Honorable Tracy O. King, Chair, House Committee on Agriculture & Livestock
FROM:
Ursula Parks, Director, Legislative Budget Board
IN RE:
HB320 by Canales (Relating to the additional tax imposed on land appraised for ad valorem tax purposes as qualified open-space land if a change in use of the land occurs.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB320, As Introduced: a negative impact of ($22,625,000) through the biennium ending August 31, 2019.
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
2018
($148,000)
2019
($22,477,000)
2020
($69,662,000)
2021
($72,521,000)
2022
($75,524,000)
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 Other Special Districts
2018
($148,000)
($29,932,000)
($8,865,000)
($6,700,000)
2019
($22,477,000)
($72,276,000)
($27,800,000)
($20,980,000)
2020
($69,662,000)
($29,829,000)
($29,060,000)
($21,898,000)
2021
($72,521,000)
($31,944,000)
($30,375,000)
($22,855,000)
2022
($75,524,000)
($34,165,000)
($31,750,000)
($23,854,000)
Fiscal Analysis
The bill would amend Chapter 23 of the Tax Code, regarding appraisal methods and procedures, to decrease from five to two the number of preceding years for which a penalty plus interest is imposed on land for which the use is changed to a use which does not qualify for special open-space land appraisal (ag rollback).
The bill would take effect September 1, 2017.
Methodology
Land qualified for special open space appraisal is appraised at a value significantly less than its market value. Under current law if the use of qualified land changes to a non-qualifying use the landowner must pay an additional tax based on the sum of the taxes that the landowner avoided over the preceding five years by paying taxes on the special appraised value instead of the market value, plus interest (ag rollback). The bill's reduction of the ag rollback period from five years to two years would create a cost to local taxing units and to the state through the school finance formulas in regard to the reduction in the additional rollback tax. The reduction in the additional rollback interest would not affect the state because interest is not included in the school finance formulas.
The losses were estimated based on information from appraisal districts projected through the five-year period. Under provisions of the Education Code, the school district tax revenue loss is partially transferred to the state. Projected school funding rates were applied to estimate the state loss and the net school district loss. Cities were excluded from the table because little agricultural land is in cities.
Local Government Impact
The estimated fiscal implication to units of local government is reflected in the table above.