C.S.H.B. 2383 78(R)    BILL ANALYSIS


C.S.H.B. 2383
By: Hegar
Local Government Ways and Means
Committee Report (Substituted)



BACKGROUND AND PURPOSE 

Under Section 11.11, Tax Code, property that is owned by the State of
Texas or a political subdivision thereof is exempt from taxation if the
property is used for public purposes.  Use of public property by a
religious organization does not fall within the definition of use for
public purposes.   

Article 3, Section 2 of the Texas Constitution authorizes the Legislature
to exempt from taxation actual places of religious worship.  Under its
constitutional authority to exempt actual places of religious worship from
taxation, the Legislature has promulgated Section 11.20, Tax Code, which
exempts property that is owned by a religious organization (as that term
is defined in Section 11.20(c)) and is used as provided therein.   The
current statutory scheme does not provide for an exemption where a
religious organization leases public property and uses the property in
such a manner that the property would be exempt under Section 11.20 if the
religious organization owned the property instead of leasing it. 

The purpose of the proposed changes to Section 11.20 is to provide an
exemption from taxation for property that is (i) owned by the United
States, the State of Texas, or a political subdivision thereof but leased
to a religious organization and (ii) is used by such religious
organization in a manner that would qualify the property as exempt from
taxation under Section 11.20 if the property was owned by the religious
organization (e.g., as a place of regular religious worship). 


RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any
additional rulemaking authority to a state officer, department, agency, or
institution. 

ANALYSIS

SECTION 1 
Amends Section 11.20(d), Tax Code, which provides than an occasional
secular use of property that is otherwise exempt does not result in the
loss of the exemption provided that certain conditions are met, to also be
applicable to (i) property that is owned by a religious organization and
(ii) public property that is leased by a religious organization and exempt
under Section 11.20(h). 
 
Adds Section 11.20(h), Tax Code, to provide an exemption from taxation of
property that is owned by the United States, the State of Texas or a
political subdivision thereof, if the property is leased or otherwise used
by a religious organization in such a manner that the property would be
exempt if the religious organization owned the property. 

Adds Section 11.20(i), Tax Code, to allow religious organizations claiming
the exemption under Subsection (h) to apply and take actions related to
the exemption as if the organization owned the property. 

SECTION 2
Provides that this Act is only applicable to an ad valorem tax year that
begins on or after the effective date. 

 EFFECTIVE DATE

January 1st, 2004.


COMPARISON OF ORIGINAL TO SUBSTITUTE

C.S.H.B. 2383 differs from the introduced version by amending Section
11.20 (d), Tax Code, to clarify that occasional secular use of property
will remain exempt and applies to Subsection (a)(1) and Subsection (h)(1),
of Section 11.20, Tax Code.