BILL ANALYSIS C.S.H.B. 366 By: Hartnett March 22, 1995 Committee Report (Substituted) BACKGROUND Section 11.14 establishes ad valorem taxation for income-producing tangible personal property, regardless of its value. When a property has a value less than $500, the tax generated may not cover the cost of collection. For properties with very low taxable values, taxing authorities are required by law to assess and collect a tax even though they may lose money on it. PURPOSE The bill establishes a minimum value of $500 for ad valorem taxation of income-producing tangible personal property and mineral interest. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Subchapter B, Chapter 11, Tax Code, by adding Section 11.145 and 11.146. Section 11.145 INCOME-PRODUCING TANGIBLE PERSONAL PROPERTY HAVING VALUE OF LESS THAN $500. (a) Provides that income-producing tangible personal property having value of less than $500 is exempt from taxation. (b) Applies the exemption to each separate taxing unit in which a person holds or uses tangible personal property for the production of income. All property in each taxing unit is aggregated to determine taxable value. Section 11.146 MINERAL INTEREST HAVING VALUE OF LESS THAN $500. (a) Provides that mineral interest having value of less than $500 is exempt from taxation. (b) Applies the exemption to each separate taxing unit in which a person owns a mineral interest. All mineral interests in each taxing unit are aggregated to determine taxable value. SECTION 2. Amends Section 11.43(a), Tax Code, by including Sections 11.145 and 11.146 as sections excluded from the exemption application process. SECTION 3. Effective Date: January 1, 1996, but only if the constitutional amendment granting authorization is approved by the voters. SECTION 4. Emergency Clause. COMPARISON OF ORIGINAL TO SUBSTITUTE H.B. 366 exempts income-producing tangible personal property with a value of less than $500 from ad valorem taxation. C.S.H.B. 366 extends this exemption to mineral interest. C.S.H.B. 366 changes the application of the exemption from each separate location to each separate taxing unit. C.S.H.B. 366 also changes the effective date from January 1, 1997 to January 1, 1996. SUMMARY OF COMMITTEE ACTION Public notice was posted in accordance to the rules and a public hearing was held on February 28, 1995. Without objection, H.B. 366 was left pending before the committee. On March 7, 1995, the committee approved C.S.H.B. 366 by Wolens without objection. By a record vote of 8 ayes, 0 nays, 0 present not voting and 3 absent, the committee voted to report H.B. 366 as substituted to the House with the recommendation that it do pass. Testimony received in favor of the bill: W. Kenneth Nolan, representing Dallas Central Appraisal District George H. Moff, representing himself David Luther, representing himself Bill Allaway, representing Texas Assn. of Taxpayers Neutral testimony on the bill: Frank Battle, representing the Texas Assn. of School Boards