BILL ANALYSIS C.S.H.B. 49 By: McCall April 17, 1995 Committee Report (Substituted) BACKGROUND Currently, Colorado allows local taxing entities to establish a "property tax work-off program". This program allows a person who is sixty years or older to work for the taxing entity in lieu of payment of a portion of their property taxes on their homestead. The reduction in taxes is based on the federal minimum wage. PURPOSE This bill would give school districts the authority to permit individuals 65 or older to perform service for the district in lieu of paying property taxes on their homestead. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not grant any additional rulemaking authority to a state officer, institution, or agency. SECTION BY SECTION ANALYSIS SECTION 1. Amends Chapter 31, Tax Code, by adding Section 31.035 Performance of Service in Lieu of Payment of School Taxes on Homestead of Elderly Person. (a) By a resolution of the governing body, a school district may allow individuals who are at least 65 years of age to perform service for the district in lieu of paying taxes imposed by the district on property owned and occupied as a residence homestead. (b) The governing body of the school district will determine how many property owners may qualify under this section and the maximum number of hours of service they will be allowed to perform. (c) Requires a contract between the property owner and the school district be executed before the delinquency date and specifies the content to be included in the contract. (d) Provides that for each hour of service performed, the property owner will receive a credit against taxes owed equal to the amount that would be earned by working one hour at the federal hourly minimum wage rate. (e) Provides that if the property owner fails to perform the service or if the district determines the service to be unsatisfactory, the district shall terminate the contract. If unpaid taxes for which the property owner was to receive credit become delinquent, penalty and interest will incur as provided for by Section 33.01(c). (f) Provides that while performing service for the school district, the property owner is not an employee of the district and is not entitled to any benefit, including workers' compensation coverage, that the district provides to an employee of the district. (g) Prevents school districts from terminating an existing employee and replacing them with volunteers. (h) Provides for liability protection for the school district. SECTION 2. Amends Section 16.302 (Allotment), Education Code, to expand the definition of "DTR" for the purposes of the school funding formula. The sum of the taxes collected by the school district shall include an amount equal to the tax credits earned under Section 31.035, Tax Code (added by this Act). SECTION 3. Emergency clause COMPARISON OF ORIGINAL TO SUBSTITUTE The committee substitute specifies that the volunteer is not entitled to workers' compensation coverage. C.S.H.B. 49 also contains provisions providing liability protection for the school district and for job protection for existing employees. The original does not contain this language. In addition, C.S.H.B. 49 expands the definition for "DTR" for purposes of state funding. DTR will now include tax credits provided by Section 31.035 (Performance of Service in Lieu of Payment of School Taxes on Homestead of Elderly Person). SUMMARY OF COMMITTEE ACTION Public notice was posted in accordance with the rules, and a public hearing was held on February 21, 1995. Representative McCall explained the bill. Without objection, H.B. 49 was referred to the Subcommittee on Property Tax. On April 6, 1995, the Subcommittee on Property Tax convened in a formal meeting and considered H.B. 49. The subcommittee considered a complete substitute by Representative Horn. Three amendments to the substitute were offered by Representative Horn. Without objection, all three amendments were adopted and incorporated into the substitute. Without objection, C.S.H.B. 49 was adopted. By a record vote of 4 ayes, 0 nays, 0 present not voting and 1 absent, the subcommittee voted to report H.B. 49 to the full committee as substituted with the recommendation that it do pass. On April 11, 1995, the committee met in a public hearing and considered H.B. 49 on subcommittee report. The committee considered a committee substitute by Representative Horn. Without objection, C.S.H.B. 49 was adopted. By a record vote of 9 ayes, 0 nays, 0 present not voting and 2 absent, the committee voted to report H.B. 49 to the House as substituted with the recommendation that it be sent to the Local and Consent Calendar and that it do pass. Testimony received in favor of the bill (2-21-95): Elizabeth Little, representing herself Thomas V. Perkins, representing himself John W. Holtermann, representing himself and the Texas Silver Haired Legislature Phill Parmer, representing the Texas Silver Haired Legislature