LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 76th Regular Session
April 15, 1999
TO: Honorable Bill Ratliff, Chair, Senate Committee on Finance
FROM: John Keel, Director, Legislative Budget Board
IN RE: SB1461 by Cain (relating to the calculation of a
residence homestead exemption from ad valorem taxation
and the limitation of school taxes on the homestead of
an elderly person if the owner of the homestead
qualifies for the exemption or limitation after the
beginning of a tax year), As Introduced
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* Estimated Two-Year Net Impact to General Revenue Related Fundsfor *
* SB1461, As Introduced: $0 through the biennium ending August 31, *
* 2001. *
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General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2000 $0 *
* 2001 0 *
* 2002 (12,865,000) *
* 2003 (13,251,000) *
* 2004 (13,648,000) *
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All Funds, Five-Year Impact:
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*Fiscal Probable Probable Probable Probable *
* Year Revenue Revenue Revenue Revenue *
* Gain/(Loss) to Gain/(Loss) to Gain/(Loss) to Gain/(Loss) to *
* General Revenue School Districts Cities Counties *
* Fund *
* 0001 *
* 2000 $0 $0 $0 $0 *
* 2001 0 (16,220,000) (2,604,000) (3,606,000) *
* 2002 (12,865,000) (3,841,000) (2,682,000) (3,714,000) *
* 2003 (13,251,000) (3,957,000) (2,763,000) (3,825,000) *
* 2004 (13,648,000) (4,075,000) (2,846,000) (3,940,000) *
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Fiscal Analysis
Current law provides for immediate qualification for the 65-and-over
homestead exemption, with proration of the exemption based on the
property owner's birthday. The proposed law also would allow immediate
qualification, but it would give the exemption for the entire year,
regardless of the owner's birthday. The bill would allow a full year
general homestead exemption to persons acquiring a homestead anytime
during the tax year.
Passage of the bill would result in a loss of taxable value and revenue
to taxing units granting 65-and-over homestead exemptions in the first
year a person qualifies for the 65-and-over homestead exemption. Under
current law, a person turning 65 during the tax year receives a portion
of the 65-and-over homestead exemption based on his or her birth date.
Persons acquiring a homestead after January 1 of the tax year do not
currently receive a general homestead exemption for that tax year.
Methodology
The Comptroller's staff estimated the number persons who would qualify
for the 65-and-over homestead exemption in fiscal 2000 through 2004. The
value loss for cities, counties, and school districts was calculated
using value information reported to the Comptroller's Property Tax
Division by taxing units. The calculated loss was reduced by 50 percent,
recognizing current proration provisions.
To determine the impact of the bill relative to the general homestead
exemption, the Comptroller's staff estimated the number of new home
acquisitions in Texas for fiscal 2000 through 2004 and reduced that
number to account for non-homestead acquisitions such as rental
properties. Again, the value loss for cities, counties, and school
districts was calculated using value information reported by taxing
units.
The staff trended 1998 estimated taxable value losses to school
districts, cities, and counties forward through fiscal 2004 and applied
estimated average school district, city, and county tax rates to
calculate estimated local levy losses.
This estimate includes losses attributable to mandatory and optional
homestead exemptions.
The Government Code requires the Comptroller to conduct a property value
study to determine 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 levy losses attributable to
mandatory homestead exemptions after a one-year lag.
Local Government Impact
The fiscal impact on local taxing units is reflected in the above table.
Source Agencies: 304 Comptroller of Public Accounts
LBB Staff: JK, BB, BR