84R12713 SMH-D

By: Schofield H.B. No. 3570

A BILL TO BE ENTITLED

AN ACT

relating to an exemption from ad valorem taxation by a school district of a percentage, rather than a dollar amount, of the appraised value of a residence homestead, a reduction of the limitation on the total amount of ad valorem taxes that may be imposed by a school district on the homestead of an elderly or disabled person to reflect any increase in the exemption amount, and the protection of school districts against the resulting loss in local revenue.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 11.13(b), Tax Code, is amended to read as follows:

(b) An adult is entitled to exemption from taxation by a school district of 7.5 percent [$15,000] of the appraised value of the adult's residence homestead, except that only $5,000 [$10,000] of the exemption applies [does not apply] to an entity operating under former Chapter 17, 18, 25, 26, 27, or 28, Education Code, as those chapters existed on May 1, 1995, as permitted by Section 11.301, Education Code.

SECTION 2. Section 11.26(a), Tax Code, is amended to read as follows:

(a) The tax officials shall appraise the property to which this section applies and calculate taxes as on other property, but if the tax so calculated exceeds the limitation imposed by this section, the tax imposed is the amount of the tax as limited by this section, except as otherwise provided by this section. A school district may not increase the total annual amount of ad valorem tax it imposes on the residence homestead of an individual 65 years of age or older or on the residence homestead of an individual who is disabled, as defined by Section 11.13, above the amount of the tax it imposed in the first tax year in which the individual qualified that residence homestead for the applicable exemption provided by Section 11.13(c) for an individual who is 65 years of age or older or is disabled. If the individual qualified that residence homestead for the exemption after the beginning of that first year and the residence homestead remains eligible for the same exemption for the next year, and if the school district taxes imposed on the residence homestead in the next year are less than the amount of taxes imposed in that first year, a school district may not subsequently increase the total annual amount of ad valorem taxes it imposes on the residence homestead above the amount it imposed in the year immediately following the first year for which the individual qualified that residence homestead for the same exemption, except as provided by Subsection (b). If the first tax year the individual qualified the residence homestead for the exemption provided by Section 11.13(c) for individuals 65 years of age or older was a tax year before the 1997 tax year, the amount of the limitation provided by this section is the amount of tax the school district imposed for the 1996 tax year less an amount equal to the amount determined by multiplying $10,000 times the tax rate of the school district for the 1997 tax year, plus any 1997 tax attributable to improvements made in 1996, other than improvements made to comply with governmental regulations or repairs. If the first tax year the individual qualified the residence homestead for the exemption provided by Section 11.13(c) for individuals 65 years of age or older or disabled was a tax year before the 2016 tax year and the appraised value of the homestead for the 2016 tax year is more than $200,000, the amount of the limitation provided by this section is the amount of tax the school district imposed for the 2015 tax year, less an amount equal to the amount computed by subtracting $15,000 from an amount equal to 7.5 percent of the appraised value of the homestead for the 2016 tax year and multiplying that amount by the tax rate of the school district for the 2016 tax year, plus any 2016 tax attributable to improvements made in 2015, other than improvements made to comply with governmental regulations or repairs. Except as provided by Subsection (b), a limitation on tax increases provided by this section on a residence homestead computed under this subsection continues to apply to the homestead in subsequent tax years until the limitation expires.

SECTION 3. Subchapter E, Chapter 42, Education Code, is amended by adding Section 42.2512 to read as follows:

Sec. 42.2512. ADDITIONAL STATE AID FOR HOMESTEAD EXEMPTION. (a) Notwithstanding Section 42.2516 or any other provision of this chapter, a school district is entitled to additional state aid to the extent that state aid under this chapter based on the determination of the school district's taxable value of property as provided under Subchapter M, Chapter 403, Government Code, does not fully compensate the district for ad valorem tax revenue lost due to any increase in the homestead exemption under Section 1-b(c), Article VIII, Texas Constitution, as proposed by the joint resolution to amend that section adopted by the 84th Legislature, Regular Session, 2015, and any additional limitation on tax increases under Section 1-b(d), Article VIII, Texas Constitution, as proposed by the joint resolution to amend that section adopted by the 84th Legislature, Regular Session, 2015.

(b) The commissioner, using information provided by the comptroller, shall compute the amount of additional state aid to which a district is entitled under Subsection (a). A determination by the commissioner under this section is final and may not be appealed.

(c) Notwithstanding any other provision of this chapter, in computing state aid for the 2016-2017 school year, a school district's taxable value of property under Subchapter M, Chapter 403, Government Code, is determined as if any increase in the homestead exemption under Section 1-b(c), Article VIII, Texas Constitution, as proposed by the joint resolution to amend that section adopted by the 84th Legislature, Regular Session, 2015, and any additional limitation on tax increases under Section 1-b(d), Article VIII, Texas Constitution, as proposed by the joint resolution to amend that section adopted by the 84th Legislature, Regular Session, 2015, had been in effect for the 2015 tax year. This subsection expires September 1, 2018.

SECTION 4. Section 403.302(j), Government Code, is amended to read as follows:

(j) For purposes of Chapter 42, Education Code, the comptroller shall certify to the commissioner of education:

(1) a final value for each school district computed on a residence homestead exemption under Section 1-b(c), Article VIII, Texas Constitution, of $5,000;

(2) a final value for each school district computed on:

(A) a residence homestead exemption under Section 1-b(c), Article VIII, Texas Constitution, of $15,000; and

(B) the effect of the additional limitation on tax increases under Section 1-b(d), Article VIII, Texas Constitution, as proposed by H.J.R. No. 4, 75th Legislature, Regular Session, 1997; [and]

(3) a final value for each school district computed on the effect of the reduction of the limitation on tax increases to reflect any reduction in the school district tax rate as provided by Section 11.26(a-1), (a-2), or (a-3), Tax Code, as applicable; and

(4) a final value for each school district computed on:

(A) a residence homestead exemption under Section 1-b(c), Article VIII, Texas Constitution, of 7.5 percent of the market value of the homestead; and

(B) the effect of any additional limitation on tax increases under Section 1-b(d), Article VIII, Texas Constitution, as proposed by the joint resolution to amend that section adopted by the 84th Legislature, Regular Session, 2015.

SECTION 5. The changes in law made by this Act to Sections 11.13 and 11.26, Tax Code, apply only to an ad valorem tax year that begins on or after January 1, 2016.

SECTION 6. This Act takes effect January 1, 2016, but only if the constitutional amendment proposed by the 84th Legislature, Regular Session, 2015, providing for an exemption from ad valorem taxation for public school purposes of 7.5 percent, rather than $15,000, of the market value of a residence homestead and providing for a reduction of the limitation on the total amount of ad valorem taxes that may be imposed for those purposes on the homestead of an elderly or disabled person to reflect any increased exemption amount is approved by the voters. If that constitutional amendment is not approved by the voters, this Act has no effect.