LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 75th Regular Session April 28, 1997 TO: Honorable Kenneth Armbrister, Chair IN RE: House Joint Resolution No. 4, As Engrossed Committee on Tax Reform & Public School Finance By: Craddick/et al. Senate Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on HJR4 ( proposing a constitutional amendment providing financial support for elementary and secondary public education, dedicating revenue and authorizing priority allocations of certain revenue, authorizing a state property tax and certain taxes on entities, providing property tax relief and reduced school taxes on residential property, including certain homestead property, and making implementation and conforming amendments.) this office has detemined the following: Biennial Net Impact to General Revenue Funds by HJR4-As Engrossed The fiscal implication would depend on the enabling legislation. The effects of House Joint Resolution 4, as engrossed, are included in the fiscal note on the Engrossed version of House Bill 4. The cost to the State for publication of the resolution is $71,000. The resolution proposes a constitutional amendment which, if adopted, would do the following: (1) provide that support of elementary and secondary public education is the first priority for State spending; (2) establish a constitutional equity standard for public school funding; (3) prohibit the Legislature from appropriating less per student for public schools in a biennium than in the prior biennium. (4) authorize the Legislature to impose a state property tax not to exceed $1.05 per $100 of valuation on non-residential property and dedicated the tax for of elementary and secondary public schools; (5) allow the Legislature to exempt, from the state property tax, property exempt from school district maintenance and operation taxes under an abatement granted before January 1, 1997 or in a reinvestment zone created by municipal ordinance before April 1, 1997 for which an abatement agreement is entered into before July 1, 1997. (6) dedicate net lottery revenue to elementary and secondary public education; (7) exempt non-residential property from school district maintenance and operation taxes; (8) authorize the Legislature to impose a franchise or privilege tax measured by income or taxable capital on corporations, partnerships, and business entities other than sole proprietorships; (9) authorize the Legislature to limit increases in appraised value of homesteads and limit the frequency of appraisals; (10) allow the Legislature to provide for the transfer of the sixty-five or over tax freeze to a different homestead and set the freeze level at the lower of the current freeze level and the amount of 1997 school district taxes; (11) require the notification of homeowners of the property tax decrease granted by the Seventy-fifth Legislature and require notification related to the effects of the tax reduction on mortgage escrow payments; (12) provide that freeport property currently taxed by school districts is subject to the state property tax; (13) allow the Legislature to provide for payment of a gross receipts tax on oil and natural gas in lieu of property taxes; (14) allow the Legislature impose a franchise tax on river authority electric business; (15) exclude revenue resulting from House Bill 4 from the Article VIII, Section 22, appropriations limit for the 1998-99 and 2000-01 biennia; (16) exempt a franchise or privilege tax, other than one imposed on a sole proprietor, from the Article VIII, Section 24, requirements relating to the imposition of a net income tax. (17) allow the Legislature to establish a commission that would make recommendations regarding abolition or modification of executive agencies, the recommendations to be accepted or rejected by the Legislature without amendment. The proposed amendment would be submitted to the voters on August 9, 1997. Source: Agencies: 304 Comptroller of Public Accounts LBB Staff: JK ,RR ,RS ,BR