a) For purposes of this section, a "defunding municipality" means   a home-rule municipality that is a defunding local government under   Section 140.013.          (b)  On the next uniform election date that occurs after the   date on which the criminal justice division of the governor's   office issues a written determination that a municipality is a   defunding local government and the time required by Section 3.005,   Election Code, the defunding municipality shall hold a separate   election in each area annexed in the preceding 30 years by the   defunding municipality on the question of disannexing the area.          (c)  The defunding municipality shall immediately by   ordinance disannex an area for which a majority of the votes   received in the election held under Subsection (b) favor   disannexation.          (d)  If an area is disannexed under Subsection (c), the   defunding municipality may not attempt to annex the area before the   10th anniversary of the date on which the criminal justice division   of the governor's office issues a written determination in   accordance with Section 140.013(b) finding that the defunding   municipality has reversed the reductions described by Section   140.013(a)(1).          (e)  A defunding municipality holding an election under   Subsection (b) may not use public funds on informational campaigns   relating to the election.   ARTICLE 3. TAX REVENUE AND DEFUNDING LOCAL GOVERNMENTS          SECTION 3.01.  Chapter 26, Tax Code, is amended by adding   Section 26.0501 to read as follows:          Sec. 26.0501.  LIMITATION ON TAX RATE OF DEFUNDING TAXING   UNIT. (a) For purposes of this section, a "defunding taxing unit"   means a county or municipality that is a defunding local government   under Section 140.013, Local Government Code.          (b)  Notwithstanding any other provision of this chapter or   other law, the governing body of a defunding taxing unit may not   adopt a tax rate for the current tax year that exceeds the lesser of   the defunding taxing unit's no-new-revenue tax rate or   voter-approval tax rate for that tax year.          (c)  For purposes of making the calculation required under   Section 26.013, in a tax year in which a county or municipality is a   defunding taxing unit, the difference between the taxing unit's   actual tax rate and voter-approval tax rate is considered to be   zero.          (d)  A county or municipality is no longer considered to be a   defunding taxing unit for purposes of this section in the first tax   year for which the criminal justice division of the governor's   office issues a written determination in accordance with Section   140.013(b), Local Government Code, finding that the county or   municipality has reversed the reductions described by Section   140.013(a)(1), Local Government Code.          SECTION 3.02.  Subchapter F, Chapter 321, Tax Code, is   amended by adding Section 321.5025 to read as follows:          Sec. 321.5025.  DISTRIBUTION OF TRUST FUNDS TO DEFUNDING   MUNICIPALITY. (a) For purposes of this section, a "defunding   municipality" means a municipality that is a defunding local   government under Section 140.013, Local Government Code.          (b)  Notwithstanding Section 321.502, the comptroller may   not, before July 1 of each state fiscal year, send to a defunding   municipality its share of the taxes collected by the comptroller   under this chapter during the state fiscal year. Before sending the   defunding municipality its share of the taxes, the comptroller   shall deduct the amount reported to the comptroller for the   defunding municipality under Subsection (c) and credit that   deducted amount to the general revenue fund. Money credited to the   general revenue fund under this subsection may be appropriated only   to the Department of Public Safety.          (c)  Not later than August 1 of each state fiscal year, the   criminal justice division of the governor's office shall report to   the comptroller for each defunding municipality the amount of money   the state spent in that state fiscal year to provide law enforcement   services in that defunding municipality.          (d)  A municipality is no longer considered to be a defunding   municipality for purposes of this section when the criminal justice   division of the governor's office issues a written determination in   accordance with Section 140.013(b), Local Government Code, finding   that the municipality has reversed the reductions described by   Section 140.013(a)(1), Local Government Code.   ARTICLE 4. MUNICIPALLY OWNED UTILITIES IN DEFUNDING MUNICIPALITIES          SECTION 4.01.  Subchapter B, Chapter 33, Utilities Code, is   amended by adding Section 33.0211 to read as follows:          Sec. 33.0211.  RATES AND FEES CHARGED BY CERTAIN MUNICIPALLY   OWNED UTILITIES. (a) This section applies only to a municipally   owned utility that is located in a municipality that is a defunding   local government under Section 140.013, Local Government Code.          (b)  The governing body of a municipally owned utility may   not charge a customer:                (1)  at a rate higher than the rate the customer was   charged or would have been charged on January 1 of the year that the   municipality was determined to be a defunding local government;                (2)  any customer fees in amounts higher than the   customer fees the customer was charged or would have been charged on   January 1 of the year that the municipality was determined to be a   defunding local government; or                (3)  any types of customer fees that the customer was   not charged or would not have been charged on January 1 of the year   that the municipality was determined to be a defunding local   government.   ARTICLE 5. TRANSITION PROVISIONS; EFFECTIVE DATE          SECTION 5.01.  Section 140.013, Local Government Code, as   added by this Act, applies only to the adoption of a budget by a   municipality or county for a fiscal year that begins on or after the   effective date of this Act.          SECTION 5.02.  Section 26.0501, Tax Code, as added by this   Act, applies beginning with the 2021 tax year.          SECTION 5.03.  Section 321.5025, Tax Code, as added by this   Act, applies only to a distribution of municipal sales and use tax   revenue to a municipality in a state fiscal year that begins on or   after the effective date of this Act.          SECTION 5.04.  (a) Section 33.0211, Utilities Code, as   added by this Act, applies only to a proceeding for the   establishment of rates for which the governing body of a   municipally owned utility has not issued a final order or decision   before the effective date of this Act.          (b)  A proceeding for which the governing body of a   municipally owned utility has issued a final order or decision   before the effective date of this Act is governed by the law in   effect immediately before that date, and that law is continued in   effect for that purpose.          SECTION 5.05.  This Act takes effect September 1, 2021.