Here are excerpts that explain how Jersey Village Property Tax Rates would be affected by keeping the “Sales Tax for Property Tax Relief Fund” in place. This document explains the controls that the Texas Legislature placed on cities like Jersey Village in an effort to control the property tax increases that residents have been seeing over the last several years. Jersey Village Residents voted to approve the half-cent in sales tax to go into this fund for the money to be used by the city to lower property taxes back in 1995. The Fire Control District Proposition is being used, if approved by the voters, to eliminate “Sales Tax for Property Tax Relief Fund”. The impact to the residents is that it eliminates the controls that The State of Texas put into law to force a vote by the residents when the effective tax rate exceeds the new state limits. The elimination of this fund can allow Jersey Village City Council to in effect set property tax rates higher without a vote by the residents.
Please read and understand that a lot of information about the impact of this proposition has been withheld from you by the city.
Senate Bill 2 – Explanatory Q&A
Prepared by TML Staff
Questions? Contact Bill Longley, Legislative Counsel, at [email protected]
Last Updated January 20, 2020
Senate Bill 2, also known as the Texas Property Tax Reform and Transparency Act of 2019, was passed by the Texas Legislature in 2019. At its most fundamental level, S.B. 2 reforms the system of property taxation in three primary ways: (1) lowering the tax rate a taxing unit can adopt without voter approval and requiring a mandatory election to go above the lowered rate; (2) making numerous changes to the procedure by which a city adopts a tax rate; and (3) making several changes to the property tax appraisal process.
When does S.B. 2 go into effect?
The vast majority of the bill, including the new tax rate calculations, took effect on January 1, 2020. A few other provisions, including those related to the use of comptroller forms in calculating the tax rate and injunctive relief for failure to comply with statutory requirements, do not go into effect until January 1, 2021.
Are there any provisions that a city needed to comply with before January 1, 2020?
Yes, only one. Section 106 of the bill provides that, not later than 30 days after the section becomes effective, taxing units must submit to their county assessor-collectors the worksheets used by the taxing unit to calculate the effective and rollback tax rates for the 2015-2019 tax years. The county assessor-collector, in turn, must post the worksheets on the county’s website. This section took effect on the 91st day after the last day of the legislation session, at which point cities had 30 days to submit their worksheets. Thus, the deadline for cities to submit their worksheets to the county assessor-collector was September 25, 2019.
What terminology was changed?
Prior to S.B. 2, the term “effective tax rate” referred to the benchmark tax rate needed to raise the same amount of maintenance and operations property taxes on existing property as the previous year, after taking into account changes in appraised values. S.B. 2 changed the terms “effective tax rate” and “effective maintenance and operations tax rate” to “no-new-revenue tax rate” and “no-new-revenue maintenance and operations tax rate,” respectively.
Additionally, the term “rollback tax rate” was changed to “voter-approval tax rate.” More significant than the change in terminology is the modification to both the voter-approval rate 2 formula (discussed in the next question), and the requirement that cities hold automatic elections to approve tax rates exceeding the voter-approval tax rate.
How do the new tax rate calculations in S.B. 2 affect cities that have adopted the dedicated sales tax for property tax relief?
The changes made to the tax rate calculations by S.B. 2 also apply to the tax rate calculations for cities that have adopted the sales tax for property tax relief. See TEX. TAX CODE § 26.041. The sales tax for property tax relief (referred to in state statute as the “additional sales and use tax”) is designed to offset an equivalent amount of city property tax revenue by reducing a city’s voter-approval tax rate by the amount of sales tax revenue that corresponds with the portion of the sales tax rate dedicated to property tax relief. According to comptroller data4, 395 cities have adopted the sales tax for property tax relief.
The voter-approval tax rate calculation in cities that have adopted the sales tax for property tax relief contains a 3.5 percent multiplier and unused increment rate adjustment, just like the calculation for any other city. Before S.B. 2, cities with the sales tax for property tax relief were deducting sales tax revenue from a property tax rate formula that used an eight percent multiplier. Now, the baseline rate is lowered due to the 3.5 percent multiplier, and the sales tax revenue is deducted from that rate. The end result is that cities that have adopted the sales tax for property tax relief will see their voter-approval rates lowered by a greater amount than those cities without the sales tax for property tax relief.