1. (a) The governing body of each taxing unit, before the later of September 30 or the 60th day after the date the certified appraisal roll is received by the taxing unit, shall adopt a tax rate for the current tax year and shall notify the assessor for the unit of the rate adopted. The tax rate consists of two components, each of which must be approved separately. The components are:

   1. (1) the rate that, if applied to the total taxable value, will impose the total amount published under Section 26.04(e)(3)(C), less any amount of additional sales and use tax revenue that will be used to pay debt service; and
   2. (2) the rate that, if applied to the total taxable value, will impose the amount of taxes needed to fund maintenance and operation expenditures of the unit for the next year.
2. (b) A taxing unit may not impose property taxes in any year until the governing body has adopted a tax rate for that year, and the annual tax rate must be set by ordinance, resolution, or order, depending on the method prescribed by law for adoption of a law by the governing body. The vote on the ordinance, resolution, or order setting the tax rate must be separate from the vote adopting the budget.
3. (c) If the governing body of a taxing unit does not adopt a tax rate before the date required by Subsection (a), the tax rate for the taxing unit for that tax year is the lower of the effective tax rate calculated for that tax year or the tax rate adopted by the taxing unit for the preceding tax year. A tax rate established by this subsection is treated as an adopted tax rate. Before the fifth day after the establishment of a tax rate by this subsection, the governing body of the taxing unit must ratify the applicable tax rate in the manner required by Subsection (b).
4. (d) The governing body of a taxing unit other than a school district may not adopt a tax rate that exceeds the lower of the rollback tax rate or 103 percent of the effective tax rate calculated as provided by this chapter until the governing body has held a public hearing on the proposed tax rate and has otherwise complied with Section 26.06 and Section 26.065. The governing body of a taxing unit shall reduce a tax rate set by law or by vote of the electorate to the lower of the rollback tax rate or 103 percent of the effective tax rate and may not adopt a higher rate unless it first complies with Section 26.06.
5. (e) A person who owns taxable property is entitled to an injunction restraining the collection of taxes by a taxing unit in which the property is taxable if the taxing unit has not complied with the requirements of this section and the failure to comply was not in good faith. An action to enjoin the collection of taxes must be filed prior to the date a taxing unit delivers substantially all of its tax bills.
6. (f) Except as required by the law under which an obligation was created, the governing body may not apply any tax revenues generated by the rate described in Subsection (a)(1) of this section for any purpose other than the retirement of debt.

Acts 1979, 66th Leg., p. 2268, ch. 841, Sec. 1, eff. Jan. 1, 1982.

Amended by Acts 1981, 67th Leg., 1st C.S., p. 164, ch. 13, Sec. 117, eff. Jan. 1, 1982;

Acts 1985, 69th Leg., ch. 657, Sec. 3, eff. June 14, 1985;

Acts 1987, 70th Leg., ch. 699, Sec. 2, eff. June 19, 1987;

Acts 1987, 70th Leg., ch. 947, Sec. 7, eff. Jan. 1, 1988;

Acts 1987, 70th Leg., ch. 988, Sec. 2, eff. June 18, 1987;

Acts 1991, 72nd Leg., ch. 404, Sec. 1, eff. Jan. 1, 1992;

Acts 1997, 75th Leg., ch. 165, Sec. 29.06, eff. Sept. 1, 1997;

Acts 1997, 75th Leg., ch. 1039, Sec. 27, eff. Jan. 1, 1998;

Acts 1999, 76th Leg., ch. 398, Sec. 3, eff. Aug. 30, 1999;

Acts 1999, 76th Leg., ch. 423, Sec. 1, eff. Jan. 1, 2000;

Acts 1999, 76th Leg., ch. 1358, Sec. 2, eff. Jan. 1, 2000.