| TO: | Honorable Steve Ogden, Chair, Senate Committee on Finance |
| FROM: | John S. O'Brien, Director, Legislative Budget Board |
| IN RE: | SB347 by Patrick, Dan (Relating to the limitation on increases in the appraised value of a residence homestead for ad valorem taxation.), As Introduced |
| Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
|---|---|
| 2008 | $0 |
| 2009 | ($165,068,000) |
| 2010 | ($340,770,000) |
| 2011 | ($517,540,000) |
| 2012 | ($537,430,000) |
| Fiscal Year | Probable Savings/(Cost) from FOUNDATION SCHOOL FUND 193 |
Probable Revenue Gain/(Loss) from School Districts - Initial Impact |
Probable Revenue Gain/(Loss) from Counties |
Probable Revenue Gain/(Loss) from Cities |
|---|---|---|---|---|
| 2008 | $0 | $0 | $0 | $0 |
| 2009 | ($165,068,000) | ($197,840,000) | ($67,748,000) | ($59,311,000) |
| 2010 | ($340,770,000) | ($397,329,000) | ($137,078,000) | ($119,234,000) |
| 2011 | ($517,540,000) | ($598,506,000) | ($207,991,000) | ($179,770,000) |
| 2012 | ($537,430,000) | ($611,076,000) | ($213,870,000) | ($183,700,000) |
The bill would amend Section 23.23 of the Tax Code to reduce the current 10 percent maximum annual percentage cap in the appraised value of a residence homestead to a maximum of three percent.
The provisions in the bill would take effect January 1, 2008, contingent upon passage of a constitutional amendment authorizing such a limitation.
The bill would require appraisal districts to reduce the limit on the growth in the appraised value of a homestead to three percent from 10 percent per year since the last reappraisal effective January 1, 2008. The first effect on taxing unit levies would be in fiscal 2009.
The analysis was based on appraisal roll information reported electronically by appraisal districts. The year-to-year percent change in value for each of a large sample of properties listed on the appraisal roll in both years was calculated, and the results were sorted by percent change. The value loss resulting from the proposed limitation was calculated for homesteads that increased in value more than 3 percent. Value lost to the existing 10 percent value limitation on homestead property was excluded. The value loss was adjusted in the second and succeeding years of the analysis to reflect multi-year appraisal cycles and the holdover of capped property from one year to the next, based on historical data from the existing 10 percent cap.
The projected city, county, and school district tax rates were applied to the value losses in each year to estimate their respective levy losses. The initial cost to school districts is shown, along with the cost of the hold harmless feature of HB 1, 79th Legislature, 3rd Called Session, the cost of state facilities funding, and the total state cost. Information to estimate the effect on other taxing units was not available.
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.
The initial impact on school districts shown in the table above is provided for illustrative purposes only. The mechanics of the school finance system would likely transfer the fiscal impact to districts' M&O revenue to the state, resulting in a zero or negligible fiscal impact to the school districts. However, districts would experience a one-year lag between the loss of I&S revenue due to the provisions of the bill and the corresponding increase in state aid for debt service, which would occur the following year.
| Source Agencies: | 304 Comptroller of Public Accounts, 701 Central Education Agency
|
| LBB Staff: | JOB, CT, SD, SJS
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