LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
June 1, 1997
TO: Honorable Bob Bullock Honorable James E. "Pete" Laney
Lieutenant Governor Speaker of the House
Senate
Austin, Texas
FROM: John Keel, Director
In response to your request for a Fiscal Note on SB841 ( relating
to ad valorem taxation) this office has detemined the following:
Biennial Net Impact to General Revenue Funds by SB841-Conference Committee Report
Implementing the provisions of the bill would result in a net
impact of $0 to General Revenue Related Funds through the biennium
ending August 31, 1999.
The bill would make no appropriation but could provide the legal
basis for an appropriation of funds to implement the provisions
of the bill.
Fiscal Analysis
The bill is an omnibus property tax bill. The bill would make
numerous changes to the Tax code for appraisal district administration,
appraisal methods, transfer of over-65 tax freeze and limits
in the growth in appraised value of residential homesteads and
limits on the frequency of value increase.
Methodolgy
The bill would allow persons 65 years of age or older who move
from one homestead to another to continue a tax freeze that
they would otherwise lose under current law, creating a cost
to the state. A mobility factor was estimated by dividing the
national number of 65 and over homesteads moving within their
state by the total US number of 65 and over homesteads. The
mobility factor times the number of 65 and over homesteads in
Texas equals the number of Texas 65 and over homesteads moving.
The number of Texas 65 and over homesteads moving times the
average freeze value loss times the 1996 average tax rate equals
the yearly levy loss from movers. The levy loss was trended
over the projection period. Each year's levy loss, net of 65
and over deaths is cumulative. The school funding formula would
reimburse school districts after a one-year lag, resulting in
a state cost and a corresponding reduction in the cost to school
districts.
The annual increase in valuation of a residence
homestead in the preceding year would be limited to the lesser
of the market value of the property or 110 percent of the appraised
value of the property for the last year in which the property
was appraised for taxation, plus the market value of new improvements.
The
other provisions of the bill would also result in increased
cost to the state and units of local government.
The probable fiscal implications of implementing the provisions
of the bill during each of the first five years following passage
is estimated as follows:
Five Year Impact:
Fiscal Year Probable Probable Revenue Probable Probable Revenue
Savings/(Cost) Gain/(Loss) from Savings/(Cost) Gain/(Loss) to
from General School from General School
Revenue Districts-Over Revenue Districts-Limitation
Fund-Over 65 Tax 65 Tax Freeze Fund-Limitation on Appraised Value
Freeze Portability Portability on Appraised Value
0001 LCL-SCHOOL 0001 LCL-SCHOOL
1998 $0 $0 $0 $0
1998 0 (12,482,000) 0 (18,509,000)
2000 (12,482,000) (11,791,000) (18,509,000) (19,814,000)
2001 (24,273,000) (11,000,000) (19,814,000) (21,213,000)
2002 (35,274,000) (10,178,000) (21,213,000) (22,709,000)
Fiscal Year Probable Revenue Probable Revenue
Gain/(Loss) to Gain/(Loss) to
Cities-Limitation Counties-Limitation
on Appraised Value on Appraised Value
LCL-CITY LCL-COUNTY
1998 $0 $0
1999 (5,183,000) (4,812,000)
2000 (5,548,000) (5,152,000)
2001 (5,940,000) (5,515,000)
2002 (6,359,000) (5,904,000)
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
1998 $0
1999 0
2000 (30,991,000)
2001 (44,087,000)
2002 (56,487,000)
Similar annual fiscal implications would continue as long as
the provisions of the bill are in effect.
Source: Agencies:
LBB Staff: JK ,RR ,BR