LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 75th Regular Session May 13, 1997 TO: Honorable Paul Sadler, Chair IN RE: Senate Joint Resolution No. 43, As Engrossed Committee on Revenue and Public Education Funding By: Cain House Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on SJR43 ( proposing a constitutional amendment relating to transferring the school tax freeze on homesteads of the elderly) this office has detemined the following: Biennial Net Impact to General Revenue Funds by SJR43-As Engrossed 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 cost to the state for publication of the resolution is $71,000. Fiscal Analysis The resolution would propose a constitutional amendment to allow persons 65 years of age or older to retain their school tax limitation (tax freeze) if the person were to acquire a different residence homestead. Under current law, a person acquiring another homestead loses the earlier tax limitation and must establish a new freeze amount. The proposed constitutional amendment would be submitted to the voters at an election to be held November 4, 1997. Methodolgy The resolution 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. A mobility factor was estimated by dividing the national number of 65-and-over homesteads moving within their states by the total national 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 for 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 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 Savings/(Cost) Gain/(Loss) from from General School Districts Revenue Fund 0001 LCL-SCHOOL 1998 $0 $0 1998 0 0 2000 0 (13,039,000) 2001 (13,039,000) (12,248,000) 2002 (25,288,000) (11,427,000) Net Impact on General Revenue Related Funds: Fiscal Year Probable Net Postive/(Negative) General Revenue Related Funds Funds 1998 $0 1999 0 2000 0 2001 (13,039,000) 2002 (25,288,000) Source: Agencies: 701 Texas Education Agency - Administration 304 Comptroller of Public Accounts LBB Staff: JK ,RR ,JD ,BR