Relating to restrictions on the use of certain ad valorem tax revenue for the payment of public securities.
Summary
SB 2519 restricts how certain local property tax revenues may be used to pay public debt. Specifically, it prohibits a taxing unit from using the increase in maintenance and operations tax revenue generated by a Chapter 26 tax rate election to repay public securities, whether directly or through transfers to a local government corporation. The bill also amends Chapter 1253 of the Government Code to clarify that municipalities, counties, and local government corporations may not dedicate, pledge, or otherwise use revenue subject to annual appropriation and derived wholly or partly from ad valorem taxes approved under Chapter 26 for payment of a public security.
The bill narrows the financing options available to local governments by separating voter-approved ad valorem tax revenue from debt service obligations on public securities. It applies only to public securities issued on or after the bill’s effective date, leaving existing securities unaffected. The measure takes effect immediately if it receives a two-thirds vote in each chamber; otherwise, it becomes effective September 1, 2025.
Impact
SB 2519 would amend the Tax Code and Government Code to limit the use of certain voter-approved property tax revenue for debt repayment. It would prevent municipalities, counties, and local government corporations from pledging or transferring Chapter 26 election-generated ad valorem tax revenue to secure or pay public securities, thereby affecting how local entities structure financing arrangements and debt service plans for future issuances.
Sentiment
The bill appears to have generally advanced with support in the Senate, clearing major procedural votes and moving through the House committee process to Calendars. The recorded Senate votes show meaningful but not overwhelming opposition, suggesting the measure was supported by a majority but not unanimously. No committee transcript was provided, so the available record indicates a generally favorable posture toward the bill with some resistance.
Contention
The main point of contention is the restriction on local government financing flexibility. Supporters likely view the bill as preventing the diversion or encumbrance of voter-approved maintenance and operations tax revenue for debt service, while opponents may be concerned that it limits municipalities, counties, and local government corporations from using a common revenue source to support public securities. The debate centers on whether these revenues should remain available for debt repayment or be reserved strictly for operating purposes.
Similar
Relating to the authority of a property owner to obtain an injunction restraining the collection of ad valorem taxes by a taxing unit if the taxing unit adopts a tax rate that exceeds the voter-approval tax rate and subsequently takes an action that constitutes a material deviation from the stated purpose of the tax increase.
Relating to the issuance and repayment of debt by local governments, including the adoption of an ad valorem tax rate and the use of ad valorem tax revenue for the repayment of debt.
Relating to the exclusion of certain securities transaction payments from the total revenue of a taxable entity that is a registered securities market operator.
Relating to the exclusion of certain securities transaction payments from the total revenue of a taxable entity that is a registered securities market operator.
Relating to the authority of a property owner to obtain an injunction restraining the collection of ad valorem taxes by a taxing unit if the taxing unit adopts a tax rate that exceeds the voter-approval tax rate and subsequently takes an action that constitutes a material deviation from the stated purpose of the tax increase.
Relating to the vote required by the governing body of a political subdivision to adopt an ad valorem tax rate that exceeds the no-new-revenue tax rate or to authorize the issuance of tax bonds.