LEGISLATIVE BUDGET BOARD
                                   Austin, Texas
         
                                   FISCAL NOTE
                               75th Regular Session
         
                                  February 6, 1997
         
         
      TO: Honorable Bill Ratliff, Chair            IN RE:  Senate Bill No. 95
          Committee on Finance                              By: Patterson, Jerry
          Senate
          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 Introduced
         
             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
 The Texas Constitution and the Property Tax Code currently provide that an 
organization qualifying as a charitable organization is entitled to an exemption 
from taxation of the buildings and personal property owned and used exclusively 
by the organization. 

 To receive this exemption, a charitable organization must be operated in a 
way that does not result in private gain.  Certain organizations also must be 
organized as nonprofit corporations as defined by the Texas Non-Profit Corporation Act.

 This bill would exempt organizations providing support to the elderly and handicapped 
under Section 11.18 (d) (3) and (13) of the Property Tax Code from the requirement 
hat they be organized as nonprofit corporations to qualify as charitable organizations.
 
 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 a 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.
         
 
          
             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