LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 76th Regular Session
  
                              April 29, 1999
  
  
          TO:  Honorable Bill Ratliff, Chair, Senate Committee on Finance
  
        FROM:  John Keel, Director, Legislative Budget Board
  
       IN RE:  HB1978  by Kuempel (relating to exempting property owned
               by organizations that provide support to elderly persons
               from ad valorem taxation), As Engrossed
  
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*  Based on the state's school funding formulas, a reduction in          *
*  taxable values could result in an increase in the cost of state       *
*  aid for public education.                                             *
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Fiscal Analysis

The bill would amend the Tax Code by expanding the current qualifying
charitable activity of providing support to elderly persons to include
providing "recreational or social activities and facilities designed to
address the special needs of elderly persons."  The bill also would
provide an exception to the Tax Code requirement that a qualified
charitable organization must engage exclusively in performing one or more
of its charitable functions as provided in Section 11.18 of the Tax
Code.  A charitable organization providing support services to the
elderly would be allowed to maintain a property tax exemption on its
property and to engage in other activities that support or are related to
its charitable functions.

The bill would take effect January 1, 2000, contingent on the passage of
a constitutional amendment authorizing the exemption of property of
institutions of public charity from ad valorem taxation.

Methodology and Impact

To the extent that some charitable organizations that would not otherwise
qualify for existing property tax exemptions qualified under the
proposed expanded exemption, passage of this bill would cause a reduction
in school district taxable values reported to the Commissioner of
Education by the Comptroller's office, resulting in an increase in state
public education.

If school districts experience a $1,000,000 annual reduction in their
property tax base, assuming a tax rate of $1.50 per $100 of taxable
value, local school districts would experience an annual of $150,000 in
property tax revenue.
  
Local Government Impact
  
County and city taxing units would experience similar losses in property
tax revenue as those outlined above for school districts.
  
  
Source Agencies:   304   Comptroller of Public Accounts, 480
                   Department of Economic Development
LBB Staff:         JK, SD, BB, BR