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 HJR4 ( proposing a constitutional amendment increasing the amount of the school property tax residence homestead exemption and providing for the continuation and reduction of the school tax limitation on the homesteads of certain persons) this office has detemined the following: Biennial Net Impact to General Revenue Funds by HJR4-Conference Committee Report Implementing the provisions of the bill would result in a net negative impact of $(1,044,625,000) to General Revenue Related Funds through the biennium ending August 31, 1999. Fiscal Analysis The resolution proposes a constitutional amendment that would increase the homestead exemption for school district property taxes by $10,000. The proposed amendment would adjust the school district tax freeze for sixty-five and older homeowners so that the benefit of the $10,000 increase in the homestead exemption would be realized by those homeowners currently eligible for the freeze. The proposed amendment would also allow the Legislature to provide for the transfer of all or part of the sixty-five or over tax freeze to a different homestead. The amendment would be submitted to the voters on August 9, 1997. The cost to the state for publication of the resolution is $71,000. Methodolgy Estimates of the revenue loss from the increased homestead exemption are based on estimates provided by the Comptroller of Public Accounts. The fiscal note assumes that the State would fully offset the property tax losses to school districts with increased state aid under the foundation school program. The probable fiscal implication relating to the increased homestead exemption and publication of the resolution during each of the first six years following passage is estimated as follows: Six Year Impact: Fiscal Year Probable Probable Savings/(Cost) Savings/(Cost) from General from General Revenue Fund Revenue Fund for Publication of the Resolution 0001 0001 1997 $0 ($71,000) 1997 (511,665,000) 0 1999 (532,889,000) 0 2000 (554,893,000) 0 2001 (577,704,000) 0 2002 (601,350,000) 0 The fiscal note reflects only the costs related to the increased homestead exemption for school district property taxes. (These costs are also included in the fiscal note for the Conference Committee Report of House Bill 4.) The effect of portability of the sixty-five and over freeze would depend on the enabling legislation, House Bill 4. 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 1997 ($71,000) 1998 (511,665,000) 1999 (532,889,000) 2000 (554,893,000) 2001 (577,704,000) 2002 (601,350,000) Similar annual fiscal implications would continue as long as the provisions of the amendment are in effect. The fiscal implications to school districts would depend on the enabling legislation, House Bill 4, therefore the fiscal implications to school districts are shown in the fiscal note for that bill. The increase in the school district homestead exemption would have the effect of shifting a small portion of appraisal district administrative cost from school districts to other taxing units. Source: Agencies: 304 Comptroller of Public Accounts 701 Texas Education Agency - Administration LBB Staff: JK ,RR ,RS ,BR