BILL ANALYSIS

Senate Research Center	S.B. 1064
	By: Middleton
	Education
	4/17/2023
	As Filed

AUTHOR'S / SPONSOR'S STATEMENT OF INTENT

Problem:

The Property Tax Assistance Division (PTAD) of the Office of the Comptroller of Public Accounts of the State of Texas conducts the property value study (PVS) every two years to estimate and verify a school district's property value for the purpose of ensuring equitable distribution of state funding for public education. The PVS surveys categories of properties in a district and estimates their value based on generally accepted sampling and statistical techniques. PTAD then compares these values on selected properties to an appraisal district's valuation of the property to test its validity. A valuation made by an appraisal district is determined to be valid if it falls within a statistically determined margin of error.

Currently, statute stipulates an allowable margin of error of five percent before an appraisal district's valuation is determined to be invalid. Despite this narrow window of valuation an appraisal district must meet, the state will certify a local value that exceeds the margin of error, but not one that is below it by a certain amount. This means that an appraisal district is incentivized to overestimate values to avoid having its valuation declared invalid by PTAD in the PVS.

For taxpayers, the incentive to overestimate valuations ensures ever-increasing appraised values and could lead to consistent increases in property taxes.

Solution:

S.B. 1064 would increase the allowable margin of error for determining validity of local property valuations surveyed in the PVS, doubling it from five percent to 10 percent.

Result:

Appraisal districts would not face as much of an incentive to overestimate property valuations to ensure compliance with the PVS. Taxpayers could be more secure from artificial increases in appraisal values due to the PVS.

As proposed, S.B. 1064 amends current law relating to the school district property value study conducted by the comptroller of public accounts.

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 403.3011(2), Government Code, to redefine "eligible school district."

SECTION 2. Amends Sections 403.302(c) and (d), Government Code, as follows:

(c) Requires the Comptroller of Public Accounts of the State of Texas (comptroller), in determining whether the local value for a school district is valid, to use a margin of error that does not exceed 10 percent, rather than five percent, unless the comptroller determines that the size of the sample of properties necessary to make the determination makes the use of such a margin of error not feasible, in which case the comptroller is authorized to use a larger margin of error.

(d) Redefines "taxable value."

SECTION 3. Makes application of the change in law made by this Act to Section 403.302, Government Code, prospective to January 1, 2024.

SECTION 4. Effective date: upon passage or September 1, 2023.