TITLE 34. PUBLIC FINANCE

PART 1. COMPTROLLER OF PUBLIC ACCOUNTS

CHAPTER 9. PROPERTY TAX ADMINISTRATION

SUBCHAPTER M. LOCAL GOVERNMENT RELIEF FOR DISABLED VETERANS EXEMPTION

The Comptroller of Public Accounts proposes amendments to §9.4321, concerning definitions and §9.4323, concerning application.

The amendments to §9.4321 update existing definitions for "local government" and "qualified local government."

The amendments to §9.4323 update the mapping requirement in subsection (b)(1), update the name of the report in subsection (b)(2)(B) and add a requirement for an applicant to provide the most recent decennial census data in subsection (b)(6).

The legislation enacted within the last four years that provides the statutory authority for these sections is House Bill 2894, 89th Legislature, R.S., 2025.

Brad Reynolds, Chief Revenue Estimator, has determined that during the first five years that the proposed amendments are in effect, the amended rules: will not create or eliminate a government program; will not require the creation or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to the agency; will not require an increase or decrease in fees paid to the agency; will not increase or decrease the number of individuals subject to the rules' applicability; and will not positively or adversely affect this state's economy. This proposal amends existing rules.

Mr. Reynolds also has determined that the proposed amended rules would have no fiscal impact on the state government, on units of local government, or individuals. The proposed amendments would benefit the public by improving the clarity and implementation of the sections. There would be no anticipated economic cost to the public. The proposed amendments would have no fiscal impact on small businesses or rural communities.

You may submit comments on the proposal or information related to the cost, benefit, or effect of the proposal, including any applicable data, research or analysis, to Shannon Murphy, Director, Property Tax Assistance Division, P.O. Box 13528, Austin, Texas 78711 or to the email address: ptad.rulecomments@cpa.texas.gov. The comptroller must receive your comments or other information no later than 30 days from the date of publication of the proposal in the Texas Register.

These amendments are proposed under Local Government Code, §140.011(i), which requires the comptroller to adopt rules necessary to implement Local Government, Code §140.011 (Local Governments Disproportionately Affected by Property Tax Relief for Disabled Veterans).

These amendments implement Local Government Code, §140.011 (Local Governments Disproportionately Affected by Property Tax Relief for Disabled Veterans).

§9.4321. Definitions.

The following phrases, words, and terms, when used in this subchapter shall have the following meanings, unless the context clearly indicates otherwise.

(1) Account--The account created by Local Government Code, §140.011(h) from which disabled veteran assistance payments are made.

(2) Adjacent--Having a common endpoint or border. The fact that a road separates a city and a United States military installation does not prevent a city and military installation from being considered adjacent.

(3) Applicant--A local government that has applied for a payment.

(4) Comptroller--The Comptroller of Public Accounts for the State of Texas.

(5) Exemption amount--The total appraised value of all property located in the local government that is granted an exemption from taxation under Tax Code, §11.131 for the tax year in which the fiscal year begins and for which the applicant is requesting payment.

(6) Fiscal year--The fiscal year of the applicant unless otherwise indicated.

(7) General fund revenue--Revenue generated by a local government from the following sources during a fiscal year and deposited in the dedicated general operating fund of the local government during that fiscal year:

(A) ad valorem taxes;

(B) sales and use taxes;

(C) franchise taxes, fees, or assessments charged for use of the local government's right-of-way;

(D) building and development fees, including permit and inspection fees;

(E) court fines and fees;

(F) other fees, assessments, and charges; and

(G) interest earned by the local government.

(8) Independent audit--An audit required by law to be prepared for the applicant for the fiscal year for which the applicant is requesting payment which verifies amounts of general fund revenue by source.

(9) Local government--

(A) a municipality [adjacent to a United States military installation]; or

(B) a county [in which a United States military installation is wholly or partly located].

(10) Lost ad valorem tax revenue or lost property tax revenue--For a fiscal year for which the applicant is requesting payment, the product of the property tax rate adopted by the applicant for the tax year in which that fiscal year begins and the exemption amount.

(11) Payment--A disabled veteran assistance payment paid to a qualified local government from the account in an amount calculated by subtracting 1.0% of the local government's general fund revenue for a fiscal year from the local government's lost property tax revenue for that fiscal year.

(12) Qualified local government--A local government entitled to a disabled veteran assistance payment under Local Government Code, §140.011. A local government is a qualified local government for a fiscal year if the amount of lost property tax revenue is equal to or greater than: [2.0% of the applicant's general fund revenue for that fiscal year.]

§9.4323. Application.

(a) In order to receive payment under this subchapter, an applicant must submit a completed application. The completed application must be received no earlier than February 1 nor later than April 1 of the year following the end of a fiscal year for which the applicant is seeking a payment under this subchapter.

(b) A completed application must include the following items:

(1) A map showing that:

(A) [if the applicant is a municipality,] the municipality is adjacent to a United States military installation or the municipality is located in a county in which a United States military installation is wholly or partly located; [or]

(B) [if the applicant is a county,] a United States military installation is wholly or partly located within the [that] county;[.]

(2) Documentation to substantiate the sources and amounts of general fund revenues listed on the application. That documentation must be:

(A) an independent audit covering the fiscal year for which the applicant is requesting payment;

(B) an [a comprehensive] annual comprehensive financial report covering the fiscal year for which the applicant is requesting payment; or

(C) documentation from the applicant's internal auditor or financial officer certifying that the information submitted is true and correct to the best of their knowledge.

(3) If the documentation listed in paragraph (2) of this subsection does not substantiate all of the sources and amounts of general fund revenues listed on the application, the applicant must submit additional documentation to substantiate the sources and amounts of general fund revenue which is certified by a city, county or independent auditor.

(4) Documentation to substantiate the exemption amount.

(5) Documentation to substantiate the property tax rate adopted by the applicant for the tax year in which the fiscal year for which the applicant is requesting payment begins.

(c) Documentation submitted with the application under subsection (b)(2) - (5) of this section must be highlighted for easy identification of the following values:

(1) the specific total for each general fund revenue source;

(2) the adopted property tax rate; and

(3) the total exemption amount.

(d) The application must be submitted on the comptroller prescribed form. The method in which the application is submitted must conform to the instructions in the comptroller prescribed form.

(e) The application must be signed by an official of the local government that is authorized to bind the local government. The local official must certify that all information in the application is true and correct.

(f) The applicant is responsible for verifying receipt by the comptroller of the completed application and any information requested under §9.4325 of this title (relating to Review by Comptroller).

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on March 24, 2026.

TRD-202601353

Victoria North

General Counsel for Fiscal and Agency Affairs

Comptroller of Public Accounts

Earliest possible date of adoption: May 10, 2026

For further information, please call: (512) 475-2220