Honorable Paul Bettencourt, Chair, Senate Committee on Local Government
FROM:
Jerry McGinty, Director, Legislative Budget Board
IN RE:
SB1454 by Paxton (Relating to the reappraisal for ad valorem taxation purposes of real property on which a building completely destroyed by a casualty is located.), As Introduced
Passage of the bill would allow reappraisals on any residence homestead property that includes a building completely destroyed by a casualty. 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 Section 23 of the Tax Code, relating to Appraisal Methods and Procedures, to allow a property owner to request a reappraisal on their residence homestead, within a certain time period, if a building located on the property has been completely destroyed by a casualty. The bill directs the assessor to recalculate the property tax amount due and provides for bill revision or refund. The reappraisal provision would not apply to property subject to the governor-declared disaster area exemption.
The bill would require the Comptroller to consult with appraisal districts to develop guidelines for reappraisals under this section by September 1, 2024 and distribute them to each appraisal district.
Passage of the bill would allow reappraisals on any residence homestead property that includes a building completely destroyed by a casualty. The bill does not define the degree of damage “completely destroyed” would entail or what type of destroyed buildings may be included.
To the extent that this bill would provide reduced property appraisals beyond what is currently exempted under Section 11.35, it can be assumed that any property that was “completely destroyed” would be appraised at a lower market value. As a result, taxable property values would be reduced and costs to the state increased through the operation of the school funding formulas. However, the frequency, timing, and severity of future damages, and the number of taxing units that would be impacted cannot be predicted. Consequently, the cost of the bill cannot be estimated.
Local Government Impact
Passage of the bill would allow reappraisals on any residence homestead property that includes a building completely destroyed by a casualty. As a result, taxable property values could be reduced. However, the no-new-revenue and voter-approval tax rates as provided by Section 26.04, Tax Code could be higher as a consequence of the reduced appraised value proposed by the bill.