LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 75th Regular Session March 25, 1997 TO: Honorable Tom Craddick, Chair IN RE: Senate Bill No. 95, As Engrossed Committee on Ways & Means By: Patterson, Jerry House Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on SB95 ( 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 SB95-As Engrossed 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 Section 11.42 of the Property Tax Code requires that eligibility for and the amount of a property tax exemption are determined by a claimant s qualifications on January 1. A person who does not qualify for an exemption on January 1 of any year may not receive the exemption for that year. The bill would allow several types of organizations (charitable, cemeteries, youth development organizations, religious organizations, schools, miscellaneous organizations, and non profit water/wastewater corporations) to receive a property tax exemption immediately upon qualification for the exemption. The bill would allow organizations that had not qualified on January 1 to pay a prorated tax bill based on the date that they had met the requirements for exemption. Taxes would be prorated based on the number of days the organization qualified during the tax year. 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 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. LOCAL 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: 304 Comptroller of Public Accounts LBB Staff: JK ,RR ,BR