LEGISLATIVE BUDGET BOARD
                                   Austin, Texas
         
                                   FISCAL NOTE
                               75th Regular Session
         
                                  May 29, 1997
         
         
      TO: Honorable Bob Bullock            IN RE:  Senate Bill No. 1437, As Passed 2nd House
          Lieutenant Governor                Wentworth
          Senate
          Austin, Texas
         
         
         
         
         FROM:  John Keel, Director    
         
In response to your request for a Fiscal Note on SB1437 ( relating 
to the exemption from and limitations on ad valorem taxes on 
the residence homestead of an elderly individual and the individual's 
surviving spouse and to the termination of that exemption if 
that homestead ceases to be the homestead of that elderly individual 
or surviving spouse) this office has detemined the following:
         
         Biennial Net Impact to General Revenue Funds by SB1437-As Passed 2nd House
         
Section 403.302 of the 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 the bill 
could cause a reduction in school district taxable values reported 
to the Commissioner of Education by the Comptroller.  To the 
extent that currently taxable property was removed from local 
school district tax rolls, the state could experience an increase 
in the cost of public education based on current funding formulas.
         

         
 
FISCAL ANALYSIS
The bill would amend Chapter 11 and 26 of the 
Tax Code to allow a person 65 years or older to receive the 
$10,000 school homestead exemption and the optional 65 and over 
homestead exemption immediately upon turning 65 years of age. 
 The bill also would allow a surviving spouse to continue to 
receive the exemption(s) as if the qualifying person 65 or over 
had lived the entire year.  The bill would allow a surviving 
spouse (55 years or older) to receive the school tax limitation 
(tax freeze) as if the qualifying person 65 or over had lived 
the entire year.  Under the bill, a person qualifying for an 
immediate homestead exemption during the year that person turned 
65 would pay prorated taxes for the tax year in which that person 
turned 65.  Under current law, to receive a 65 and over homestead 
exemption, a person must be 65 years of age on January 1 of 
the tax year.  The bill would provide for a reduction in the 
school tax limitation amount if school district taxes are reduced 
in the year immediately following  the first year of qualification.

The 
bill would take effect immediately upon enactment, assuming 
that it received the requisite two-thirds majority votes in 
both houses of the Legislature.  Otherwise, it would take effect 
90 days after adjournment.  Section 5 of the bill would take 
effect January 1, 1998.
          
LOCAL
The bill would cause some loss of revenue to local governments. 
 The loss would depend on the number of persons reaching the 
age of 65 on particular dates and the number of taxing units 
offering the optional 65 and over homestead exemption, and in 
what amounts offered. 
          
   Source:            Agencies:   304   Comptroller of Public Accounts
                                         
                      LBB Staff:   JK ,RR ,BR