LEGISLATIVE BUDGET BOARD

Austin, Texas

FISCAL NOTE, 80TH LEGISLATIVE REGULAR SESSION

April 24, 2007

TO:	Honorable Jim Keffer, Chair, House Committee on Ways & Means
FROM:	John S. O'Brien, Director, Legislative Budget Board
IN RE:	HB3058 by Rose (Relating to the ad valorem tax appraisal of certain real property on which action is taken to conserve groundwater.), As Introduced

Passage of the bill would require a chief appraiser to reduce the market value of property on which the owner had installed a rainwater catchment system, implemented a brush control initiative, or taken other action to conserve groundwater. As a result, taxable property values could be decreased and the related costs to the Foundation School Fund could be increased.

The bill would add a new Section 23.145 of the Tax Code to require a chief appraiser to reduce the market value of property on which the owner had installed a rainwater catchment system, implemented a brush control initiative, or taken other action to conserve groundwater.

Under the bill, the chief appraiser would estimate the cost of the measures to the property owner and take into consideration the cost of such measures in determining the market value of the property. The proposed appraisal methodology would apply only to real property located in a priority management area designated by the Texas Commission on Environmental Quality under Chapter 35 of the Tax Code.

Because the state is constitutionally prohibited from imposing a state property tax, there would be no direct fiscal impact on the state; however, Section 403.302 of the Government Code requires the Comptroller to conduct a property value study to determine the total taxable value for each school district. Total taxable value is an element in the state's school funding formula. Passage of this bill could cause a change in school district taxable values reported to the Commissioner of Education by the Comptroller.

The bill is estimated to have an impact on the state aid districts receive based on the enrichment tier as tied to the yield of the Austin Independent School District (ISD). To the extent that the bill has the effect of lessening Austin ISD's revenue per weighted student per penny of tax effort, as determined by the Commissioner of Education, the equalized yield on those enrichment pennies would decrease, resulting in a decrease in state aid.

Local Government Impact

Passage of the bill would mandate a reduction in the appraised value of certain property based on actions taken by an owner to conserve water and implement brush control. There could be an undetermined loss of revenue to local units of government to the extent that the actual costs of property owner actions exceeded current methods of determining the market value of property where such actions occurred. The Comptroller's Property Tax Division does not receive or maintain information from appraisal districts that would be helpful in determining the impact of this bill.

Source Agencies:

304 Comptroller of Public Accounts

LBB Staff:

JOB, CT, SD, SJS