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: HB3425 by Merritt (Relating to an exemption from ad
valorem taxation of a portion of the appraised value of
the residence homesteads of certain active and retired
school employees.), As Introduced
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB3425, 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 (14,040,842) *
* 2005 (14,742,884) *
* 2006 (15,480,028) *
****************************************************
All Funds, Five-Year Impact:
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*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 $0 $0 $0 $0 *
* 2003 0 (14,040,842) (3,288,045) (3,621,737) *
* 2004 (14,040,842) (702,042) (3,452,447) (3,802,824) *
* 2005 (14,742,884) (737,144) (3,625,070) (3,992,965) *
* 2006 (15,480,028) (774,001) (3,806,323) (4,192,614) *
***************************************************************************
Fiscal Analysis
The bill would amend Section 11.13 of the Tax Code to provide school
teachers, nurses, and counselors with five consecutive years of school
employment a partial homestead exemption of $3,000 if they were currently
employed in one of these positions, currently a member of the Teachers
Retirement System, or at least 65 years of age. Data were obtained from
the Texas Education Agency, the National Center for Education Statistics,
and the Teachers Retirement System of Texas to estimate the number of
people potentially eligible for the proposed exemption. Using data from
the U.S. Census Bureau, the number was adjusted to reflect the percentage
of home ownership. Adjustments were made to account for households
where both spouses were teachers.
The bill would take effective January 1, 2002, contingent upon passage of
a constitutional amendment authorizing the exemption.
Methodology
The number of potentially eligible homesteads was multiplied by $3,000
and reduced slightly to account for low-value homes with existing
exemptions equaling or exceeding the value of the home. The total
statewide value was multiplied by the appropriate school, county, or
city tax rate to generate the taxing unit losses. Approximately 71.5
percent of total statewide value is in cities, so their loss was
adjusted accordingly. The estimated impact was projected over the
forecast period, taking into account value growth, tax rate growth, and
teacher population growth. The exemption would be effective for the
2002 tax year, resulting in losses in fiscal year 2003 forward. School
districts would suffer a loss in 2003; the state would bear all except
the incremental cost in fiscal 2004 and forward because of the one-year
lag in the school funding formula.
Local Government Impact
The fiscal impacts on local units of government are reflected in the
above table.
Source Agencies: 304 Comptroller of Public Accounts
LBB Staff: JK, SD, WP, BR