LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session April 30, 2001 TO: Honorable Paul Sadler, Chair, House Committee on Public Education FROM: John Keel, Director, Legislative Budget Board IN RE: HJR103 by Hamric (Proposing a constitutional amendment to prohibit an increase in the total amount of school district ad valorem taxes that may be imposed on the residence homestead of a disabled person.), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HJR103, As Introduced: positive impact of $0 through the biennium * * ending August 31, 2003. * ************************************************************************** The resolution proposes an amendment to Article VIII, Section 1-b(d) of the Texas Constitution to extend the current school property tax limitation ("tax freeze") for residence homesteads to disabled persons. The proposed constitutional amendment would be submitted to voters at an election to be held November 6, 2001. General Revenue-Related Funds, Five-Year Impact: **************************************************** * Fiscal Year Probable Net Positive/(Negative) * * Impact to General Revenue Related * * Funds * * 2002 $0 * * 2003 0 * * 2004 0 * * 2005 (3,382,500) * * 2006 (4,114,000) * **************************************************** All Funds, Five-Year Impact: *************************************************************************** *Fiscal Probable Savings/(Cost) from Probable Revenue Gain/(Loss) * * Year General Revenue Fund from School Districts * * 0001 * * 2002 $0 $0 * * 2003 0 0 * * 2004 0 (3,382,500) * * 2005 (3,382,500) (731,500) * * 2006 (4,114,000) (876,500) * *************************************************************************** Fiscal Analysis For the 2000 tax year, school districts reported $17.7 billion in property value loss attributable to the current 65-and-over school property tax limitation. Applying a $1.50 tax rate, this value loss translates into a levy loss of $265,500,000. This levy loss benefits 1,069,000 qualified 65-and-over homeowners, resulting in an average tax limitation benefit of $248. School district reports indicate 102,000 disabled persons qualified for the $10,000 homestead exemption (approximately 10 percent of the total number of qualified 65-and-over homeowners). Methodology Based on an assumption that the average 65-and-over homestead owner receives approximately 10 years benefit from the school property tax limitation, qualified disabled persons would receive an average benefit of $27.50 in the first year of implementation, increasing at a 10 percent rate over the next 10 years. It was also assumed that the number of qualified disabled persons would increase by approximately 10 percent per year over the projection period. Because of the younger age of most disabled persons who would qualify under this provision and their increasing number, levy losses would continue to increase by some undetermined amount beyond 2013. 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. The state could reimburse school districts for their total levy losses, including losses for this exemption, after a one-year lag. Local Government Impact No fiscal implication to units of local government, other than school districts, is anticipated. Source Agencies: 307 Secretary of State, 304 Comptroller of Public Accounts LBB Staff: JK, CT, BR