Honorable Morgan Meyer, Chair, House Committee on Ways & Means
FROM:
Jerry McGinty, Director, Legislative Budget Board
IN RE:
SB611 by Campbell (Relating to an exemption from ad valorem taxation of the residence homestead of the surviving spouse of a member of the armed services of the United States who is killed or fatally injured in the line of duty.), As Engrossed
Passage of the bill would provide that the surviving spouse of a member of the armed services of the United States who is killed or fatally injured in the line of duty is entitled to an exemption from taxation of the total appraised value of the surviving spouse's residence homestead if the surviving spouse has not remarried since the death of the member of the armed services. Contingent on adoption of a constitutional amendment, 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 11 of the Tax Code, regarding taxable property and exemptions, to provide that the surviving spouse of a member of the armed services of the United States who is killed or fatally injured in the line of duty (rather than killed in action) is entitled to an exemption from taxation of the total appraised value of the surviving spouse's residence homestead if the surviving spouse has not remarried since the death of the member of the armed services.
Contingent on adoption of a constitutional amendment (SJR 35), the bill's provision changing the eligibility requirement that the deceased spouse, while serving as a member of the United States armed services, have been killed in action to a requirement to have been killed or fatally injured in the line of duty would create a cost to local taxing units and the state through the school funding formulas. The number of armed service members who are killed or fatally injured in the line of duty is greater than the number who are killed in action, which means more surviving spouses would be eligible for the residence homestead exemption. 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 take effect January 1, 2022, contingent on approval by voters of a constitutional amendment (SJR 35).
Local Government Impact
Passage of the bill would provide that the surviving spouse of a member of the armed services of the United States who is killed or fatally injured in the line of duty (rather than killed in action) is entitled to an exemption from taxation of the total appraised value of the surviving spouse's residence homestead if the surviving spouse has not remarried since the death of the member of the armed services. Contingent on adoption of a constitutional amendment, taxable property values could be reduced and the related ad valorem tax revenue for units of local government could be reduced.
The estimate is based on information from appraisal districts, the Congressional Research Service, and the United States Department of Defense. The number of armed service members who were killed in the line of duty between 2006 and 2020 was compared to the number who were killed in action during the same period to develop a percentage. The percentage was applied to the reported value lost to the current exemption for spouses of military members who were killed in action to estimate the value loss. The loss was trended through the five-year projection period.
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.
For informational purposes the loss to school districts is shown; however, under provisions of the Education Code, the school district tax revenue loss is partially transferred to the state.