| TO: | Honorable Royce West, Chair, Senate Committee on Intergovernmental Relations |
| FROM: | John S O'Brien, Director, Legislative Budget Board |
| IN RE: | HB1090 by Gonzalez, Naomi (Relating to the calculation of interest on certain ad valorem tax refunds.), As Engrossed |
The bill would amend Chapter 42 of the Tax Code, regarding property taxation and judicial review, to require that interest on any refund to a property owner based on the final determination of an appeal to district court be calculated at an annual rate that is equal to the sum of 2 percent and the most recent prime rate quoted and published by the Federal Reserve Board as of the first day of the month in which the refund is made, but the rate may not be more than 8 percent.
The current prime rate plus 2 percent is under 8 percent (the current statutory interest rate for refunds resulting from district court appeals that do not involve the denial of exemptions). To the extent that the prime rate plus 2 percent remains below 8 percent, the bill's proposed interest calculation method would reduce interest costs for taxing units. No information exists to estimate the amount of any gain to taxing units. The bill's proposed interest rate calculation change would not affect property values, tax rates, or other variables affecting property tax levies. Interest payments are not part of the school funding formula so there would be no fiscal impact on the state.
The bill would take effect September 1, 2011.
| Source Agencies: | 304 Comptroller of Public Accounts
|
| LBB Staff: | JOB, KKR, KK, SD, SJS
|