LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
May 30, 1997
TO: Honorable Bob Bullock Honorable James E. "Pete" Laney
Lieutenant Governor Speaker of the House
House of Representatives
Austin, Texas
Senate
Austin, Texas
FROM: John Keel, Director
In response to your request for a Fiscal Note on HB4 ( relating
to residence homestead school property tax exemptions and tax
limitations, allocating and dedicating certain state funds for
education, limiting the increase in school property tax rates,
and providing for certain additional revenue; making an appropriation)
this office has detemined the following:
Biennial Net Impact to General Revenue Funds by HB4-Conference Committee Report
Implementation of the provisions of the bill through the biennium
ending August 31, 1999 would result in an impact of $1,044,554,000
for the $10,000 residential homestead exemption increase, an
increase in Lottery revenue of $299,912,000 and $170,000,000
reduction in the amount of appropriations in House Bill 1.
Appropriations:
The bill would appropriate the following amounts:
Fiscal Year Appropriation Net
out of Reductions
General to
Revenue Fund Appropriations
in House
Bill 1 out
of The
General
Revenue Fund
0001 0001
1998 $520,000,000($140,000,000)
1999 520,000,000 (30,000,000)
Fiscal Analysis
SCHOOL DISTRICT PROPERTY TAXES
The bill would require the state
to reimburse local school districts for lost ad valorem tax
revenue from a $10,000 residence homestead exemption increase.
In addition, portability would be provided for the age 65-and-over
tax freeze. This provision of the bill would become effective
on the effective date of the Act and would apply to school district
property taxes imposed for and after the 1997 tax year. For
purposes of calculating state aid under the Foundation School
Program, local district property values would be calculated
as if the homestead exemptions were in effect for the 1996 tax
year.
SCHOOL FINANCE
The bill would increase the Basic Allotment
from $2,387 per student to $2,396 per student. The increased
state aid from the homestead exemption, in conjunction with
the increased basic allotment, would trigger an increase in
the minimum teacher salary schedule. Local districts would
be held harmless for payroll increases required to meet the
new minimum. A guaranteed yield, set at $28 per student, would
be created for new facilities, limited by appropriation.
Notes:
1)
The amount appropriated in House Bill 1, Acts of the 75th Legislature,
Regular Session, 1997, for the Foundation School Program--School
Facilities is reduced to $200 million for the fiscal biennium
ending August 31, 1999.
LOTTERY SURCHARGE
The State Lottery
Act would be amended to increase the state share of lottery
proceeds by reducing the percentage of gross lottery revenue
that could be paid in prizes. In addition, lottery proceeds
currently transferred to general revenue would be transferred
to the foundation school fund, on or before the 15th of the
month.
GENERAL
Some provisions of the bill are contingent
on the adoption of a constitutional amendment proposed by House
Joint Resolution 4, Seventy-fifth Legislature, Regular Session,
1997. The proposed constitutional amendment will be submitted
to the voters at an election to be held August 9, 1997.
Methodolgy
SCHOOL FINANCE
The estimates in this note for school finance
are based on district property values presented by the Comptroller
of Public Accounts from the Preliminary January 1996 study (local
values) and revised Legislative Budget Board projections of
student enrollment growth of 2.2 percent per year statewide.
In addition, estimates for teacher payroll from the Texas
Education Agency were used.
ALL OTHER REVENUE ESTIMATES
The
estimates in this note for all other revenues are based on projections
provided by the Comptroller of Public Accounts.
The probable fiscal implications of implementing the provisions
of the bill during each of the first five years following passage
is estimated as follows:
Five Year Impact:
Fiscal Year Probable Probable Probable Revenue Probable Revenue
Savings/(Cost) Savings/(Cost) Gain/(Loss) from Gain/(Loss) from
from Foundation from Foundation School School
School School Fund-Over Districts-$10,000 Districts-Over
Fund-$10,000 65 Tax Freeze Homestead 65 Tax Freeze
Homestead Portability Exemption Portability
Exemption
0193 0193 LCL-SCHOOL LCL-SCHOOL
1998 ($511,665,000) $0 ($511,665,000) $0
1998 (532,889,000) 0 (532,889,000) (12,482,000)
2000 (554,893,000) (12,482,000) (554,893,000) (11,791,000)
2001 (577,704,000) (24,273,000) (577,704,000) (11,000,000)
2002 (601,350,000) (35,274,000) (601,350,000) (10,178,000)
Fiscal Year Probable Revenue Probable Revenue Probable
Gain/(Loss) from Gain/(Loss) from Savings/(Cost)
Foundation General Revenue from General
School Fund - Fund Revenue Fund /
Lottery Proceeds Savings from
Reduction in
Appropriations
in House Bill 1
0193 0001 0001
1998 $1,425,664,000 ($1,294,738,000) $140,000,000
1999 1,559,403,000 (1,390,417,000) 30,000,000
2000 1,634,904,000 (1,457,486,000) 0
2001 1,695,707,000 (1,511,429,000) 0
2002 1,735,642,000 (1,547,023,000) 0
Net Impact on General Revenue Related Funds:
The probable fiscal implication to General Revenue related funds
during each of the first five years is estimated as follows:
Fiscal Year Probable Net Postive/(Negative)
General Revenue Related Funds
Funds
1998 ($240,739,000)
1999 (333,903,000)
2000 (389,957,000)
2001 (417,699,000)
2002 (448,005,000)
Similar annual fiscal implications would continue as long as
the provisions of the bill are in effect.
Local school districts would collect less in local property
tax revenues due to the increased homestead exemption. State
aid to local districts would increase by a like amount.
Source: Agencies:
304 Comptroller of Public Accounts
701 Texas Education Agency - Administration
LBB Staff: JK ,RR ,BR ,DD