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Senate Bill 2 to limit most taxing units to 3.5% growth in 2020 or trigger rollback election
By Allen Rich
Aug 6, 2019
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Fannin County, Texas -- Beginning in 2020, Senate Bill 2 will require voters to give their approval before cities, counties and other taxing units could raise 3.5% more property tax revenue than during the previous year. The bill dictates that community colleges and hospital districts must hold an election before surpassing 8% property tax revenue growth.

First of all, it is important to note that this formula will only apply to revenue generated by existing property, which exempts property that has gone onto tax rolls during the current fiscal year (Sept. 1-Sept. 1).

School districts fall under the provisions of House Bill 3, which the authors designed to lower school tax rates by an average of 8 cents per $100 valuation in 2020 and 13 cents in 2021.

Since the '80s, taxing units have been able experience up to 8% growth in property tax revenue growth before taxpayers could call for a rollback election and it requires a petition containing 7% of the registered voters of the taxing unit to trigger a rollback election if the tax rate adopted for the current tax year would impose taxes for maintenance and operations in an amount of at least $5 million; or 10% of the number of registered voters of the taxing unit according to the most recent list of registered voters if the tax rate adopted for the current tax year would impose taxes for maintenance and operations in an amount of less than $5 million.

Senate Bill 2 is tax reform legislation that will limit taxing units to 3.5% growth in property tax revenue and if the 3.5% benchmark is exceeded, it will automatically trigger a rollback election.

A noteworthy exception is that tax districts will be allowed to raise $500,000 without having to hold an election, as long as that increase does not exceed 8% revenue growth.

The Senate Bill 2 rollback procedures are not in effect for the 2019 fiscal year, but will take effect for the 2020 tax year.

So, for this coming fiscal year, taxing units are still allowed up to 8% growth in property tax revenue before facing a possible rollback election.

Typically, it will be late September before the data is in place to determine a taxing unit's percentage of growth in property tax revenue.

If a taxing unit's percentage of growth in property tax revenue is greater than 8% this year, the taxing unit would risk a rollback election whereby the voters can petition an election to challenge the adopted rate.  If the election is successful, the rate reverts to the rollback rate.

Beginning in FY 2020, if a taxing unit's percentage of growth in property tax revenue is greater than 3.5%, a rollback election will occur automatically, with no need for a petition.

Also beginning next year, some of the terms will change; the "effective rate" will become the "no-new revenue rate" and the "rollback rate" will be known as the "voter-approval tax rate."

The voter-approval tax rate will be the no-new revenue rate plus 3.5%.  Any rate adopted beyond that threshold will automatically generate an election for the voters to approve or reject. 

There will also be a new website that taxpayers can view to see the impact of all of these rates as the rate relates to their property.