TO: | Honorable Steve Ogden, Chair, Senate Committee on Finance |
FROM: | John S. O'Brien, Director, Legislative Budget Board |
IN RE: | SB475 by Wentworth (Relating to the exemption from ad valorem taxation of property owned by certain organizations engaged primarily in performing charitable functions.), As Introduced |
Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
---|---|
2010 | $0 |
2011 | ($420,000) |
2012 | ($488,000) |
2013 | ($521,000) |
2014 | ($558,000) |
Fiscal Year | Probable Savings/(Cost) from Foundation School Fund 193 |
Probable Revenue Gain/(Loss) from School Districts - Net Impact |
Probable Revenue Gain/(Loss) from Counties |
Probable Revenue Gain/(Loss) from Cities |
---|---|---|---|---|
2010 | $0 | $0 | $0 | $0 |
2011 | ($420,000) | ($139,000) | ($178,000) | ($152,000) |
2012 | ($488,000) | ($108,000) | ($188,000) | ($160,000) |
2013 | ($521,000) | ($121,000) | ($201,000) | ($170,000) |
2014 | ($558,000) | ($133,000) | ($215,000) | ($182,000) |
The bill would amend Chapter 11 of the Tax Code, regarding taxable property and exemptions.
The bill would make an ad valorem taxation exemption for qualified charitable organizations mandatory, if certain conditions are met. Section 11.184(b) of the Code, which currently makes this exemption optional, would be repealed.
The bill would extend an exemption from ad valorem taxation to property owned by corporation that is not a qualified charitable organization, if certain conditions were met. The required conditions include (1) qualifying as a 501(c)(2) organization under federal tax law; (2) holding title to the property, collecting income from the property, and turning the income less expenses over to a qualified charitable organization; and (3) the property would be exempt from ad valorem taxation if it was owned by the qualified charitable organization. The qualified charitable organization would be required to get a determination letter from the Comptroller's Office.
The bill would be effective January 1, 2010.
The bill's requirement of mandatory exemptions for qualifying charitable organizations would create a cost to cities, counties, school districts, and the state through the operation of the school finance formulas. Currently, some taxing units grant the exemption and some do not. The cost was estimated based on a survey of large appraisal districts to determine the value of currently non exempt property that would be exempted under the bill. The appropriate tax rates were applied to the value losses to estimate the tax revenue losses. All costs were estimated over the five year projection period.
The mechanics of the school finance system would transfer the costs related to the compressed tier to the state and would transfer a portion of the debt (facilities funding) and enrichment costs to the state, reducing the fiscal impact to school districts.
Source Agencies: | 304 Comptroller of Public Accounts
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LBB Staff: | JOB, MN, SD, SJS
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