In 1979, the 66th Legislature passed the “Peveto bill”, SB 621, which formed the foundation of the current property tax system. It separated appraisals from tax collection by creating countywide appraisal districts (CADs) and required property to be assessed at full market value and reassessed once every three years. To improve oversight, the legislation required counties to establish appraisal review boards (ARBs) to allow taxpayers to protest their appraisals and created a State Property Tax Board – later abolished in 1991 with SB 984 and its functions transferred to the Texas State Comptroller’s office.
In line with the function of ARBs, SB 621 created the Truth-in-Taxation process, which was the requirement that local taxing units must make taxpayers aware of tax rate proposals to allow them the opportunity to “rollback” or limit a tax increase. The “rollback rate” was set at 5 percent to moderate property tax levy growth. In the following session, this was increased to 8 percent in an amendment to HB 30, a cleanup bill for the 1979 property tax omnibus. Lawmakers at the time cited high costs to local governments driven up by inflation as the intent for raising the rollback rate.