HOUSE BILL 4 |
HOUSE AUTHOR: Craddick et al. |
EFFECTIVE: 9-1-97 |
SENATE SPONSOR: Armbrister et al. |
House Bill 4 amends the Tax Code to provide property tax relief to homeowners by increasing the mandatory homestead exemption for school district property tax purposes, proportionally reducing school district tax freeze amounts for elderly homeowners, and providing for the transferability of the freeze from one qualifying homestead to another. It amends several Education Code school finance provisions to reflect the impact of these changes on school district property tax bases and to increase state aid to offset decreases in school district property tax revenue. Implementation of these provisions is contingent on voter approval of the constitutional amendment proposed by House Joint Resolution 4. The act also adds a new chapter to the Education Code to implement a guaranteed yield system to help school districts finance school facilities construction and improvements, and it dedicates the state's lottery proceeds to the foundation school fund.
ARTICLE 1. SCHOOL FINANCE
Article 1 of the act adds several temporary provisions to the Education Code to make certain adjustments in the school finance system required by changes in school district property tax bases that would result from the proposed increase in homestead tax exemptions and tax freeze provisions.
It provides that, in computing a school district's wealth per pupil for the 1997-1998 school year for equalization purposes and the state aid to which a district is entitled for that school year, a district's taxable property value is determined as if the increase in the homestead exemption and the tax freeze provisions proposed by House Joint Resolution 4 had been in effect for the 1996 tax year.
If a district's Foundation School Program allotment based on its taxable property value as determined above does not fully compensate the district for the potential loss of tax revenue, a hold-harmless provision in House Bill 4 provides for the distribution of additional state aid to make up the difference for the 1997-1998 and 1998-1999 school years.
The article adds a temporary provision to the Government Code to require the comptroller to certify two sets of property values for the 1996 and 1997 tax years: (1) a final property value for each school district computed on a residence homestead exemption of $5,000 and (2) a final property value computed on a residence homestead exemption of $15,000 and the effect of the proposed elderly homeowners' tax freeze provisions.
Article 1 adds two temporary Education Code provisions affecting teachers and librarians for the 1997-1998 and 1998-1999 school years. One sets forth the number of days of service required for those two years and postpones application of the formula for determining the minimum days of service until the 1999-2000 school year; the other provides that, for those two years, the minimum teacher or librarian salary formula factors in amounts appropriated elsewhere in the act but not certain contingent appropriations in the General Appropriations Act for teacher salary hold-harmless provisions and student enrollment growth.
Article 1 also appropriates an additional $1.04 billion from the general revenue fund to the Foundation School Program for the 1998 and 1999 fiscal years to offset district property tax revenue lost as a result of the increase in the homestead exemption and adjusts the amounts allocated in the General Appropriations Act for the program and for school facilities for FY1998 and FY1999 and certain contingency appropriations in the General Appropriations Act for student enrollment growth and transitional aid to districts affected by an increase in the minimum salary schedule, which would be triggered by the increase in appropriations to the Foundation School Program.
Other provisions contingent on voter approval of the constitutional amendment proposed by House Joint Resolution 4 include an increase in the basic allotment from $2,387 to $2,396 and a teacher salary hold-harmless provision to cover increases in school district costs incurred by the automatic increases in the state minimum salary schedule for teachers and librarians.
Article 1 makes changes to the public school finance system that are not contingent on voter approval of the constitutional amendment proposed by House Joint Resolution 4. These include (1) basing the cost of attendance credits on district maintenance and operations tax revenues rather than total tax revenues and (2) adding a new chapter on school facilities financing to provide a guaranteed yield funding system that provides districts a specified amount of state and local funds per pupil for each cent of tax effort, up to a predetermined maximum rate, for debt service on bonds issued to finance construction, acquisition, or improvement of district instructional facilities.
The new chapter sets the dollar amount guaranteed level at a minimum of $28, provides a maximum rate for the guaranteed yield, limits the total yield amount of state and local funds guaranteed under the system, and limits the applicability of the funding formula to bonds and refunding bonds meeting certain criteria.
Article 1 takes effect September 1, 1997.
ARTICLE 2. PROPERTY TAXES
Article 2 amends the Tax Code to increase the school district homestead exemption from $5,000 to $15,000, but it provides that $10,000 of the exemption does not apply to certain types of school districts or political subdivisions that levy property taxes for public education but are not the principal school districts operating public schools in their respective areas. It also provides for a reduction in the freeze amount for homeowners who qualified before 1997, setting the new freeze amount equal to the 1996 freeze amount, plus any 1997 tax attributable to certain improvements, minus the product of the school district's 1997 tax rate and $10,000. It allows an individual who qualifies for the freeze to transfer a proportional amount of the freeze to another homestead.
Article 2 requires an election to be held in a school district if the school board adopts a tax rate in excess of the rollback tax rate calculated as the rate that would provide the same amount of revenue per student, considering state and local funds, as in the preceding year, plus $0.08 per $100 of taxable value, and it retains certain rollback rate adjustments for changes in nondistrict revenue. It eliminates the year-to-year correction for projected enrollments and state aid. For 1997 and 1998, the article provides an interim rollback rate to allow school districts to maintain prior revenue levels or prior maintenance and operations rates without a rollback election.
The increased homestead exemption and the new provisions relating to the elderly homeowners' tax freeze take effect for 1997 taxes if the constitutional amendment proposed by House Joint Resolution 4 is approved. The tax rate rollback provisions take effect September 1, 1997, and apply to tax rates adopted by a school board on or after that date. Article 2 voids any school district tax rate adopted for 1997 taxes before that date.
ARTICLE 3. LOTTERY REVENUE
Article 3 of the act amends the Government Code to cap the total amount of lottery prizes awarded in a fiscal year at an amount equal to the gross revenue from ticket sales in that fiscal year multiplied by the percentage amount of lottery prizes awarded for all lottery games in fiscal year 1997, minus an amount equal to 5.0 percent of gross lottery revenue for the fiscal year in which the prizes are being awarded. It also allocates to the foundation school fund the portion of lottery proceeds that formerly went to general revenue. Article 3 takes effect September 1, 1997, and the cap on the total amount of prizes awarded applies to tickets sold on or after that date. For fiscal year 1998, the article adjusts the formula established for capping the amount of lottery prizes awarded to reduce the deduction from 5.0 percent to 4.5 percent of gross lottery revenue for the 1998 fiscal year.