LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
74th Regular Session
April 19, 1995
TO: Honorable Tom Craddick, Chair IN RE: Committee Substitute
Committee on Ways & Means forHouse Bill
House of Representatives No. 2860
Austin, Texas
FROM: John Keel, Director
In response to your request for a Fiscal Note on House Bill No.
2860 (Relating to the power of certain school districts to grant
tax abatements.) this office has determined the following:
The bill would repeal the section in Chapter 312, Tax Code, that
sunsets the Property Redevelopment and Tax Abatement Act.
Passage of this bill would reenact the language in Chapter 312,
without the sunset provision.
The bill would also enable school districts with wealth below the
equalized wealth level (currently $280,000 per pupil) to
designate reinvestment zones if they adopt specific guidelines,
conduct hearings and make certain economic development findings.
To qualify as a reinvestment zone the property would have to:
be in undeveloped area contiguous to an airport;
be in a municipality with a population exceeding 400,000; and
be in a municipal utility district.
The school district could abate taxes on real property in the
zone by agreement with the property owner, if the owner agrees to
donate to the school district real property in an amount and at a
location acceptable to the district. The abatement would not
take effect until the donation is made and would be restricted to
land that has been prepared for construction of a school
building. In these situations the land subject to an exchange
would be removed from the tax rolls, as public use property, and
could lower property wealth reported by the Comptroller to the
Commissioner of Education. This could result in an increase in
state education cost, however the impact cannot be determined..
The Comptroller's Property Tax Division has estimated the impact
of the repeal of the sunset provisions of Chapter 312, Tax Code.
This estimate incorporates school district tax abatement growth
since the passage of SB 7 (which added a provision prohibiting
the Comptroller from deducting abated value from market value if
the abatement was granted after May 31, 1993). This abatement
change reduced the growth in school district abatements from its
pre-SB 7 rate because the reduced revenue from abated property is
no longer offset by increased state funding.
The probable fiscal implication of implementing the provisions of
the bill during each of the first five years following passage
is estimated as follows:
Fiscal Loss to School Loss to Counties Loss to Cities
Year Districts
1996 $2,700,000 $22,350,000 $3,857,000
1997 2,700,000 27,451,000 4,737,000
1998 2,700,000 31,966,000 5,516,000
1999 2,700,000 34,371,000 5,931,000
2000 2,700,000 34,795,000 6,004,000
Similar annual fiscal implications would continue as long as the
provisions of the bill are in effect.
The fiscal implication to the State cannot be determined.
Source: Comptroller of Public Accounts
LBB Staff: JK, BR, DF