Honorable Jane Nelson, Chair, Senate Committee on Finance
FROM:
Ursula Parks, Director, Legislative Budget Board
IN RE:
SB717 by Taylor, Van (relating to the reappraisal for ad valorem tax purposes of property damaged in a disaster.), Committee Report 1st House, Substituted
Passage of the bill would require, rather than permit, the reappraisal of property in a disaster area at its market value immediately after the disaster. As a result, taxable property values could be reduced and the related costs to the Foundation School Fund could be increased through the operation of the school finance formulas.
The bill would amend Chapter 23 of the Tax Code, regarding property tax appraisal methods and procedures, to require a chief appraiser of an appraisal district that is in a disaster area declared by the Governor to reappraise all property that the Federal Emergency Management Agency (FEMA) estimates to have sustained five percent or greater damage as a result of the disaster at its market value immediately after the disaster. (note: language in current law permitting only a taxing unit in a disaster area to authorize reappraisal would be deleted.) A property owner would be permitted to refuse to have the property reappraised under this proposal. A chief appraiser would be required to complete the reappraisal not later than the 45th day after the date the Governor declares the area a disaster area unless FEMA does not complete the damage estimates on or before the reappraisal deadline, in which case the chief appraiser would be required to complete the reappraisal as soon as practicable after the damage estimates are completed. The Comptroller would be permitted to adopt rules to implement the bill's provisions. The bill would make conforming changes.
The reappraisal of property located in an area that was declared to be a disaster area by the Governor before the bill's effective date would be governed by the law in effect immediately before the effective date.
The bill's provision that would require, rather than permit, the reappraisal of property in a disaster area at its market value immediately after the disaster would create a cost to local taxing units and to the state through the school funding formula. The amount of value loss caused by future disasters is unknown; consequently, the cost of the bill cannot be estimated.
The bill would take effect immediately upon enactment, assuming it received the requisite two-thirds majority votes in both houses of the Legislature. Otherwise, it would take effect September 1, 2017.
Local Government Impact
Passage of the bill would require, rather than permit, the reappraisal of property in a disaster area at its market value immediately after the disaster. As a result, taxable property values and the related ad valorem tax revenue for units of local government could be reduced.