83(R) HB 1208 - Introduced version

LEGISLATIVE BUDGET BOARD
Austin, Texas

FISCAL NOTE, 83RD LEGISLATIVE REGULAR SESSION


April 16, 2013

TO:	Honorable Tracy O. King, Chair, House Committee on Agriculture & Livestock

FROM:	Ursula Parks, Director, Legislative Budget Board

IN RE:	HB1208 by Parker (Relating to liability for interest if land appraised for ad valorem tax purposes as agricultural or open-space land is sold or diverted to a different use.), As Introduced

Estimated Two-year Net Impact to General Revenue Related Funds for HB1208, As Introduced: an impact of $0 through the biennium ending August 31, 2015.

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

General Revenue-Related Funds, Five-Year Impact:

Fiscal Year	Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2014	$0
2015	$0
2016	$0
2017	$0
2018	$0

All Funds, Five-Year Impact:

Fiscal Year	Probable Revenue Gain/(Loss) from School Districts	Probable Revenue Gain/(Loss) from Counties
2014	($1,901,000)	($564,000)
2015	($5,513,000)	($1,627,000)
2016	($5,820,000)	($1,730,000)
2017	($6,071,000)	($1,822,000)
2018	($6,393,000)	($1,932,000)

The bill would amend Subchapters C and D of Chapter 23 of the Tax Code, regarding property appraisal methods, to place a moratorium, from September 1, 2013 to January 1, 2024 on the interest on any additional property taxes that become due when land that is designated for agriculture use is sold or diverted to nonagricultural use or when the use of qualified open-space land changes. The bill would prohibit the tax bill for those additional taxes from including any interest. The moratorium would not affect the liability for interest due on additional taxes if those taxes become delinquent.

The bill would be effective September 1, 2013 and would apply only to a change in use occurring after that date.

The Tax Code requires that landowners pay the difference between the market value and the productivity value of qualified agricultural land plus interest for each of the five years preceding a change in the use of the land (rollback). The bill would remove the interest requirement on land that changes use on or after September 1, 2013 and before January 1, 2024 creating a cost to school districts and counties.

The requirements to qualify as agricultural lands under Subchapter C are very stringent and include requirements that land must be owned by an individual, not a corporation, partnership, trust or other business entity. Agriculture must be the owner's primary occupation and source of income. Very few acres across the state qualify under this Subchapter. The roll-back tax for these lands is three years instead of five. Eliminating the interest for these additional taxes is not estimated to have a significant fiscal impact.

The annual number of acres subject to rollback under Subchapter D in each appraisal district was estimated based on information from appraisal districts. The number of acres subject to rollback was multiplied by the difference between the projected market value and the projected productivity value of each acre to estimate the loss in value subject to rollback. The statutory interest rate (7 percent) was applied to the value losses for each year in the five year period to estimate the interest that would be lost to school districts and counties under the bill's proposed language. This procedure was applied over the five year projection period. Because of the bill's September 1 effective date, only one-third of the annual cost is estimated for the first year in the fiscal impact table below. There would be no state cost because the interest on agricultural productivity value rollbacks is not included in the state's school funding formula. There would be an insignificant cost to cities because very little agricultural land is in cities.

Insufficient information is available to estimate the cost to special taxing units.

Local Government Impact

The fiscal implication to school districts and counties is included in the tables above. There would be an insignificant cost to cities because very little agricultural land is in cities. Insufficient information is available to estimate the cost to special taxing units.