H.B. No. 5
 
AN ACT
relating to providing for a reduction of the limitation on the total
amount of ad valorem taxes that may be imposed by a school district
on the residence homesteads of the elderly or disabled to reflect
any reduction in the school district's tax rate and protecting a
school district against any resulting loss in local revenue.
       BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
       SECTION 1.  Section 11.26, Tax Code, is amended by adding
Subsections (a-1), (a-2), and (a-3) to read as follows:
       (a-1)  Notwithstanding the other provisions of this section,
if in the 2007 tax year an individual qualifies for a limitation on
tax increases provided by this section on the individual's
residence homestead and the first tax year the individual or the
individual's spouse qualified for an exemption under Section
11.13(c) for the same homestead was the 2006 tax year, the amount of
the limitation provided by this section on the homestead in the 2007
tax year is equal to the amount computed by:
             (1)  multiplying the amount of tax the school district
imposed on the homestead in the 2006 tax year by a fraction the
numerator of which is the tax rate of the district for the 2007 tax
year and the denominator of which is the tax rate of the district
for the 2006 tax year; and
             (2)  adding any tax imposed in the 2007 tax year
attributable to improvements made in the 2006 tax year as provided
by Subsection (b) to the lesser of the amount computed under
Subdivision (1) or the amount of tax the district imposed on the
homestead in the 2006 tax year.
       (a-2)  Notwithstanding the other provisions of this section,
if in the 2007 tax year an individual qualifies for a limitation on
tax increases provided by this section on the individual's
residence homestead and the first tax year the individual or the
individual's spouse qualified for an exemption under Section
11.13(c) for the same homestead was a tax year before the 2006 tax
year, the amount of the limitation provided by this section on the
homestead in the 2007 tax year is equal to the amount computed by:
             (1)  multiplying the amount of tax the school district
imposed on the homestead in the 2005 tax year by a fraction the
numerator of which is the tax rate of the district for the 2006 tax
year and the denominator of which is the tax rate of the district
for the 2005 tax year;
             (2)  adding any tax imposed in the 2006 tax year
attributable to improvements made in the 2005 tax year as provided
by Subsection (b) to the lesser of the amount computed under
Subdivision (1) or the amount of tax the district imposed on the
homestead in the 2005 tax year;
             (3)  multiplying the amount computed under Subdivision
(2) by a fraction the numerator of which is the tax rate of the
district for the 2007 tax year and the denominator of which is the
tax rate of the district for the 2006 tax year; and
             (4)  adding to the lesser of the amount computed under
Subdivision (2) or (3) any tax imposed in the 2007 tax year
attributable to improvements made in the 2006 tax year, as provided
by Subsection (b).
       (a-3)  Except as provided by Subsection (b), a limitation on
tax increases provided by this section on a residence homestead
computed under Subsection (a-1) or (a-2) continues to apply to the
homestead in subsequent tax years until the limitation expires.
       SECTION 2.  Section 42.2511(a), Education Code, is amended
to read as follows:
       (a)  Notwithstanding any other provision of this chapter, a
school district is entitled to additional state aid to the extent
that state aid under this chapter based on the determination of the
school district's taxable value of property as provided under
Subchapter M, Chapter 403, Government Code, does not fully
compensate the district for ad valorem tax revenue lost due to:
             (1)  the increase in the homestead exemption under
Section 1-b(c), Article VIII, Texas Constitution, as proposed by
H.J.R. No. 4, 75th Legislature, Regular Session, 1997, and the
additional limitation on tax increases under Section 1-b(d),
Article VIII, Texas Constitution, as proposed by H.J.R. No. 4, 75th
Legislature, Regular Session, 1997; and
             (2)  the reduction of the limitation on tax increases
to reflect any reduction in the school district tax rate as provided
by Section 11.26(a-1), (a-2), or (a-3), Tax Code, as applicable.
       SECTION 3.  Section 42.302(a-1), Education Code, is amended
to read as follows:
       (a-1)  In this section, "wealth per student" has the meaning
assigned by Section 41.001. For purposes of Subsection (a), the
dollar amount guaranteed level of state and local funds per
weighted student per cent of tax effort ("GL") for a school district
is:
             (1)  the amount of district tax revenue per weighted
student per cent of tax effort available to a district at the 88th
percentile in wealth per student, as determined by the commissioner
in cooperation with the Legislative Budget Board, for the
district's maintenance and operations tax effort equal to or less
than the rate equal to the product of the state compression
percentage, as determined under Section 42.2516, multiplied by the
maintenance and operations tax rate adopted by the district for the
2005 tax year;
             (2)  the amount of district tax revenue per weighted
student per cent of tax effort that would be available to the Austin
Independent School District, as determined by the commissioner in
cooperation with the Legislative Budget Board, if the reduction of
the limitation on tax increases as provided by Section 11.26(a-1),
(a-2), or (a-3), Tax Code, did not apply, for the first six cents by
which the district's maintenance and operations tax rate exceeds
the rate equal to the product of the state compression percentage,
as determined under Section 42.2516 and notwithstanding the
limitation on district enrichment tax rate ("DTR") under Section
42.303, multiplied by the maintenance and operations tax rate
adopted by the district for the 2005 tax year; and
             (3)  $31.95, for the district's maintenance and
operations tax effort that exceeds the amount of tax effort
described by Subdivision (2).
       SECTION 4.  Section 403.302, Government Code, is amended by
amending Subsection (j) and adding Subsection (j-1) to read as
follows:
       (j)  For purposes of Section 42.2511, Education Code, the
comptroller shall certify to the commissioner of education:
             (1)  a final value for each school district computed on
a residence homestead exemption under Section 1-b(c), Article VIII,
Texas Constitution, of $5,000; [and]
             (2)  a final value for each school district computed
on:
                   (A)  a residence homestead exemption under
Section 1-b(c), Article VIII, Texas Constitution, of $15,000; and
                   (B)  the effect of the additional limitation on
tax increases under Section 1-b(d), Article VIII, Texas
Constitution, as proposed by H.J.R. No. 4, 75th Legislature,
Regular Session, 1997; and
             (3)  a final value for each school district computed on
the effect of the reduction of the limitation on tax increases to
reflect any reduction in the school district tax rate as provided by
Section 11.26(a-1), (a-2), or (a-3), Tax Code, as applicable.
       (j-1)  For purposes of applying Subsection (j)(3) in the
2007-2008 school year, the comptroller shall compute the final
value under that subsection as if the reduction of the limitation on
tax increases to reflect any reduction in the school district tax
rate as provided by Section 11.26(a-1) or (a-2), Tax Code, as
applicable, had taken effect in the 2006 tax year. This subsection
expires September 1, 2008.
       SECTION 5.  This Act applies beginning with the tax year that
begins January 1, 2007.
       SECTION 6.  This Act takes effect on the date on which the
constitutional amendment proposed by the 80th Legislature, Regular
Session, 2007, authorizing the legislature to provide for a
reduction of the limitation on the total amount of ad valorem taxes
that may be imposed for public school purposes on the residence
homesteads of the elderly or disabled to reflect any reduction in
the rate of those taxes for the 2006 and 2007 tax years takes
effect, if that constitutional amendment is approved by the voters.
If that constitutional amendment is not approved by the voters,
this Act has no effect.
____________________________________________________________
   President of the SenateSpeaker of the House      
       I certify that H.B. No. 5 was passed by the House on March 1,
2007, by the following vote:  Yeas 143, Nays 0, 1 present, not
voting.
______________________________
Chief Clerk of the House   
       I certify that H.B. No. 5 was passed by the Senate on April
19, 2007, by the following vote:  Yeas 30, Nays 0.
______________________________
Secretary of the Senate    
APPROVED:  _____________________
APPROVED:  _____________________
                   Date          
 
 
          _____________________
                 Governor