79(3) HB 60 Introduced version

Fiscal Year	Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2007	$0
2008	$0
2009	($228,993,000)
2010	($483,484,000)
2011	($765,620,000)

All Funds, Five-Year Impact:

Fiscal Year	Probable Savings/(Cost) from FOUNDATION SCHOOL FUND 193	Probable Revenue Gain/(Loss) from School Districts	Probable Revenue Gain/(Loss) from Counties	Probable Revenue Gain/(Loss) from Cities
2007	$0	$0	$0	$0
2008	$0	($228,993,000)	($54,969,000)	($50,819,000)
2009	($228,993,000)	($254,491,000)	($116,276,000)	($107,272,000)
2010	($483,484,000)	($282,136,000)	($185,364,000)	($169,823,000)
2011	($765,620,000)	($308,966,000)	($262,629,000)	($238,968,000)

Fiscal Analysis

The bill would amend Section 403.302 of the Government Code to increase from five percent to 10 percent the maximum margin of error the Comptroller may apply in determining the validity of school district taxable values reported to the Commissioner of Education for use in school funding formulas.

The bill would apply to the annual school district property value study for the 2006 tax year (reported to the Commissioner of Education, July 1, 2007).

This bill would take effect immediately upon enactment, assuming that it received the requisite two-thirds majority votes in both houses of the Legislature. Otherwise, it would take effect on the 91st day after the last day of the legislative session.

Methodology

The Comptroller’s Property Value Study (PVS) employs a statistical sampling procedure to estimate the taxable wealth in each Texas school district for use in the state’s school funding formula. As in any sample, the result has a margin of error—a statistic that indicates the reliability of the estimate. In general, larger samples and greater uniformity in local appraisals result in smaller margins of error. The Comptroller’s school district property samples are sized to provide a plus or minus five percent margin of error, or lower, in the great majority of Texas school districts. This is required under current law, which requires the Comptroller to attain margins of error that do not exceed five percent. This bill would increase the maximum target margin of error to 10 percent. The bill would permit the Comptroller to use any target margin of error below 10 percent.

Local Government Impact

A hypothetical fiscal impact was estimated assuming the Comptroller applied the proposed maximum 10 percent margin of error in conducting the annual school district property value study.

If this were to occur, some of the incentive for appraisal districts to keep property values at or near market value would be lost. If the bill took immediate effect, the initial effect would occur in fiscal 2008, because appraisal district values would already be set in fiscal 2007. It was assumed that the statewide average percentage of market value at which properties are appraised would fall below current projections of one percent per year until values were just above the new 10 percent margin of error threshold. The value loss would cause corresponding levy losses to cities, counties, and school districts. Similar losses would occur in special districts, but not enough information is available to quantify those losses. The school district losses would shift to the state after a one-year lag because of the operation of the school funding formula.

Source Agencies:

304 Comptroller of Public Accounts

LBB Staff:

JOB, SD, SJS

LEGISLATIVE BUDGET BOARD
Austin, Texas

FISCAL NOTE, 79TH LEGISLATURE 3rd CALLED SESSION - 2006


May 1, 2006

TO:	Honorable Jim Keffer, Chair, House Committee on Ways & Means

FROM:	John S. O'Brien, Deputy Director, Legislative Budget Board

IN RE:	HB60 by Otto (Relating to the margin of error to be used by the comptroller of public accounts in connection with the annual property value study to determine whether the local value for a school district is valid.), As Introduced