LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session April 17, 2001 TO: Honorable Rene Oliveira, Chair, House Committee on Ways & Means FROM: John Keel, Director, Legislative Budget Board IN RE: HB3319 by Ramsay (Relating to the operation and performance of appraisal districts and the determination of school district property values.), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB3319, As Introduced: negative impact of $(17,105,000) through * * the biennium ending August 31, 2003. * ************************************************************************** The bill would amend the Tax Code and Government Code to require the Comptroller to audit, as soon as practicable, the performance of an appraisal district upon a finding that an appraisal district's market value of property was not valid. The bill would allow the Comptroller to order the development, submission, and implementation of an improvement plan to address the deficiencies found in an audit. The bill would take effect immediately upon enactment, assuming that it received the requisite two-thirds majority votes in both houses of the Legislature. Otherwise, it would take effect September 1, 2001. General Revenue-Related Funds, Five-Year Impact: **************************************************** * Fiscal Year Probable Net Positive/(Negative) * * Impact to General Revenue Related * * Funds * * 2002 $(9,754,000) * * 2003 (7,351,000) * * 2004 (141,158,000) * * 2005 (299,550,000) * * 2006 (466,974,000) * **************************************************** 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 Counties Cities * * 0001 * * 2002 $(9,754,000) $0 $0 $0 * * 2003 (7,351,000) (156,236,000) (36,587,000) (36,636,000) * * 2004 (141,158,000) (168,735,000) (76,101,000) (76,204,000) * * 2005 (299,550,000) (181,984,000) (118,717,000) (118,878,000) * * 2006 (466,974,000) (196,023,000) (164,621,000) (164,844,000) * *************************************************************************** The estimated fiscal implications to general revenue reflect the Comptroller's estimated dynamic tax feedback effects created by the reduction in industry and consumer tax burdens. The dynamic tax feedback effects are shown only with respect to the losses incurred by the General Revenue Fund 0001. Fiscal Analysis A school district, city, and county property tax levy loss was projected for fiscal 2003 based on a reduction in the statewide weighted average percentage of market value from 99.9 percent to 99.0 percent. Although the bill could have an immediate effect, a reduction in the statewide weighted average percentage of market value would not occur until fiscal 2003 because appraisals for previous fiscal years would already be substantially complete at the time the bill could take effect. One percent per year in tax base reductions were projected for the remainder of the projection period, resulting in increasing levy losses. Methodology This estimate reflects the Comptroller's estimated fiscal impact on the state and units of local government. A loss to the state because of increased funding requirements was projected for fiscal 2002 and fiscal 2003 based on existing below-market property appraisals, as measured by past property value studies. The school district losses from fiscal 2003 and forward were shifted to the state in fiscal 2004 and forward through the school funding formula, which operates with a one-year lag. Once the static fiscal impact was estimated, the dynamic fiscal impact was calculated using a Texas-specific general equilibrium model to distribute among the state's economic sectors the savings that otherwise would have been paid in taxes by consumers. The revenue feedback calculation was based on the historical relationship between state tax revenues and associated economic factors. Local Government Impact The fiscal impacts on units of local government are reflected in the above table. Source Agencies: 701 Texas Education Agency, 304 Comptroller of Public Accounts LBB Staff: JK, SD, WP, BR