TO: | Honorable Fred Hill, Chair, House Committee on Local Government Ways and Means |
FROM: | John Keel, Director, Legislative Budget Board |
IN RE: | HB3223 by Bohac (Relating to limiting the maximum average annual increase in the appraised value of real property for ad valorem tax purposes to five percent.), As Introduced |
Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
---|---|
2004 | $0 |
2005 | $6,480,000 |
2006 | ($263,103,000) |
2007 | ($368,857,000) |
2008 | ($379,690,000) |
Fiscal Year | Probable Revenue Gain fromGENERAL REVENUE FUND 1 |
Probable Savings/(Cost) fromFOUNDATION SCHOOL FUND 193 |
Probable Revenue (Loss) fromSchool Districts | Probable Revenue (Loss) fromCities |
---|---|---|---|---|
2004 | $0 | $0 | $0 | $0 |
2005 | $6,480,000 | $0 | ($276,145,000) | ($95,110,000) |
2006 | $13,042,000 | ($276,145,000) | ($110,458,000) | ($133,154,000) |
2007 | $17,746,000 | ($386,603,000) | ($19,330,000) | ($139,812,000) |
2008 | $26,244,000 | ($405,934,000) | ($20,297,000) | ($146,803,000) |
Fiscal Year | Probable Revenue (Loss) fromCounties |
---|---|
2004 | $0 |
2005 | ($57,250,000) |
2006 | ($80,150,000) |
2007 | ($84,157,000) |
2008 | ($88,365,000) |
The bill would reduce the current 10 percent per year cap on homestead appraisal increases to five percent. Actual 2002 reported school district value losses to the 10 percent cap are $14.2 billion. This translates to a 2002 revenue loss to school districts of over $225 million. For the purposes of this analysis, an annual five percent statewide residential growth rate is projected.
This estimate assumes the appraised value of properties currently subject to the cap would not be increased to market value by passage of the proposed bill. As a result, the existing base stock of capped properties becomes the starting point for the estimate and the proposed reduced percentage cap would increase the loss attributable to these properties, as well as increasing the number of properties added to the "capped" stock each year.
The projected growth rate was compared to the recent historical growth rate to predict a fiscal 2003 loss under current law. The total predicted loss under the proposed cap was estimated by increasing the predicted fiscal 2003 loss by the ratio of the proposed cap to the old cap. The predicted fiscal 2003 loss was subtracted from the total predicted loss under the proposed bill to estimate the incremental loss. The predicted fiscal 2003 loss was used as a base to project future losses.
A real property to homestead multiplier was calculated by comparing the value of all real property to the value of homestead property. The multiplier was used to extend the homestead loss to all real property.
Losses were phased in over the first two years and trended at five percent through the projection period to account for value and rate increases. School district losses would shift to the state after a one-year lag through the operation of the school funding formula.
The Comptroller's office estimated the dynamic tax feedback effects which are shown only with respect to the gain incurred by the General Revenue Fund 0001.
Source Agencies: | 304 Comptroller of Public Accounts
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LBB Staff: | JK, JO, SD, WP, DLBe
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