| TO: | Honorable Fred Hill, Chair, House Committee on Local Government Ways and Means |
| FROM: | John Keel, Director, Legislative Budget Board |
| IN RE: | HB1821 by Kuempel (Relating to the immediate qualification of newly acquired land for ad valorem tax appraisal as qualified open-space land.), As Introduced |
| Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
|---|---|
| 2004 | $0 |
| 2005 | $0 |
| 2006 | ($916,000) |
| 2007 | ($1,924,000) |
| 2008 | ($3,031,000) |
| Fiscal Year | Probable (Cost) fromFOUNDATION SCHOOL FUND 193 |
Probable Revenue (Loss) fromSchool Districts | Probable Revenue (Loss) fromCounties |
|---|---|---|---|
| 2004 | $0 | $0 | $0 |
| 2005 | $0 | ($916,000) | ($191,000) |
| 2006 | ($916,000) | ($1,008,000) | ($401,000) |
| 2007 | ($1,924,000) | ($1,107,000) | ($632,000) |
| 2008 | ($3,031,000) | ($152,000) | ($664,000) |
The bill would permit immediate qualification of land for appraisal as open-space land when: 1) an owner filed a notice with the chief appraiser stating that the owner intended to devote the land principally to a particular agricultural use; 2) the land was not appraised as open-space land at the time of acquisition; 3) the land was appraised as open-space land in any of the 10 preceding years; 4) the land was not otherwise ineligible for appraisal as open-space land; and 5) the land was acquired by the owner on or after June 1, 2002.
The bill would require the chief appraiser to determine the value of the land as if the land had been used for the stated intended purpose for the preceding five years. To continue receiving open-space appraisal, the land would have to be devoted principally to agricultural use to the degree of intensity generally accepted in the area within three years after receiving open-space appraisal under this proposal. Failure to meet the local degree of intensity standard would result in imposition of the additional rollback tax, as if the use of the land had changed.
The bill would require the chief appraiser, on request of the owner during the initial three-year appraisal period, to inspect the land and provide the owner a written evaluation specifying any actions necessary to meet local primary use and degree of intensity standards.
Based on a telephone survey of a sample of Texas appraisal districts by the Comptroller's office, the proposed bill would have no impact in the Panhandle and West Texas Regions of the state. In other regions, passage of the bill could affect an average of 1,000 acres in each appraisal district. Since the typical affected acreage would be native pastureland, native pasture values were used in the analysis. The difference between the reported native pasture market value and ag-use productivity value was calculated based on 1,000 acres in each affected appraisal district. The appraisal district differences in market value and productivity were then totaled.
Only land acquired on or after June 1, 2002 would be eligible for immediate qualification. The Comptroller's office estimated one-third of the total eligible acreage would apply and qualify for productivity appraisal each year until the total acreage was absorbed. Consequently, the value loss would increase by one-third through year three of the projection period. The estimated value losses were converted to levy losses by applying the appropriate tax rates. The estimated levy losses were trended forward to account for increases in values and rates. The estimated losses were reduced because of the restriction that the land would have to have previously qualified within the preceding 10 years. The school district costs would shift to the state after a one-year lag through the operation of the school funding formula.
| Source Agencies: | 304 Comptroller of Public Accounts, 802 Parks and Wildlife Department
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| LBB Staff: | JK, SD, WP, DLBe
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