LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
74th Regular Session
April 4, 1995
TO: Honorable Tom Craddick, Chair IN RE: House Bill No. 2860
Committee on Ways & Means By: Grusendorf
House of Representatives
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 in undeveloped areas contiguous to
an airport of a municipality with a population exceeding 400,000;
if they adopt specific guidelines, conduct hearings and make
certain economic development findings. Further 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.
The Comptroller estimated school district tax abatement growth
based on the reported abatements 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
abatements from its pre-SB 7 rate because the reduced revenue
from abated property is no longer offset by increased state
funding.
The bill would also create a situation where local school
districts and taxpayers could make agreements to exchange land
for abated taxes. 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, and could result in
an increase in state education cost.
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, Central Education
Agency - Administration
LBB Staff: JK, BR, DF