Honorable Tommy Williams, Chair, Senate Committee on Finance
FROM:
Ursula Parks, Director, Legislative Budget Board
IN RE:
HB862 by King, Susan (Relating to the transfer of the limitation on school district, county, municipal, or junior college district ad valorem taxes on the residence homestead of a person who is elderly or disabled to a subsequent homestead of that person.), As Engrossed
Passage of the bill would prohibit the transfer of a zero tax ceiling in certain situations and would create a gain to the state through the operation of the school funding formulas.
The bill would amend Section 11.26, Tax Code, to prohibit a transfer of an over-65 or disabled person's school district property tax ceiling to a subsequently qualified homestead if the new homestead is valued at more than the average taxable value of homesteads in the school district and the tax ceiling transfer would result in a tax ceiling of zero on the subsequently qualified homestead. A transfer of a zero tax ceiling is required in such a situation under current law.
The bill would amend Section 11.261, Tax Code, to institute the same prohibition on certain zero tax ceiling transfers in county, city and junior college taxing units that have established the tax ceiling. The bill's prohibition of the transfer of a zero tax ceiling in certain situations would create a gain to counties, cities and junior colleges that have established the over-65 or disabled tax ceiling and would create a gain to school districts and to the state through the operation of the school funding formulas. The gain would be created because zero tax ceiling transfers are required under current law in the circumstances that would be prohibited by the bill.
Insufficient information is available on the value loss caused by zero tax ceiling transfers to estimate the increased revenue that would be created by the bill. Consequently the amount of gain cannot be estimated.
The bill would take effect on January 1, 2014.
Local Government Impact
Passage of the bill would prohibit the transfer of a zero tax ceiling in certain situations and would create a gain to counties, cities and junior colleges that have established the over-65 or disabled tax ceiling and would create a gain to school districts.