LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session April 12, 2001 TO: Honorable Rene Oliveira, Chair, House Committee on Ways & Means FROM: John Keel, Director, Legislative Budget Board IN RE: HB2416 by Brown, Betty (Relating to limiting the amount of county or municipal ad valorem taxes that may be imposed on the residence homesteads of the elderly and their surviving spouses.), As Introduced ************************************************************************** * No significant fiscal implication to the State is anticipated. * ************************************************************************** The bill would add Section 11.261 to the Tax Code to extend the 65-and-over residence homestead property tax freeze to cities and counties on a local option basis, in the same format as the current school tax freeze. The bill would take effect January 1, 2002, contingent on passage of a constitutional amendment to permit a city or county to establish a property tax freeze on residence homesteads of the elderly. Note: Counties or cities would not be reimbursed or "held harmless" for exemption costs by the state. Local Government Impact The proposed freeze is similar to the existing mandatory freeze applicable to school district property taxes. Cities and counties choosing to adopt a property tax freeze for 65-and-over homestead owners would experience an undetermined loss of local property tax revenue. The amount of such loss would depend on the number of entities adopting the limitation, the number of 65-and-over recipients, and the appraised value of those recipients' homesteads. Note: Based on the Comptroller's 1999 Property Value Study findings, approximately $19 billion in property value was attributable to the mandatory school district property tax freeze. This amounted to a school tax levy loss of approximately $275.9 million, or 2.3 percent of total 1999 school tax levies. If all cities and counties adopted the freeze, and all experienced a similar percent reduction in tax levies as school districts, they would have the potential of losing $74.6 million for cities and $68.4 million for counties. Source Agencies: 304 Comptroller of Public Accounts LBB Staff: JK, SD, WP, BR