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HB 3105

Relating to water.

2025 Regular Session Introduced by Ken Helm and 1 co-sponsor

Freeze or cut a school district's total property tax extension if reserves reach 50% to 60% of operating budget, via an educational limiting rate based on EAV, with disclosures.

In committee upon adjournment.
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Bill Summary · HB 3105

Summary — HB 3105 (2025) — "Relating to water" (actually: School District Extension Freeze Law)

Status & key dates
- Introduced Feb 18–20, 2025 by Rep. Fred Crespo.
- Assigned to multiple committees; most recent status: In committee upon adjournment (June 28, 2025).
- If enacted, the amendments take effect July 1, 2025.
- The bill amends the Property Tax Code by adding Division 7 (Article 18) — the "School District Extension Freeze Law" — and changes Section 20‑15 (tax bill disclosures).

Purpose / intent
- To limit growth in property tax extensions for school districts that hold unusually large reserve balances, and to increase taxpayer transparency when such a reduction occurs.

Key provisions
1. Reserve thresholds and extension limitations
- If, at the end of any levy year, a school district has reserves equal to or greater than 50% of its operating budget (as determined by the State Board of Education), then for the next levy year the county clerk must extend a total tax rate for that district "for all purposes" that is no greater than the district’s extension for the previous levy year (an effective freeze on total extension dollars).
- If reserves are 60% or greater at the end of the immediately preceding levy year, the district’s extension for the next levy year must be reduced further: the extension is decreased by an amount equal to the difference between the district’s reserve amount and a 60% reserve benchmark (i.e., excess reserves above 60% are used to reduce the extension).

  1. Calculation details

    • The bill defines an "educational limiting rate" to convert the applicable extension limit into a rate using current equalized assessed value (EAV) of district property. The denominator excludes new property and recovered tax increment value (per PTELL definitions). The State Board of Education will determine reserves and may adopt rules and require districts to supply necessary information.

  2. Interaction with PTELL

    • For districts subject to both the Property Tax Extension Limitation Law (PTELL) and this new law, PTELL’s provisions are suspended for any levy year in which the district is subject to the new educational limiting rate.

  3. Referendum option

    • A district may propose an increase above the educational limiting rate by referendum at a regularly scheduled election; if a majority of votes cast approve, the higher rate applies for the specified levy years.

  4. Tax bill disclosure

    • Section 20‑15 is amended so county tax bills must include a separate statement showing the dollar amount by which the school district’s educational extension was reduced if the reduction occurred because reserves were ≥60%.

Who is affected
- School districts with very large reserve balances (≥50% or ≥60% of operating budget) — their ability to increase total property tax extensions is constrained or reduced.
- Property taxpayers in those districts — likely to see lower or frozen school-related property tax extensions (and a new line item showing any reduction).
- County clerks/treasurers — must apply limiting rate rules, compute altered rates/extensions, and add disclosure on tax bills.
- State Board of Education — responsibility to determine reserve levels and collect required information from districts.

Potential impacts / considerations
- Fiscal: Limits growth in property-tax-funded school revenue for districts with high reserves; may pressure districts to draw down reserves or seek voter approval (referendum) for higher extensions.
- Administrative: Requires SBE determinations, district reporting, and modified tax-bill computations and disclosures.
- Transparency: Taxpayers will be informed when a district’s extension was reduced because of large reserves.

Notes and caveats
- The bill’s formula language ties reductions to reserve "amounts" and uses EAV-based rate conversion; exact dollar impacts will depend on each district’s reserve accounting, operating budget baseline, and changes in EAV.
- The bill suspends PTELL for affected districts for levy years governed by this new law.

Compiled from official sources — confirm details with the bill’s official record.

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