LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 76th Regular Session April 18, 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), Committee Report 1st House, as amended ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Fundsfor * * SB1461, Committee Report 1st House, as amended: impact of $0 * * through the biennium ending August 31, 2001. * * * * The bill would make no appropriation but could provide the legal * * basis for an appropriation of funds to implement the provisions of * * the bill. * ************************************************************************** General Revenue-Related Funds, Five-Year Impact: **************************************************** * Fiscal Year Probable Net Positive/(Negative) * * Impact to General Revenue Related * * Funds * * 2000 $0 * * 2001 0 * * 2002 (2,562,000) * * 2003 (2,639,000) * * 2004 (2,718,000) * **************************************************** All Funds, Five-Year Impact: *************************************************************************** *Fiscal Probable Probable Probable Probable * * Year Savings/(Cost) Revenue Revenue Revenue * * to General Gain/(Loss) to Gain/(Loss) to Gain/(Loss) to * * Revenue Fund School Districts Cities Counties * * 0001 * * 2000 $0 $0 $0 $0 * * 2001 0 (3,032,000) (372,000) (515,000) * * 2002 (2,562,000) (561,000) (383,000) (530,000) * * 2003 (2,639,000) (578,000) (395,000) (546,000) * * 2004 (2,718,000) (595,000) (406,000) (563,000) * *************************************************************************** Fiscal Analysis The bill would amend Section 11.42 of the Tax Code to provide that persons turning 65 years of age and persons already 65 years of age who acquired a homestead anytime during the year would qualify for the homestead exemption for the entire tax year. The bill would take effect January 1, 2000 and only would apply to ad valorem taxes imposed for a tax year that began on or after that date. Methodology To determine the impact of the bill relative to the 65-and-over homestead exemption provisions, the Comptroller's staff estimated the number persons who would qualify for the 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. The Comptroller's 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. The estimate includes losses attributable to mandatory and optional homestead exemptions. 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 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