LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 76th Regular Session April 6, 1999 TO: Honorable Rene Oliveira, Chair, House Committee on Ways & Means FROM: John Keel, Director, Legislative Budget Board IN RE: HB2574 by Hilbert (relating to allocation for ad valorem tax purposes of the value of certain business aircraft used both in and outside of this state), As Introduced ************************************************************************** * Estimated Two-Year Net Impact to General Revenue Related Fundsfor * * HB2574, As Introduced: $0 through the biennium ending August 31, * * 2001. * ************************************************************************** General Revenue-Related Funds, Five-Year Impact: **************************************************** * Fiscal Year Probable Net Positive/(Negative) * * Impact to General Revenue Related * * Funds * * 2000 $0 * * 2001 0 * * 2002 (11,537,000) * * 2003 (11,883,000) * * 2004 (12,240,000) * **************************************************** All Funds, Five-Year Impact: *************************************************************************** *Fiscal Probable Probable Probable Probable * * Year Savings/(Cost) Revenue Revenue Revenue * * from General Gain/(Loss) Gain/(Loss) Gain/(Loss) * * Revenue Fund from School from Cities from Counties * * 0001 Districts * * 2000 $0 $0 $0 $0 * * 2001 0 (11,537,000) (2,500,000) (3,461,000) * * 2002 (11,537,000) (346,000) (2,575,000) (3,565,000) * * 2003 (11,883,000) (357,000) (2,652,000) (3,672,000) * * 2004 (12,240,000) (367,000) (2,732,000) (3,782,000) * *************************************************************************** Fiscal Analysis Business aircraft in Texas are currently taxable at a single location (situs) in the state. Once situs is established under Section 21.02 of the Tax Code, the aircraft is appraised and taxed at that single location. This bill would decrease appraised values for local governments by providing for the allocation of a business aircraft's appraised value to Texas and other locations. Methodology The Comptroller staff estimated the property value loss to local governments by first determining the number of business aircraft with situs in Texas and the average appraised value of a business aircraft in Texas, to determine the current appraised value of all business aircraft in the state. The staff then estimated the reduction in appraised value that would occur using the allocation formula proposed in the bill. The resulting reduction represents the value loss to local governments. The value loss was converted to a property tax levy loss by applying estimated average property tax rates. A moderate growth rate was used, consistent with the current growth for commercial property in Texas 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. The cost to the state was estimated by assuming that the state would reimburse school districts for their total levy losses, after a one-year lag Local Government Impact The impact on local taxing units is reflected in the above table. Source Agencies: LBB Staff: JK, BB, BR