LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
May 2, 2001
TO: Honorable Teel Bivins, Chair, Senate Committee on
Education
FROM: John Keel, Director, Legislative Budget Board
IN RE: SB1389 by Armbrister (Relating to the treatment under
the public school finance system of declining property
values and taxes levied on property subject to
bankruptcy proceedings or an appeal by a property
owner.), As Introduced
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* SB1389, As Introduced: negative impact of $(54,250,000) 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. *
**************************************************************************
General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2002 $(27,125,000) *
* 2003 (27,125,000) *
* 2004 (27,125,000) *
* 2005 (27,125,000) *
* 2006 (27,125,000) *
****************************************************
All Funds, Five-Year Impact:
*****************************************************
* Fiscal Year Probable Savings/(Cost) from *
* Foundation School Fund *
* 0193 *
* 2002 $(27,125,000) *
* 2003 (27,125,000) *
* 2004 (27,125,000) *
* 2005 (27,125,000) *
* 2006 (27,125,000) *
*****************************************************
Fiscal Analysis
The bill amends Chapters 41 and 42 of the Education Code to require the
Commissioner of Education to reduce a school district's taxable value,
for purposes of calculating state funding, by an amount reflecting the
district's inability to collect ad valorem taxes on certain property
subject to federal bankruptcy proceedings and taxpayer property value
appeals.
The bill amends Chapter 42 to require the commissioner to adjust a school
district's taxable value, when a district experiences a decline in value
of any because of factors beyond the control of the board of trustees.
It removes a four percent threshold for declines to be recognized, and
removes a provision that makes the computation subject to limits by
appropriation. The bill removes language making such adjustments
contingent on specific appropriations.
Methodology
The Texas Education Agency (TEA) indicates that recent statistics on
bankruptcies show more than 62,000 filings in Texas in the period of July
1999, through June 2000. More than 95 percent of the filings were for
personal bankruptcy, although nearly 2600 were for businesses. This
fiscal note will assume that only half the filings will result in unpaid
taxes, and the average unpaid tax amount will be $500. With this assumed
average unpaid tax liability, the cost to the state would be $15.5
million per year. Regarding taxable value appeals, state aid costs and
recapture revenue loss would depend on the value associated with future
taxpayer property value appeals.
A comparison of certified 1998 and 1999 school district taxable values
indicates an aggregate decline in value of $775,000,000 for school
districts experiencing a decline in value of four percent or less.
Applying an average school district tax rate of $1.50 to the decline
amount would result in a $11,625,000 loss to the state had the bill been
effective for the 2000-2001 school year.
Local Government Impact
School districts would experience additional revenue as indicated in the
state fiscal impact table above.
TEA indicates that each district would need to provide a separate
schedule of taxes levied but not collected for one of the eligible
reasons, along with a separate report of taxes collected due to the
conclusion of one of the conditions. These additional reports would be
added to the independent audit report, and may have some additional cost
to school districts. School districts that seek an adjustment prior to
the submission of audit reports would be required to submit applications
for consideration.
Source Agencies: 304 Comptroller of Public Accounts, 701 Texas
Education Agency
LBB Staff: JK, CT, RN