LEGISLATIVE BUDGET BOARD
                                   Austin, Texas
         
                                   FISCAL NOTE
                               75th Regular Session
         
                                  May 17, 1997
         
         
      TO: Honorable Bill Ratliff, Chair            IN RE:  House Bill No. 2383, 
As Engrossed
          Committee on Finance                              By: Hochberg
          Senate
          Austin, Texas
         
         
         
         
         FROM:  John Keel, Director    
         
In response to your request for a Fiscal Note on HB2383 ( relating 
to the qualification of a nonprofit charitable or religious 
organization, school or youth association for an exemption from 
ad valorem taxation) this office has detemined the following:
         
         Biennial Net Impact to General Revenue Funds by HB2383-As Engrossed
         
Section 403.302 of the 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 decrease in school district taxable values reported 
to the Commissioner of Education by the Comptroller.  The decrease 
in school district taxable value could result in an increase 
in the state cost of public education, based on current funding 
formulas.
         

         
 
The bill would amend Chapter 11 of the Tax Code to require certain 
organizations applying for charitable property tax exemption 
to use their property to perform their principal function or 
perform the principal function of a similar organization.  The 
bill would remove the requirement that an organization pledge 
its assets in performing its function.  The bill would allow 
the organization to transfer its assets to the United States 
government if the organization was discontinued.  The bill would 
apply to charitable, youth development, religious, and private 
school organizations.

The bill would allow charitable organizations 
or youth development associations to file late for the exemption, 
similar to current law for religious organizations and private 
schools.  An organization's contract with the United States 
would not affect exemption eligibility.

The bill would be 
effective immediately upon enactment, assuming that it received 
the requisite two-thirds majority votes in both houses of the 
Legislature.  Otherwise, it would be effective 90 days after 
adjournment.
          
The bill could result in a revenue loss to local governments. 
 The amount of loss would depend on the number of organizations 
qualifying for the exemptions with the new requirements and 
the value of the real and personal property exempted.
          
   Source:            Agencies:   
                                         
                      LBB Staff:   JK ,RR ,BR