LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session March 25, 2001 TO: Honorable Kip Averitt, Chair, House Committee on Financial Institutions FROM: John Keel, Director, Legislative Budget Board IN RE: HJR67 by Chisum (Proposing a constitutional amendment to extend residence homestead ad valorem tax exemptions and protection from forced sale to a homestead owned by a family-owned business.), As Introduced ************************************************************************** * Approval of the constitutional amendment would result in a * * reduction of school district taxable values, resulting in an * * increase in state public education cost. The cost to the state * * for publication of the resolution is $80,000. * ************************************************************************** The resolution would propose an amendment to the Texas Constitution to exempt, as a residence homestead, a person's residence that is owned by a family-owned business. The proposed amendment would allow for the designation of a residence owned by a family-owned business as a homestead for purposes of protection from forced sale from certain property taxes. Because the state is constitutionally prohibited from imposing a state property tax, there would be no direct fiscal impact on the state; however, Section 403.302 of the Government Code requires the Comptroller to conduct a property value study to determine the total taxable value for each school district. Total taxable value is an element in the state's school funding formula. Passage of this resolution extending residence homestead property tax exemptions to a homestead owned by a family-owned business would cause a reduction in school district taxable values reported to the Commissioner of Education by the Comptroller. There also would be some loss of taxable value and local revenue to some local units of government granting homestead exemptions. The amount of such loss would depend on the number and value of family-owned homesteads in those units. The Texas Education Agency has estimated that as a general rule, a difference of $1 billion in property valuation would change state aid requirements by approximately $14 million per year. Local Government Impact Local taxing units would experience similar losses in property tax revenue due to a reduction in taxable value. Source Agencies: 304 Comptroller of Public Accounts LBB Staff: JK, JO, WP, BR