SRC-JFA S.B. 765 75(R)BILL ANALYSIS


Senate Research CenterS.B. 765
By: Ratliff
State Affairs
4-21-97
Committee Report (Amended)


DIGEST 

Currently, under the Tax Code, when a landowner who is growing crops or
raising cattle decides to convert his land to timber production, the land,
which was formerly classified as agricultural land and appraised at $80 to
$90 an acre, is classified as timberland and is appraised at $400 to $600
an acre.  Such a result may discourage landowners from growing timber at a
time when additional trees would support the East Texas timber-based
economy.  Some 60 percent of East Texas' forest lands are owned by
private, non-industrial landowners such as farmers and ranchers.  One in
seven of these privately owned acres are being replanted in trees after
harvesting.  Allowing farm and pasture lands to be converted to timber
production would increase the number of acreage in timber production in
East Texas.  The landowner does not have income from the land for about 15
years since that is the amount of time it takes a forest to reach its
merchantable size.  This bill would amend the Tax Code to authorize the
owner of certain open-space land that is converted to production of timber
to elect to have the land continue to be appraised for property-tax
purposes as open-space land for 15 years so long as certain conditions are
satisfied.  
    
PURPOSE

As proposed, S.B. 765 authorizes the appraisal for property tax purposes
of certain open-space land that is converted to production of timber as
open-space land if certain conditions are met.   

RULEMAKING AUTHORITY

This bill does not grant any additional rulemaking authority to a state
officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Chapter 23D, Tax Code, by adding Section 23.59, as
follows: 

Sec. 23.59.  APPRAISAL OF OPEN-SPACE LAND THAT IS CONVERTED TO TIMBER
PRODUCTION.  Authorizes the owner, if the owner's land has been appraised
under this subchapter for at least five preceding years and is converted
to production of timber after September 1, 1997, to elect to have the land
continue to be appraised under this subchapter for 15 years after the date
of the conversion, so long as the land qualifies for appraisal as timber
land under Subchapter E.  Provides that in that event, the land is deemed
to be the same category of land under this subchapter as it was
immediately before conversion to timber production.  Provides that the
election must be made by a new application filed as provided by Section
23.54 and remains in effect for 15 years or until a change in use of the
land occurs.  Provides that this section applies to the appraisal of land
converted to timber production only until the end of the tax year in which
the 15th anniversary of the date of the conversion occurs.  Requires the
land to be appraised as timber land as provided by Subchapter E in the
16th and subsequent years, so long as it qualifies as timber land under
Subchapter E. 

SECTION 2. Amends Section 23.72, Tax Code, to delete text providing that
land qualifies for appraisal as provided by this subchapter if it has been
devoted principally to production of timber or forest products or to
agricultural use that would qualify the land for appraisal under
Subchapter C or D of this chapter for five of the preceding seven years.   

 SECTION 3. Amends Sections 23.73(a) and (c), Tax Code, to prohibit the
appraised value, in each year until the end of the 12th year following the
first year in which the timber land qualifies for appraisal under this
subchapter after one or more years in which the land did not qualify for
appraisal under this subchapter, from exceeding the lesser of the market
value of the land as determined by other appraisal methods or the
appraised value of the land according to Subchapter D as if the land
qualified for appraisal under that subchapter.  Prohibits the limitation,
in the first year in which the limitation provided by this subsection may
be applied, from being applied to more than 100 acres of timber land
consisting of one tract or contiguous tracts owned by the same owner.
Prohibits the limitation provided by this subsection, in the following
12-year period, from being applied to more than 400 acres of timber land
owned by the same owner.  Requires the chief appraiser, for the purposes
of this section and Section 23.76, to determine the market value of
qualified timber land and the appraised value of the timber land according
to Subchapter D as if the land qualified for appraisal under that
subchapter.  Requires the chief appraiser to record in the appraisal
records the market value of the land; the appraised value of the land
according to this subchapter; and the appraised value of the land
according to Subchapter D as if the land qualified for appraisal under
that subchapter.  Makes a conforming change.   

SECTION 4. Effective date: September 1, 1997.

SECTION 5. Emergency clause.

SUMMARY OF COMMITTEE CHANGES

Amendment 1. 

Adds SECTIONS 2 and 3 to set forth amendments to Sections 23.72 and 23.73,
Tax Code. Renumbers subsequent sections accordingly.