HB698 - Relating to the abolition of ad valorem taxes and the creation of a joint interim committee on the abolition of those taxes.

      By: Harrison H.B. No. 698       A BILL TO BE ENTITLED   AN ACT   relating to the abolition of ad valorem taxes and the creation of a   joint interim committee on the abolition of those taxes.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  (a)  In this section, "committee" means the joint   interim committee on the abolition of ad valorem taxes.          (b)  The joint interim committee on the abolition of ad   valorem taxes is composed of:                (1)  five members of the house of representatives   appointed by the speaker of the house of representatives; and                (2)  five senators appointed by the lieutenant   governor.          (c)  The speaker of the house of representatives and the   lieutenant governor shall make the appointments under Subsection   (b) of this section not later than February 1, 2026.          (d)  The speaker of the house of representatives and the   lieutenant governor shall each designate a co-chair from among the   committee members.          (e)  The committee shall convene at the joint call of the   co-chairs.          (f)  The committee has all other powers and duties provided   to a special or select committee by the rules of the senate and   house of representatives, by Subchapter B, Chapter 301, Government   Code, and by policies of the senate and house committees on   administration.          (g)  The committee shall conduct a comprehensive study to   determine how to replace local tax revenue that will be lost when ad   valorem taxes are abolished with local sales and use tax revenue.          (h)  The committee shall:                (1)  consider whether political subdivisions that   currently impose ad valorem taxes would have the authority to   impose sales and use taxes;                (2)  determine the average sales and use tax rate for   each type of political subdivision that would be necessary to   generate the same amount of tax revenue as the amount of tax revenue   lost as a result of the abolition of ad valorem taxes;                (3)  determine, if appropriate, the effect that   broadening the application of sales and use taxes at the local level   would have on the tax rates identified under Subdivision (2) of this   subsection;                (4)  identify whether tax revenue generated by sales   and use taxes would require redistribution to offset disparities in   available local tax revenue as a result of the abolition of ad   valorem taxes and, if so, evaluate the different mechanisms of   redistribution available; and                (5)  identify and examine any other issue that would   need to be addressed to implement the abolition of ad valorem taxes.          (i)  On request of the committee, a state agency or political   subdivision shall provide information for and assistance in   conducting the study under this section.          (j)  Not later than December 1, 2026, the committee shall   prepare and submit to the legislature a written report containing   the results of the study and any recommendations for legislative or   other action.          (k)  The committee is abolished and this section expires   January 1, 2027.          SECTION 2.  (a)  Title 1, Tax Code, is repealed.          (b)  Notwithstanding any other law, this state or a political   subdivision of this state may not impose an ad valorem tax.  To the   extent of a conflict, this section controls over a conflicting   provision in a general or special law.          (c)  The change in law made by this section does not affect   tax liability accruing before January 1, 2031.  That liability   continues in effect as if this section had not been enacted, and the   former law is continued in effect for the collection of taxes due   and for civil and criminal enforcement of the liability for those   taxes.          SECTION 3.  (a)  This Act takes effect as provided by   Subsections (b) and (c) of this section, but only if the   constitutional amendment proposed by the 89th Legislature, Regular   Session, 2025, to abolish ad valorem taxes is approved by the   voters.  If that amendment is not approved by the voters, this Act   has no effect.          (b)  This section and Section 1 of this Act take effect   January 1, 2026.          (c)  Section 2 of this Act takes effect January 1, 2031.