Austin, Texas
March 10, 2009

Honorable Rene Oliveira, Chair, House Committee on Ways & Means
John S. O'Brien, Director, Legislative Budget Board
HB1000 by Bolton (Relating to the amounts of certain residence homestead exemptions from ad valorem taxation and the adjustment of the amounts of those exemptions applicable to a homestead based on changes in the appraised value of the homestead.), As Introduced

Estimated Two-year Net Impact to General Revenue Related Funds for HB1000, As Introduced: a negative impact of ($562,436,000) through the biennium ending August 31, 2011.

The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.

Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2010 $0
2011 ($562,436,000)
2012 ($653,767,000)
2013 ($680,768,000)
2014 ($702,665,000)

Fiscal Year Probable Savings/(Cost) from
Foundation School Fund
Probable Revenue Gain/(Loss) from
School Districts - Net Impact
Probable Revenue Gain/(Loss) from
2010 $0 $0 $0
2011 ($562,436,000) ($187,126,000) ($60,145,000)
2012 ($653,767,000) ($144,817,000) ($63,026,000)
2013 ($680,768,000) ($159,371,000) ($65,721,000)
2014 ($702,665,000) ($170,193,000) ($67,880,000)

Fiscal Analysis

The bill would amend Chapter 11 of the Tax Code to increase the mandatory residence homestead exemption granted by counties from $3,000 to $6,000 for the 2010 tax year or any later year in which the owner becomes entitled to the exemption. For each subsequent year, the exemption would be adjusted to reflect the change in the homestead's appraised value.

The mandatory residence homestead exemption for school districts would be increased to $30,000 and would also be adjusted in subsequent years for changes in homestead appraised value. The bill would make conforming changes to school finance provisions and the Comptroller's Property Value Study.

The bill would take effect January 1, 2010, contingent upon the passage of a constitutional amendment that would be submitted to voters at an election to be held November 3, 2009.


Current law provides mandatory residence homestead exemptions of $3,000 for counties and $15,000 for school districts. The bill would increase the county homestead exemption to $6,000 and the school district homestead exemption to $30,000, contingent on passage of a constitutional amendment.

The bill would not require that school district tax ceilings for age 65-and-over and disabled taxpayers be reduced to reflect the additional exemption, significantly reducing the cost of the proposed bill.

Some low-value residences are appraised at less than the total of their exemptions, so the entire amount of the new homestead exemption would not be absorbed. The gross amount of the additional homestead exemption was multiplied by an absorption factor to reduce the cost for the lack of complete absorption. The bill would require that the exempt amount be increased proportionate to any homestead value increases. The value loss was adjusted for projected increases in homestead values to increase the value loss to the additional exemption. The value loss was trended through the projection period, and the appropriate tax rates were applied to estimate the cost of the proposed exemption increases.

Because of the operation of the hold harmless provisions of HB 1, 79th Legislature, Third Called Session (2006), the portion of the cost related to school district compressed rates is transferred to the state. A portion of the school district debt and enrichment costs are also transferred to the state after a one-year lag because of the operation of the funding formulas. All costs were estimated over the five year projection period. There would be no losses to taxing units other than the state, school districts, and counties.

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 growth of the equalized yield on those enrichment pennies would slow, resulting in slower growth in state aid.

Local Government Impact

The fiscal implication to units of local government is reflected in the table above and is contingent upon passage of a constitutional amendment authorizing the exemption. The fiscal implication is also included in the fiscal note relating to the corresponding resolution. There would be no fiscal implication to taxing units other than the state, school districts, and counties.

Source Agencies:
304 Comptroller of Public Accounts, 701 Central Education Agency
LBB Staff: