BILL ANALYSIS

Senate Research Center	S.J.R. 3
88R7152 CJC-D	By: Bettencourt et al.
	Finance
	3/13/2023
	As Filed

AUTHOR'S / SPONSOR'S STATEMENT OF INTENT

The 84th Legislature passed, and voters approved, increasing the homestead exemption from $15,000 to $25,000 in 2015. Similarly, the 87th Legislature passed S.J.R. 2 which was approved by voters in May 2022 increasing the exemption up to $40,000 per homestead. In the 88th Legislature, S.J.R. 3 would raise the homestead exemption to $70,000.

This increase in the homestead exemption amount will provide a savings of $341 to a homeowner's school tax at the statewide ISD average tax rate of $1.136. Included in S.J.R. 3 is a hold harmless to school districts where the state will make up any formula funding deficit a school district might incur as a result of this exemption increase.

S.J.R. 3 would put to the voters the option to increase the homestead exemption amount to $70,000. S.J.R. 3 does contain a temporary provision, like what was done last year, which permits the increase to $70,000 for the tax year of 2023 if approved in November 2023 to make the exemption effective immediately. This temporary section of S.J.R. 3 will expire at the end of 2023, and the language in S.B. 3 would become the permanent increase in the constitutional homestead exemption amount going forward as of January 1, 2024.

S.J.R. 3 also contains a provision to provide the full amount of the $40,000 homestead exemption increase to Over 65/Disabled exemption holders who did not receive the full benefit from S.J.R. 3 and S.B. 1 that was approved by voters in May 2022. Additionally, S.J.R. 3 contains language that if a future legislature increases the homestead exemption, Over 65/Disabled exemption holders will automatically benefit from the increased exemption amount. This provision will eliminate the need to have a separate constitutional amendment every time the exemption amount is increased for Over 65/Disabled exemption holders.

S.J.R. 3 seeks to increase the constitutional homestead exemption amount to $70,000.

S.J.R. 3 proposes a constitutional amendment to increase the amount of the exemption of residence homesteads from ad valorem taxation by a school district and to adjust the amount of the limitation on school district ad valorem taxes imposed on the residence homesteads of the elderly or disabled to reflect increases in the exemption amount.

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 Sections 1-b(c) and (d), Article VIII, Texas Constitution, as follows:

(c) Provides that the amount of $70,000, rather than $40,000, of the market value of the residence homestead of a married or unmarried adult, including one living alone, is exempt from ad valorem taxation for general elementary and secondary public school purposes.

(d) Requires the legislature to provide, for a residence homestead subject to the limitation provided by this subsection in the 2021 tax year or an earlier tax year, for a reduction in the amount of the limitation for the 2024 tax year and subsequent tax years in an amount equal to $15,000 multiplied by the 2022 tax rate for general elementary and secondary public school purposes applicable to the residence homestead.� Requires the legislature, beginning with the 2024 tax year, for any tax year in which the amount of the exemption provided by Subsection (c) of Section (1-b) (Residence Homestead Tax Exemptions and Limitations) applicable to the residence homestead of a married or unmarried adult, including one living alone, is increased, to provide for a reduction for that tax year and subsequent tax years in the amount of the limitation provided by this subsection applicable to a residence homestead that was subject to the limitation in the tax year preceding the tax year in which the amount of the exemption is increased in an amount equal to the amount by which the amount of the exemption is increased multiplied by the tax rate for general elementary and secondary public school purposes applicable to the residence homestead for the tax year in which the amount of the exemption is increased.

SECTION 2. Provides that the following temporary provision is added to the Texas Constitution:

TEMPORARY PROVISION.� (a)� Provides that this temporary provision applies to the constitutional amendment proposed by the 88th Legislature, Regular Session, 2023, to increase the amount of the exemption of residence homesteads from ad valorem taxation by a school district and to adjust the amount of the limitation on school district ad valorem taxes imposed on the residence homesteads of the elderly or disabled to reflect increases in the exemption amount.

(b) Provides that the amendments to Sections 1-b(c) and (d), Article VIII (Taxation and Revenue), of this constitution take effect for the tax year beginning January 1, 2024.

SECTION 3. Requires that the proposed constitutional amendment be submitted to the voters at an election to be held November 7, 2023. Sets forth the required language of the ballot.