| TO: | Honorable Tom Craddick, Speaker of the House, House of Representatives |
| FROM: | John S. O'Brien, Director, Legislative Budget Board |
| IN RE: | HB3630 by Van Arsdale (Relating to the appraisal for ad valorem tax purposes of a parcel of land that is used for single-family residential purposes and is contiguous to a parcel of agricultural or open-space land owned by the same person. ), As Passed 2nd House |
General appraisal standards require a chief appraiser to consider the highest and best use of real property when determining market value. Passage of the bill would require a chief appraiser to consider other factors when determining market value, which could result in a reduction in taxable value to the extent that appraisal districts currently use appraisal methodology which would conflict with the proposed legislation. As a result of taxable property value reductions, the related costs to the
The bill would add Section 23.25 to the Tax Code relating to appraisal of land that is used for single-family residential purposes and contiguous to agricultural or open-space land.
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 would mandate the manner by which certain open-space land is appraised for property tax purposes and would prohibit chief appraisers from using certain comparable sales data in the determining the market value of open-space land. Passage of the bill could result in an undetermined loss of revenue to units of local government to the extent that appraisal districts currently use appraisal methodology in conflict with the proposed legislation. General appraisal standards require a chief appraiser to consider the highest and best use of real property when determining market value. The bill would limit the range of sales data to be used in making a market value determination. The Comptroller's Property Tax Division does not receive or maintain information from appraisal districts that would be helpful in determining the impact of the bill.
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.
Senate floor amendment 3 would require appraisal districts to notice homeowners not utilizing the homestead exemption about the provisions of the homestead exemption law. This would not have statewide fiscal impact.
Senate floor amendment 4 specifies that after January 1, 2008, an individual is not entitled to have land designated for agricultural use if the land secures a home equity loan. This would not have statewide fiscal impact.
The bill would take effect January 1, 2008.
Passage of the bill could result in an undetermined loss of revenue to units of local government to the extent that appraisal districts currently use appraisal methodology in conflict with the proposed legislation.
| Source Agencies: | 304 Comptroller of Public Accounts
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| LBB Staff: | JOB, CT, SD, SJS
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