Honorable Jane Nelson, Chair, Senate Committee on Finance
FROM:
Ursula Parks, Director, Legislative Budget Board
IN RE:
SB279 by Watson (relating to the authority of the governing body of a taxing unit other than a school district to adopt an exemption from ad valorem taxation of a portion, expressed as a dollar amount, of the appraised value of an individual ’s residence homestead.), Committee Report 1st House, Substituted
No fiscal implication to the State is anticipated.
The bill would amend Chapter 11 of the Tax Code, regarding taxable property and exemptions, to authorize taxing units other than school districts to grant a residence homestead exemption of at least $5,000, or a larger amount specified by the taxing unit by taking official action before July 1 of the year in which the exemption is to take effect.
In a taxing unit (other than a school district) that has not previously adopted an optional percentage exemption under Section 11.13(n) of the Tax Code, the proposed new exemption would take effect automatically unless the taxing unit takes official action electing not to adopt the exemption.
In a taxing unit that rescinds an optional percentage exemption and grants the proposed new exemption, a qualifying taxpayer would be entitled to continue to receive the percentage exemption in lieu of the new exemption if the taxpayer remains qualified, and the amount of the percentage exemption exceeds the amount of the proposed new exemption.
The optional homestead exemption proposed by the bill would create a cost to taxing units other than school districts to the extent that the taxing units adopt the new exemption or allow the automatic exemption to go into effect. There would be no cost to school districts or to the state.
The number of taxing units that would adopt the new exemption or allow it to go into effect automatically cannot be predicted. Similarly, the amount at which a taxing unit would set the exemption is unknown. Consequently, the cost of the bill to these taxing units cannot be estimated.
The bill would take effect on January 1, 2016 contingent on the passage of a constitutional amendment (SJR 20).
Local Government Impact
The optional homestead exemption proposed by the bill would create a cost to taxing units other than school districts to the extent that the taxing units adopt the new exemption or allow the automatic exemption to go into effect. The number of taxing units that would adopt the new exemption or allow it to go into effect automatically cannot be predicted. Similarly, the amount at which a taxing unit would set the exemption is unknown. Consequently, the cost of the bill to these taxing units cannot be estimated.