Honorable Dennis Bonnen, Chair, House Committee on Ways & Means
FROM:
Ursula Parks, Director, Legislative Budget Board
IN RE:
HB2336 by Flynn (Relating to the collection, consideration, and use of information not readily available to the general public by appraisal districts for ad valorem tax determination purposes.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB2336, As Introduced: a negative impact of ($36,127,000) through the biennium ending August 31, 2017.
In addition, the bill would have a negative impact of ($468,682,000) for the 2018-19 biennium.
The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
Fiscal Year
Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2016
$0
2017
($36,127,000)
2018
($181,776,000)
2019
($286,906,000)
2020
($402,849,000)
Fiscal Year
Probable Savings/(Cost) from Foundation School Fund 193
Probable Revenue Gain/(Loss) from School Districts
Probable Revenue Gain/(Loss) from Counties
Probable Revenue Gain/(Loss) from Cities
2016
$0
$0
$0
$0
2017
($36,127,000)
($183,875,000)
($66,890,000)
($66,014,000)
2018
($181,776,000)
($167,057,000)
($106,315,000)
($104,713,000)
2019
($286,906,000)
($204,697,000)
($150,184,000)
($147,627,000)
2020
($402,849,000)
($246,595,000)
($198,873,000)
($195,098,000)
Fiscal Year
Probable Revenue Gain/(Loss) from Other Special Districts
2016
$0
2017
($46,497,000)
2018
($73,828,000)
2019
($104,188,000)
2020
($137,829,000)
Fiscal Analysis
The bill would amend Chapters 6, 23 and 41 of the Tax Code, regarding property taxation, to prohibit a chief appraiser from employing or contracting with a person to collect information that is not readily available to the general public regarding the owner of a residence homestead or the value of the residence homestead, and to prohibit a chief appraiser from determining the appraised value of a residence homestead based on information that is not readily available to the general public or voluntarily provided to the chief appraiser by the owner.
An appraisal review board would be prohibited from considering information presented by the chief appraiser or a taxing unit on a protest involving a residence homestead unless the information was presented to the appraisal review board during the hearing and was readily available to the general public at the time the information was presented.
The bill would take effect on January 1, 2016.
Methodology
Information regarding the sales prices of property is necessary to appraise property accurately. Texas does not have a law requiring the disclosure of sales prices. Appraisal districts, in most instances, therefore must obtain sales prices from third party sources in order to provide equal and uniform residence homestead market values. Without information on the actual sale of property, which is assumed not to meet the requirement of being readily available to the general public, homestead appraisals would be less uniform and would not keep up with actual market value growth. This would cause a loss of expected property tax revenue. Consequently, the bill's prohibition on the appraisal districts' use of residence homestead information that is not readily available to the general public would create a cost to units of local government and to the state through the operation of the school funding formula.
The estimate assumes that residence homestead taxable values would fall below the forecast amount by 2 percent in the first year the bill takes effect and that this percentage would increase by 1 percent per year through the five year forecast. The first taxable value losses would occur in fiscal year 2017.
Projected tax rates were applied through the five-year projection period to estimate the tax revenue loss to special districts, cities and counties, and to estimate the school district loss that would be transferred partially to the state. Under the hold harmless provisions of the Education Code, only a small portion of the first year school district loss related to the compressed rate would be transferred to the state while 100 percent of the loss would be transferred to the state in later years. Because lagged year property values are used in the enrichment formula, school districts lose enrichment funding (a state gain) in the first year of a taxable property value reduction. In the second and successive years the enrichment loss and a portion of the school district debt (facilities) loss are transferred to the state through the relevant funding formulas.
Local Government Impact
The estimated fiscal implication to units of local government is reflected in the table above.