LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 77th Regular Session
  
                              March 13, 2001
  
  
          TO:  Honorable Rene Oliveira, Chair, House Committee on Ways &
               Means
  
        FROM:  John Keel, Director, Legislative Budget Board
  
       IN RE:  HJR7  by Brown, Betty (Proposing a constitutional
               amendment to authorize a county or a city or town to
               establish an ad valorem tax freeze on residence
               homesteads of the elderly and their spouses.), As
               Introduced
  
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*  No significant fiscal implication to the State is anticipated,        *
*  other than the cost of publication.                                   *
*                                                                        *
*  The cost to the state for publication of the resolution is $80,000.   *
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The resolution would propose a constitutional amendment to allow cities
and counties to adopt a local property tax limitation or "tax freeze" for
persons who receive a 65-and-over homestead exemption.

The proposed limitation would include survivor benefits to a surviving
spouse and legislative authorization to allow transfer of the freeze to a
subsequent homestead within the same city or county.  The limitation
either could be adopted by the governing body or installed through an
election ordered by the governing body following the receipt of a
petition signed by 5 percent of the registered voters of the city or
county.

The proposed freeze is similar to the existing mandatory freeze
applicable to school district property taxes.  If adopted, the proposed
amendment, by itself, would have no fiscal impact on local governments.
  
Local Government Impact
  
Cities and counties choosing to adopt a property tax freeze for
65-and-over homestead owners would experience a 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.

The Comptroller's 2001 publication Tax Exemptions & Tax Incidence
includes estimates that the 65-and-over school district tax freeze on
homesteads costs the state (reimbursing school districts for prior year
exemption losses) approximately $300 million per year.

It is not known how many cities and counties might hold an election and
vote to adopt a property tax freeze for 65-and-over homestead owners.
For purposes of this analysis it was assumed that all taxing
jurisdictions would provide the exemption.  Based on the cost to the
state of approximately $300 million per year for school districts and the
average tax rate of cities and counties, if all adopted the tax freeze,
cities could be expected to lose approximately $117 million per year in
tax levies, while counties would experience a reduction of approximately
$70 million per year.

Note:  Counties or cities would not be reimbursed or "held harmless" by
the state for exemption costs.
  
  
Source Agencies:   307   Secretary of State, 304   Comptroller of Public
                   Accounts
LBB Staff:         JK, SD, WP, BR