SB1453

Regular Session

Relating to the current debt rate and tax rate of a taxing unit for ad valorem tax purposes.

ModeratePlan for compliance

Low Cost

Effective:2026-01-01

Enforcing Agencies

Comptroller of Public Accounts • Local Governing Bodies (School Boards, City Councils, Commissioners Courts)

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

Effective Date: January 1, 2026
Compliance Deadline: August 2026 (First tax rate adoption cycle under new rules).
Agency Rulemaking: The Comptroller of Public Accounts must update Truth-in-Taxation forms and website posting templates prior to the 2026 tax season. Monitor the Texas Register throughout 2025 for the definition of "minimum" debt service.

Immediate Action Plan

Municipal Advisors: Immediately audit all client debt schedules to distinguish between "mandatory" payments and "planned/prepayment" allocations.
Legal Counsel: Draft template motions for the "60% supermajority vote" required to exceed the minimum debt rate.
Commercial Property Owners: Flag the August 2026 tax season for enhanced auditing; challenge any tax rate that exceeds the minimum if the specific supermajority motion is absent from the public record.
Compliance Officers: Monitor Comptroller updates for the release of revised Truth-in-Taxation worksheets in late 2025.

Operational Changes Required

Contracts

Municipal Engagement Letters: Law firms and financial advisors serving taxing units must amend engagement letters to include the additional scope of work required for calculating "minimum" rates and drafting specific "excess revenue" motions.
Bond Covenants: While existing covenants remain valid, the interpretation of "required" payments within those covenants will now dictate the statutory tax rate cap.

Hiring/Training

Finance Officers & Counsel: Staff responsible for tax rate calculations must be trained on the new distinction between "budgeted debt service" and "statutory minimum debt service."
Board Education: School boards and city councils require training on the new voting thresholds; a simple majority is no longer sufficient to adopt a rate that allows for debt prepayment.

Reporting & Record-Keeping

Meeting Minutes: If a taxing unit seeks to collect more than the minimum, the meeting minutes must explicitly record a motion stating the purpose of the excess revenue and the specific difference in tax rates.
Website Postings: By August 7 annually, taxing units must post a debt obligation schedule reflecting the "minimum dollar amount" required, distinct from total budget figures.
Public Notices: School districts must utilize revised statutory language in the "Notice of Public Meeting to Discuss Budget and Proposed Tax Rate."

Fees & Costs

Administrative Costs: Municipalities may incur increased legal and advisory fees to ensure compliance with the stricter rate-setting formulas.
Tax Liability: Commercial property owners may realize reduced tax liabilities if taxing units fail to garner the supermajority vote required to maintain higher debt rates.

Strategic Ambiguities & Considerations

The term "minimum dollar amount required" is the primary area of regulatory risk.

Variable Rate Debt: It is unclear if the Comptroller will allow "minimum" calculations to include buffers for interest rate fluctuations.
Coverage Ratios: It is undefined whether "required" includes maintaining debt service coverage ratios mandated by bond covenants or strictly the principal/interest payment.
Risk: A narrow interpretation by the Comptroller could technically force a taxing unit into a position where they under-collect revenue, risking default. We must engage in the rulemaking process to ensure "minimum" includes contractual safety margins.

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Legislative Timeline

This bill's path through the Texas Legislature

TopicsTaxation Taxation--property-assessment & Collection Taxation--property-tax Rate

Official Analysis

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BILL ANALYSIS

Senate Research Center	S.B. 1453
89R10390 TJB-D	By: Bettencourt
	Local Government
	3/21/2025
	As Filed

AUTHOR'S / SPONSOR'S STATEMENT OF INTENT

The Interest and Sinking (I&S) tax rate declines as the total amount of debt outstanding from issuances is paid off over time.

However, the governing bodies of some taxing units elect to retire debt earlier than required. These decisions require that the taxing unit's I&S tax rate be set higher than otherwise would be required. This leads taxpayers to pay higher tax bills than they otherwise would.

S.B. 1453 seeks to amend the definition of "current debt" for purposes of calculating an I&S tax rate, to include only the minimum amount required by the bond issuances' schedules.

S.B. 1453 does permit a taxing entity to adopt an I&S rate higher than the minimum tax rate if there is a motion that:

States what the minimum I&S tax rate would be,
States the proposed rate,
States the difference between the minimum and proposed I&S tax rates,
Describes the purpose for which the excess collected from the proposed rate will be used, and
The motion is approved by at least 60 percent of the members of the governing body.

As proposed, S.B. 1453 amends current law relating to the current debt rate and tax rate of a taxing unit for ad valorem tax purposes.

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 44.004(c), Education Code, as follows:

(c) Requires that the notice of public meeting to discuss and adopt the budget and the proposed tax rate, subject to Subsection (d) (relating to the requirement that the language of the notice substantially conform to the language and format prescribed by the Comptroller of Public Accounts of the State of Texas (comptroller)) to contain certain sections, including a section entitled "Comparison of Proposed Rates with Last Year's Rates," which is required to show in rows certain tax rates, expressed as amounts per $100 valuation of property, for columns entitled "Maintenance & Operations," "Interest & Sinking Fund," and "Total," which is the sum of "Maintenance & Operations" and "Interest & Sinking Fund," including the "Rate to Maintain Same Level of Maintenance & Operations Revenue & Pay Debt Service," which, in the case of "Interest & Sinking Fund," is the tax rate that, when applied to the current taxable value for the district, as certified by the chief appraiser under Section 26.01 (Submission of Rolls to Taxing Units), Tax Code, and as adjusted and multiplied in a certain manner, would impose taxes in an amount that, when added to certain funds and taxes would provide the minimum dollar amount required to be paid to service the district's debt.

SECTION 2. Amends Section 26.012(3), Tax Code to define "current debt service."

SECTION 3. Amends Section 26.04(e), Tax Code, as follows:

(e) Requires the designated officer or employee to post prominently on the home page of the taxing unit's Internet website in the form prescribed by the comptroller certain information, including a schedule of the taxing unit's debt obligations showing the minimum dollar amount of principal and interest required to be paid, rather than the amount of principal and interest that will be paid, to service the taxing unit's debts in the next year from property tax revenue, including certain payments.

SECTION 4. Amends Section 26.05, Tax Code, by adding Subsections (a-1) and (a-2), as follows:

(a-1) Provides that the governing body of a taxing unit is authorized to approve a rate described by Subsection (a)(1) (relating to one component of tax rate calculations for a taxing unit other than a school district) that exceeds the rate for the taxing unit as determined under Subsection (a) (relating to the two components of a tax rate a governing body of each tax unit is required to calculate) only if:

(1)� the rate is proposed to be approved by a motion that states the rate determined under Subsection (a)(1), states the proposed rate, states the difference between the proposed rate and the rate determined under Subsection (a)(1), and describes the purpose for which the excess revenue collected from the proposed rate will be used; and

(2)� the motion is approved by at least 60 percent of the members of the governing body.

(a-2)� Provides that, if the governing body of a taxing unit approves a rate described by Subsection (a)(1) under Subsection (a-1) for a tax year, the rate approved under Subsection (a-1) is considered to be the current debt rate of the taxing unit for that tax year.� Requires the officer or employee designated by the governing body to calculate the voter-approval tax rate of the taxing unit under Chapter 26 (Assessment) to recalculate that rate to account for the new current debt rate, and that recalculated voter-approval tax rate is considered to be the voter-approval tax rate of the taxing unit for that tax year.

SECTION 5.� Makes application of this Act prospective.

SECTION 6.� Effective date: January 1, 2026.

Senate Authors

Sen. Paul BettencourtRepublican · Primary Author

House Sponsor

Rep. Morgan MeyerRepublican · Primary Sponsor

Bill Text(with markup)

S.B. No. 1453

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

	AN ACT
	relating to the current debt rate and tax rate of a taxing unit for
	ad valorem tax purposes.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1. Section 44.004(c), Education Code, is amended to
	read as follows:
	(c) The notice of public meeting to discuss and adopt the
	budget and the proposed tax rate may not be smaller than one-quarter
	page of a standard-size or a tabloid-size newspaper, and the
	headline on the notice must be in 18-point or larger type. Subject
	to Subsection (d), the notice must:
	(1) contain a statement in the following form:
	"NOTICE OF PUBLIC MEETING TO DISCUSS BUDGET AND PROPOSED TAX RATE
	"The (name of school district) will hold a public meeting at
	(time, date, year) in (name of room, building, physical location,
	city, state). The purpose of this meeting is to discuss the school
	district's budget that will determine the tax rate that will be
	adopted. Public participation in the discussion is invited." The
	statement of the purpose of the meeting must be in bold type. In
	reduced type, the notice must state: "The tax rate that is
	ultimately adopted at this meeting or at a separate meeting at a
	later date may not exceed the proposed rate shown below unless the
	district publishes a revised notice containing the same information
	and comparisons set out below and holds another public meeting to
	discuss the revised notice." In addition, in reduced type, the
	notice must state: "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.";
	(2) contain a section entitled "Comparison of Proposed
	Budget with Last Year's Budget," which must show the difference,
	expressed as a percent increase or decrease, as applicable, in the
	amounts budgeted for the preceding fiscal year and the amount
	budgeted for the fiscal year that begins in the current tax year for
	each of the following:
	(A) maintenance and operations;
	(B) debt service; and
	(C) total expenditures;
	(3) contain a section entitled "Total Appraised Value
	and Total Taxable Value," which must show the total appraised value
	and the total taxable value of all property and the total appraised
	value and the total taxable value of new property taxable by the
	district in the preceding tax year and the current tax year as
	calculated under Section 26.04, Tax Code;
	(4) contain a statement of the total amount of the
	outstanding and unpaid bonded indebtedness of the school district;
	(5) contain a section entitled "Comparison of Proposed
	Rates with Last Year's Rates," which must:
	(A) show in rows the tax rates described by
	Subparagraphs (i)-(iii), expressed as amounts per $100 valuation of
	property, for columns entitled "Maintenance & Operations,"
	"Interest & Sinking Fund," and "Total," which is the sum of
	"Maintenance & Operations" and "Interest & Sinking Fund":
	(i) the school district's "Last Year's
	Rate";
	(ii) the "Rate to Maintain Same Level of
	Maintenance & Operations Revenue & Pay Debt Service," which:
	(a) in the case of "Maintenance &
	Operations," is the tax rate that, when applied to the current
	taxable value for the district, as certified by the chief appraiser
	under Section 26.01, Tax Code, and as adjusted to reflect changes
	made by the chief appraiser as of the time the notice is prepared,
	would impose taxes in an amount that, when added to state funds to
	be distributed to the district under Chapter 48, would provide the
	same amount of maintenance and operations taxes and state funds
	distributed under Chapter 48 per student in average daily
	attendance for the applicable school year that was available to the
	district in the preceding school year; and
	(b) in the case of "Interest & Sinking
	Fund," is the tax rate that, when applied to the current taxable
	value for the district, as certified by the chief appraiser under
	Section 26.01, Tax Code, and as adjusted to reflect changes made by
	the chief appraiser as of the time the notice is prepared, and when
	multiplied by the district's anticipated collection rate, would
	impose taxes in an amount that, when added to state funds to be
	distributed to the district under Chapter 46 and any excess taxes
	collected to service the district's debt during the preceding tax
	year but not used for that purpose during that year, would provide
	the minimum dollar amount required to be paid to service the
	district's debt; and
	(iii) the "Proposed Rate";
	(B) contain fourth and fifth columns aligned with
	the columns required by Paragraph (A) that show, for each row
	required by Paragraph (A):
	(i) the "Local Revenue per Student," which
	is computed by multiplying the district's total taxable value of
	property, as certified by the chief appraiser for the applicable
	school year under Section 26.01, Tax Code, and as adjusted to
	reflect changes made by the chief appraiser as of the time the
	notice is prepared, by the total tax rate, and dividing the product
	by the number of students in average daily attendance in the
	district for the applicable school year; and
	(ii) the "State Revenue per Student," which
	is computed by determining the amount of state aid received or to be
	received by the district under Chapters 43, 46, and 48 and dividing
	that amount by the number of students in average daily attendance in
	the district for the applicable school year; and
	(C) contain an asterisk after each calculation
	for "Interest & Sinking Fund" and a footnote to the section that, in
	reduced type, states "The Interest & Sinking Fund tax revenue is
	used to pay for bonded indebtedness on construction, equipment, or
	both. The bonds, and the tax rate necessary to pay those bonds, were
	approved by the voters of this district.";
	(6) contain a section entitled "Comparison of Proposed
	Levy with Last Year's Levy on Average Residence," which must:
	(A) show in rows the information described by
	Subparagraphs (i)-(iv), rounded to the nearest dollar, for columns
	entitled "Last Year" and "This Year":
	(i) "Average Market Value of Residences,"
	determined using the same group of residences for each year;
	(ii) "Average Taxable Value of Residences,"
	determined after taking into account the limitation on the
	appraised value of residences under Section 23.23, Tax Code, and
	after subtracting all homestead exemptions applicable in each year,
	other than exemptions available only to disabled persons or persons
	65 years of age or older or their surviving spouses, and using the
	same group of residences for each year;
	(iii) "Last Year's Rate Versus Proposed
	Rate per $100 Value"; and
	(iv) "Taxes Due on Average Residence,"
	determined using the same group of residences for each year; and
	(B) contain the following information: "Increase
	(Decrease) in Taxes" expressed in dollars and cents, which is
	computed by subtracting the "Taxes Due on Average Residence" for
	the preceding tax year from the "Taxes Due on Average Residence" for
	the current tax year;
	(7) contain the following statement in bold print:
	"Under state law, the dollar amount of school taxes imposed on the
	residence of a person 65 years of age or older or of the surviving
	spouse of such a person, if the surviving spouse was 55 years of age
	or older when the person died, may not be increased above the amount
	paid in the first year after the person turned 65, regardless of
	changes in tax rate or property value.";
	(8) contain the following statement in bold print:
	"Notice of Voter-Approval Rate: The highest tax rate the district
	can adopt before requiring voter approval at an election is (the
	school district voter-approval rate determined under Section
	26.08, Tax Code). This election will be automatically held if the
	district adopts a rate in excess of the voter-approval rate of (the
	school district voter-approval rate)."; and
	(9) contain a section entitled "Fund Balances," which
	must include the estimated amount of interest and sinking fund
	balances and the estimated amount of maintenance and operation or
	general fund balances remaining at the end of the current fiscal
	year that are not encumbered with or by corresponding debt
	obligation, less estimated funds necessary for the operation of the
	district before the receipt of the first payment under Chapter 48 in
	the succeeding school year.
	SECTION 2. Section 26.012(3), Tax Code, is amended to read
	as follows:
	(3) "Current debt service" means the minimum dollar
	amount required to be expended for debt service for the current
	year.
	SECTION 3. Section 26.04(e), Tax Code, is amended to read as
	follows:
	(e) By August 7 or as soon thereafter as practicable, the
	designated officer or employee shall submit the rates to the
	governing body. The designated officer or employee shall post
	prominently on the home page of the taxing unit's Internet website
	in the form prescribed by the comptroller:
	(1) the no-new-revenue tax rate, the voter-approval
	tax rate, and an explanation of how they were calculated;
	(2) the estimated amount of interest and sinking fund
	balances and the estimated amount of maintenance and operation or
	general fund balances remaining at the end of the current fiscal
	year that are not encumbered with or by corresponding existing debt
	obligation; and
	(3) a schedule of the taxing unit's debt obligations
	showing:
	(A) the minimum dollar amount of principal and
	interest required to [~~that will~~] be paid to service the taxing
	unit's debts in the next year from property tax revenue, including
	payments of lawfully incurred contractual obligations providing
	security for the payment of the principal of and interest on bonds
	and other evidences of indebtedness issued on behalf of the taxing
	unit by another political subdivision and, if the taxing unit is
	created under Section 52, Article III, or Section 59, Article XVI,
	Texas Constitution, payments on debts that the taxing unit
	anticipates to incur in the next calendar year;
	(B) the amount by which taxes imposed for debt
	are to be increased because of the taxing unit's anticipated
	collection rate; and
	(C) the total of the amounts listed in Paragraphs
	(A)-(B), less any amount collected in excess of the previous year's
	anticipated collections certified as provided in Subsection (b).
	SECTION 4. Section 26.05, Tax Code, is amended by adding
	Subsections (a-1) and (a-2) to read as follows:
	(a-1) The governing body of a taxing unit may approve a rate
	described by Subsection (a)(1) that exceeds the rate for the taxing
	unit as determined under that subsection only if:
	(1) the rate is proposed to be approved by a motion
	that:
	(A) states the rate determined under Subsection
	(a)(1);
	(B) states the proposed rate;
	(C) states the difference between the proposed
	rate and the rate determined under Subsection (a)(1); and
	(D) describes the purpose for which the excess
	revenue collected from the proposed rate will be used; and
	(2) the motion is approved by at least 60 percent of
	the members of the governing body.
	(a-2) If the governing body of a taxing unit approves a rate
	described by Subsection (a)(1) under Subsection (a-1) for a tax
	year, the rate approved under Subsection (a-1) is considered to be
	the current debt rate of the taxing unit for that tax year. The
	officer or employee designated by the governing body to calculate
	the voter-approval tax rate of the taxing unit under this chapter
	shall recalculate that rate to account for the new current debt
	rate, and that recalculated voter-approval tax rate is considered
	to be the voter-approval tax rate of the taxing unit for that tax
	year.
	SECTION 5. This Act applies only to ad valorem taxes imposed
	for an ad valorem tax year that begins on or after the effective
	date of this Act.
	SECTION 6. This Act takes effect January 1, 2026.

LEGISLATIVE BUDGET BOARD
Austin, Texas

FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION


March 22, 2025

TO:	Honorable Paul Bettencourt, Chair, Senate Committee on Local Government

FROM:	Jerry McGinty, Director, Legislative Budget Board

IN RE:	SB1453 by Bettencourt (Relating to the current debt rate and tax rate of a taxing unit for ad valorem tax purposes.), As Introduced

No significant fiscal implication to the State is anticipated.

The bill would define current debt service (for the purpose of calculating the current debt rate of a taxing unit) as meaning the minimum dollar amount required to be expended for debt service for the current year.

The bill would add requirements concerning the governing body of a taxing unit and the conditions needed to approve a debt tax rate that exceeds the minimum debt tax rate for the taxing unit. If such a debt rate were to be adopted, the designated officer or employee would recalculate the voter-approval tax rate to account for the new current debt rate for that year.

The bill would amend a current law definition which now reads, “Current debt means debt service for the current year.” The result could be to require some taxing units to adopt a lower tax rate, and to continue payments of debt for a longer period, than they would under current law.

Local Government Impact

The bill could result in some taxing units being required to adopt a lower tax rate, and to continue payments of debt for a longer period, than they would under current law.

Source Agencies:

304 Comptroller of Public Accounts

LBB Staff:

JMc, SZ, SD, BRI

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Frequently Asked Questions

Common questions about SB1453

What does Texas SB1453 do?

SB1453 fundamentally restricts how local taxing units calculate property tax debt rates, mandating the use of the "minimum dollar amount required" for debt service rather than higher planned expenditures. This legislation prevents taxing units from collecting excess revenue to prepay debt without a specific public motion and a 60% supermajority vote. While this offers potential tax relief for commercial property owners, it demands an immediate overhaul of rate-setting methodologies for municipal finance advisors and bond counsel.

Who authored SB1453?

SB1453 was authored by Texas Senator Paul Bettencourt during the Regular Session.

When was SB1453 signed into law?

SB1453 was signed into law by Governor Greg Abbott on June 20, 2025.

Which agencies enforce SB1453?

SB1453 is enforced by Comptroller of Public Accounts and Local Governing Bodies (School Boards, City Councils, Commissioners Courts).

How urgent is compliance with SB1453?

The compliance urgency for SB1453 is rated as "moderate". Businesses and organizations should review the requirements and timeline to ensure timely compliance.

What is the cost impact of SB1453?

The cost impact of SB1453 is estimated as "low". This may vary based on industry and implementation requirements.

What topics does SB1453 address?

SB1453 addresses topics including taxation, taxation--property-assessment & collection and taxation--property-tax rate.

Legislative data provided by LegiScanLast updated: November 25, 2025

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