LEGISLATIVE BUDGET BOARD
                                   Austin, Texas
         
                                   FISCAL NOTE
                               75th Regular Session
         
                                  February 7, 1997
         
         
      TO: Honorable Tom Craddick, Chair            IN RE:  House Bill No. 526
          Committee on Ways & Means                              By: Shields
          House
          Austin, Texas
         
         
         
         
         FROM:  John Keel, Director    
         
         In response to your request for a Fiscal Note on HB526 ( Relating to the 
immediate qualification for an ad valorem tax exemption for a church or other 
nonprofit organization.) this office has detemined the following:
         
         Biennial Net Impact to General Revenue Funds by HB526-As Introduced
         
             Under current school funding statutes, the bill could result in increased 
costs to the state in state aid for public education.  When calculating state aid for 
public education, the state must recognize the loss in local property value due to 
exemptions granted to qualified organizations within the school district.  Depending 
on a school district s wealth per student, this could result in an increased cost to 
state-funded public education.
         
         FISCAL ANALYSIS
The Texas Constitution and the Property Tax Code currently provide that an 
organization qualifying as a charitable organization is entitled to an exemption
from taxation of the buildings and personal property owned and used exclusively 
by the organization. 

To receive this exemption, a charitable organization must be operated in a way 
that does not result in private gain.  Certain organizations also must be organized 
as nonprofit corporations as defined by the Texas Non-Profit Corporation Act.

This bill would exempt organizations providing support to the elderly and handicapped 
under Section 11.18 (d) (3) and (13) of the Property Tax Code from the requirement 
that they be organized as nonprofit corporations to qualify as charitable organizations.
 
Section 403.302, Government Code, requires the Comptroller to conduct a property 
value study to determine the total taxable value for each school district.  Total 
taxable value is an element in the state's school funding formula.  Passage of this 
bill could cause a reduction in a school district taxable values reported to the 
Commissioner of Education by the Comptroller.

METHODOLOGY
In a hypothetical school district that qualifies for both tier-one and tier-two 
state aid for public education, it would cost the state one dollar for each 
dollar of local tax revenue loss due to the proration formula contained in the bill.
         
 
          
             Passage of this bill could also reduce other local taxing units taxable 
values and reduced the amount of their local tax levies.  Local taxing units would 
include Cities, Counties and Special Districts.
          
   Source:            Agencies:   
                                         
                      LBB Staff:   JK ,RR