LEGISLATIVE BUDGET BOARD
                                   Austin, Texas
         
                                   FISCAL NOTE
                               75th Regular Session
         
                                  April 18, 1997
         
         
      TO: Honorable Tom Craddick, Chair            IN RE:  House Bill No. 846, Committee Report 1st House, Substituted
          Committee on Ways & Means                              By: King
          House
          Austin, Texas
         
         
         
         
         FROM:  John Keel, Director    
         
In response to your request for a Fiscal Note on HB846 ( Relating 
to the exemption from ad valorem taxation of public property.) 
this office has detemined the following:
         
         Biennial Net Impact to General Revenue Funds by HB846-Committee Report 1st House, Substituted
         
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 the bill 
could cause a reduction in a school district's taxable values 
reported to the Commissioner of Education by the Comptroller. 
 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.

The 
fiscal impact on the state would depend on the number and amount 
of local taxable property removed from the local tax rolls due 
to being converted to public-use property.
         

         
 
FISCAL ANALYSIS
The bill would amend Section 11.11 of the Tax 
Code to provide that, for property tax purposes, property is 
owned by the state or a political subdivision of the state if 
it is subject to a lease-purchase agreement containing a provision 
that legal title passes to the state or to a political subdivision 
at the end of the lease term.  This status would expire if the 
state or political subdivision did not exercise their right 
to acquire legal title to the property within 30 days after 
the lease expires.  

Current law provides a property tax 
exemption only for property owned by the state or a political 
subdivision of the state and used for a public purpose.  

The 
bill would take effect January 1, 1998.
          
LOCAL
There would be a tax revenue loss to local governments 
that currently tax property under lease-purchase agreements, 
depending on the incidence of these types of purchase arrangements.
          
   Source:            Agencies:   
                                         
                      LBB Staff:   JK ,RR ,BR