LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session April 9, 2001 TO: Honorable Frank Madla, Chair, Senate Committee on Intergovernmental Relations FROM: John Keel, Director, Legislative Budget Board IN RE: SB1007 by Barrientos (Relating to the exemption from ad valorem taxation of property owned by charitable organizations that provide child care services.), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * SB1007, As Introduced: negative impact of $(1,495,099) through * * the biennium ending August 31, 2003. * ************************************************************************** The bill would amend Section 11.18 of the Tax Code to include in the statutory list of charitable organizations eligible for property tax exemptions, certain organizations providing child-care services. The bill would exempt from property taxation the real and personal property owned by a child-care facility if the organization were exempt from federal income taxation under Section 501(a), Internal Revenue Code of 1986, by being listed as an exempt entity under Section 501(c)(3) of that code. General Revenue-Related Funds, Five-Year Impact: **************************************************** * Fiscal Year Probable Net Positive/(Negative) * * Impact to General Revenue Related * * Funds * * 2002 $0 * * 2003 (1,495,099) * * 2004 (1,539,952) * * 2005 (1,586,150) * * 2006 (1,633,735) * **************************************************** All Funds, Five-Year Impact: *************************************************************************** *Fiscal Probable Probable Probable Probable * * Year Savings/(Cost) Revenue Revenue Revenue * * from General Gain/(Loss) to Gain/(Loss) to Gain/(Loss) to * * Revenue Fund School Districts Cities Counties * * 0001 * * 2002 $0 $(1,495,099) $(481,697) $(425,655) * * 2003 (1,495,099) (44,853) (496,148) (438,425) * * 2004 (1,539,952) (46,199) (511,032) (451,578) * * 2005 (1,586,150) (47,585) (526,363) (465,125) * * 2006 (1,633,735) (49,012) (542,154) (479,079) * *************************************************************************** Fiscal Analysis The Comptroller's office contacted the Dallas County Central Appraisal District (CAD), the Harris County CAD, the Tarrant County CAD, the Bexar County CAD, and the Travis County CAD. They indicated that for the 2000 tax year, a taxable value of $475,480,059 was attributable to real property owned by private child day-care centers. Methodology The Texas Department of Protective and Regulatory Services reported that there are 10,674 licensed day care facilities and 11,554 licensed residential child care facilities in Texas, for a total of 22,228 facilities. Of this total 4,363 are non-profit facilities. For purposes of this analysis, the percent of non-profit facilities, (19.6%) was applied to the values reported by the above appraisal districts. Based on this percentage, approximately $93 million in taxable value could be removed from the tax rolls. To illustrate the fiscal impact on the state and units of local government, this base amount was trended upward based on historical property tax levy increases to reflect potential losses in future fiscal years. 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 cost to the state was estimated by assuming that the state would reimburse school districts for their total levy losses, including losses for this exemption, after a one-year lag. Local Government Impact The fiscal impact on units of local government is reflected in the above table. Source Agencies: 304 Comptroller of Public Accounts LBB Staff: JK, DB, BR