Honorable Dustin Burrows, Chair, House Committee on Ways & Means
FROM:
John McGeady, Assistant Director Sarah Keyton, Assistant Director Legislative Budget Board
IN RE:
HB3348 by Guillen (Relating to the eligibility of land on which the Texas Animal Health Commission has established a temporary quarantine for ticks for appraisal for ad valorem tax purposes as agricultural or open-space land.), As Introduced
Passage of the bill would permit the continued eligibility of special appraisal designation on land during a temporary quarantine of livestock to eradicate ticks on qualified open space land. 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, Subchapter C of the Tax Code, regarding land designated for agricultural use, to provide that an individual's ability to have land the individual owns designated for agricultural use does not end because the individual ceases exclusively or continuously using the land for agriculture as an occupation or a business venture for profit if the land: - is subject to a temporary quarantine established by the Texas Animal Health Commission for tick eradication; and - otherwise continues to qualify for the designation under Section 23.42.
The bill would amend Chapter 23, Subchapter D of the Tax Code, regarding property tax appraisal methods and procedures, to provide that the eligibility of land for special open space appraisal does not end because the land ceases to be devoted principally to agricultural use to the degree of intensity generally accepted in the area for a specified five-year period if: - the land is is subject to a temporary quarantine established by the Texas Animal Health Commission for tick eradication; - the land is appraised under this subchapter primarily on the basis of the livestock located in the area subject to quarantine; and - otherwise continues to qualify.
The continued eligibility for agricultural use and special open-space appraisal would apply only during the period that begins on the date the land is designated as a tick eradication area and that ends on the date the land is released from quarantine by the Texas Animal Health Commission. The bill would require a land owner to notify the chief appraiser the land is designated as a tick eradication area not later than the 30th day after the designation and to notify the chief appraiser when the land is released from quarantine not later than the 30th day after the release.
Special agricultural land appraisal and special open space land appraisal result in an appraised value for property tax purposes that is significantly less than the market value. The temporary quarantine of livestock to eradicate ticks on qualified open space land would cause a temporary cessation of agricultural use. This cessation, under current law, could cause the land to lose its special appraisal designation resulting in an increased taxable value. Under the bill, the increased taxable value would not occur because the land would retain its special appraisal status creating a cost to local taxing units and to the state through the school funding formulas.
Within quarantine areas, all livestock (cattle and equine) and live or hunted wildlife that are capable of hosting fever ticks, are subject to movement restrictions, inspections and treatment as prescribed by Texas Animal Health Commission (TAHC) fever tick regulations. As of May 1, 2017 TAHC reported that approximately 1.4 million acres were under various types of fever tick quarantine outside of the permanent quarantine zone. The number of acres that have lost the special appraisal designation or that would lose the designation in the future under current law is unknown. Similarly, the number of acres that would retain the special appraisal designation under the bill's provisions are 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, 2019.
Local Government Impact
Passage of the bill would permit the continued eligibility of special appraisal designation on land during a temporary quarantine of livestock to eradicate ticks on qualified open space land. As a result, taxable property values and the related ad valorem tax revenue for units of local government could be reduced.