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Signed Into Law
Signed June 20, 2025Effective 2026-01-01
SB1453

Regular Session

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

Government Affairs & Regulatory Compliance Analysis

SB1453: Government Affairs Overview

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.

Sen. Paul Bettencourt·Senate Bill·Regular Session

Moderate
Low Cost
Effective:2026-01-01
Enforcing Agencies

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

Business Impact

Who SB1453 Affects

This legislation has regulatory implications for the following Texas businesses and organizations:

Regulatory Priority: moderate

Notable regulatory updates (effective 2026-01-01). Consider how these changes may affect your operations.

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Real Estate

Affected business types:

  • Property developers
  • Commercial landlords
  • Property managers
  • Real estate investors
View all real estate legislation

Key Operational Considerations

  • 1Bond Covenants: While existing covenants remain valid, the interpretation of "required" payments within those covenants will now dictate the statutory tax rate cap.
  • 2Finance Officers & Counsel: Staff responsible for tax rate calculations must be trained on the new distinction between "budgeted debt service" and "statutory minimum debt service."
  • 3Board 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.

Estimated Cost Impact

lowMinimal cost impact anticipated.

Enforcing Agencies

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SB1453
Moderate
Relating to the current debt rate and tax rate of a taxing unit for ad valorem tax purposes.
Moderate Compliance Urgency
Requires near-term attention
Cost Impact
Low
Effective
2026-01-01
Enforcing Agencies
Comptroller of Public AccountsLocal Governing Bodies
Primary Author: Sen. Paul Bettencourt
89th Texas Legislature
jdkey.com
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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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JD Key Consulting specializes in Texas regulatory compliance strategy. Work directly with James Dickey—former Chairman of the Republican Party of Texas—to understand this bill's impact on your operations and develop an actionable compliance plan.

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Information presented is for general knowledge only and is provided without warranty, express or implied. Consult qualified government affairs professionals and legal counsel before making compliance decisions.

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Legislative Timeline

This bill's path through the Texas Legislature

Filed
Feb 19, 2025
Passed Senate
Apr 3, 2025
Passed House
May 24, 2025
Signed
Jun 20, 2025
Effective
Jan 1, 2026
TopicsTaxationTaxation--property-assessment & CollectionTaxation--property-tax Rate
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Senate Authors

Sen. Paul BettencourtRepublican · Primary Author

House Sponsor

Rep. Morgan MeyerRepublican · Primary Sponsor

Bill Text(with markup)

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

Related Legislation

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More from Sen. Paul Bettencourt

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Related by Topic

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Quick Reference

Frequently Asked Questions

Common questions about SB1453

Q

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.

Q

Who authored SB1453?

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

Q

When was SB1453 signed into law?

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

Q

Which agencies enforce SB1453?

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

Q

How significant are the changes in SB1453?

The regulatory priority for SB1453 is rated as "moderate". Businesses and organizations should review the legislation to understand potential impacts.

Q

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.

Q

What topics does SB1453 address?

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

Q

What are the key dates for SB1453?

Key dates for SB1453: Effective date is 2026-01-01. Rulemaking: Update Truth-in-Taxation forms and website posting templates to reflect the new definition of 'current debt service' (minimum required vs. planned expenditures). (Prior to 2026 Tax Season). Consult with legal counsel regarding applicability.

Q

Which Texas businesses are affected by SB1453?

SB1453 primarily affects property owners and real estate professionals. These businesses should review the legislation with their legal and compliance teams to understand potential impacts.

Need Strategic Guidance on This Legislation?

JD Key Consulting is an Austin, Texas-based government affairs firm led by James Dickey, former Chairman of the Republican Party of Texas. We specialize in Texas regulatory compliance and legislative strategy for data centers, energy, banking, and manufacturing.

Legislative data provided by LegiScanLast updated: January 25, 2026