LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
February 12, 2001
TO: Honorable Rene Oliveira, Chair, House Committee on Ways &
Means
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB1013 by McReynolds (Relating to the exemption of farm
products from ad valorem taxation.), As Introduced
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB1013, As Introduced: impact of $0 through the biennium ending *
* August 31, 2003. *
* *
* The bill would make no appropriation but could provide the legal *
* basis for an appropriation of funds to implement the provisions of *
* the bill. *
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General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2002 $0 *
* 2003 0 *
* 2004 (5,882,663) *
* 2005 (6,396,349) *
* 2006 (7,152,538) *
****************************************************
All Funds, Five-Year Impact:
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*Fiscal Probable Probable Probable Probable *
* Year Savings/(Cost) Revenue Revenue Revenue *
* from General Gain/(Loss) Gain/(Loss) Gain/(Loss) *
* Revenue Fund from School from Counties from Cities *
* 0001 Districts *
* 2002 $0 $0 $0 $0 *
* 2003 0 (5,882,663) (1,583,794) (75,419) *
* 2004 (5,882,663) (513,686) (1,722,094) (82,004) *
* 2005 (6,396,349) (756,189) (1,925,683) (91,699) *
* 2006 (7,152,538) (901,398) (2,168,367) (103,256) *
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Fiscal Analysis
To be exempt under current law, harvested timber in the hands of the
producer must be located on the land on which it was produced and owned
by the person who owned the timber when it was standing.
The bill would provide a property tax exemption for harvested timber
after it left the land where it was produced. Property exempted under
this bill is currently taxable as income-producing personal property.
Methodology
The fiscal impact of exempting timber after it left the land where it was
produced was based on the 1997 Texas timber harvest of 675.9 million
cubic feet having a delivered value of $1.01 billion. These amounts were
extrapolated through fiscal year 2006 using the producers price index
for lumber and a growth rate for production of 2 percent per year. The
total taxable value under current law was then calculated through fiscal
year 2006. The fiscal impact on property taxes was estimated under the
assumption that 33 percent of the taxable value of timber would be
subject to the exemption.
Fiscal implications would exist for the state, school districts, and
counties. Although the exemption would take effect January 1, 2002,
school districts, counties and cities would not experience an impact
until fiscal year 2003. The operation of the school funding formula
would effectively shift most of the school district cost to the state
after a one-year lag.
Local Government Impact
The impacts on units of local government are reflected in the above table.
Source Agencies: 304 Comptroller of Public Accounts
LBB Staff: JK, SD, WP, BR