Honorable Dennis Bonnen, Chair, House Committee on Ways & Means
FROM:
Ursula Parks, Director, Legislative Budget Board
IN RE:
HB1473 by Bohac (Relating to an exemption from ad valorem taxation of the total appraised value of the residence homesteads of certain elderly persons and their surviving spouses.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB1473, As Introduced: a negative impact of ($378,966,000) 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
$0
2019
($378,966,000)
2020
($411,493,000)
2021
($446,962,000)
2022
($488,115,000)
Fiscal Year
Probable Savings/(Cost) from Foundation School Fund 193
Probable Revenue Gain/(Loss) from Counties
Probable Revenue Gain/(Loss) from Cities
Probable Revenue Gain/(Loss) from Other Special Districts
2018
$0
$0
$0
$0
2019
($378,966,000)
($111,184,000)
($106,843,000)
($83,909,000)
2020
($411,493,000)
($120,188,000)
($114,290,000)
($90,568,000)
2021
($446,962,000)
($129,962,000)
($122,294,000)
($97,787,000)
2022
($488,115,000)
($141,287,000)
($131,563,000)
($106,150,000)
Fiscal Analysis
The bill would amend Chapter 11 of the Tax Code, related to property tax exemptions, to provide a total residence homestead exemption to individuals who are 80 years of age or older and have received a residence homestead exemption on that homestead for at least the preceding 10 years. A surviving spouse of a deceased individual who received the exemption would receive the exemption under the following conditions: 1. the deceased spouse died in a year in which the deceased spouse qualified for the exemption; 2. the surviving spouse was 55 years of age or older when the deceased spouse died; and 3. the property was the residence homestead of the surviving spouse when the deceased spouse died and remains the residence homestead of the surviving spouse.
The bill would amend Chapter 403 of the Government Code, related to the Comptroller's property value study, and Chapters 41, 42 and 46 of the Education Code, related to school funding, to hold school districts harmless for any negative fiscal effect of the new exemption on school district Tier 1, Tier 2, or facilities funding.
The bill would make conforming changes to various provisions of the Tax Code and the Education Code.
The bill would take effect on January 1, 2018, contingent on voter approval of a constitutional amendment (HJR 64).
Methodology
The bill's provisions providing a total residence homestead exemption to certain individuals who are 80 years of age or older and to certain surviving spouses of those individuals would create a cost to local taxing units and to the state through the school finance formulas. The bill's school funding hold harmless provisions would ensure that 100 percent of the school district cost related to the new homestead exemption is transferred to the state.
The taxable value loss estimate was based on information from appraisal districts, the Texas Demographic Center and the 2013 Demand Institute Housing & Community Survey. Projected tax rates were applied to the taxable value losses through the five-year projection period to estimate tax revenue losses to school districts, special districts, cities and counties. Under the bill's provisions in conjunction with existing provisions of the Education Code, the school district tax revenue loss is transferred to the state.
Local Government Impact
The estimated fiscal implication to units of local government is reflected in the table above and is contingent upon passage of a constitutional amendment authorizing the exemption.