BILL ANALYSIS

Senate Research Center	H.B. 2894
	By: Hickland et al. (Flores)
	Finance
	5/7/2025
	Engrossed

AUTHOR'S / SPONSOR'S STATEMENT OF INTENT

In 2009, the Texas Legislature enacted a law granting a residence homestead property tax exemption to 100 percent or totally disabled veterans. In 2011, the legislature expanded this exemption to include the surviving spouses of these disabled veterans, and in 2015, the legislature established a framework for providing relief to certain local governments disproportionately affected by the granting of property tax relief to such disabled veterans and surviving spouses. Under that framework, municipalities adjacent to a U.S. military installation and counties in which a U.S. military installation is wholly or partly located are eligible to receive disabled veteran assistance payments from the state. However, only nine local governments currently meet these eligibility requirements, even though many communities could benefit greatly from these payments.

As the number of disabled veterans using the exemption increases statewide, the burden of higher property taxes shifts to other homeowners and may strain local governments with a high concentration of veterans that do not qualify for the assistance payments. H.B. 2894 seeks to address these issues by expanding the eligibility criteria for these assistance payments to municipalities and counties that are not adjacent to a U.S. military installation but experience property tax revenue loss due to the exemption of an amount equal to or greater than 10 percent of the municipality's general fund revenue in a fiscal year.

H.B. 2894 amends current law relating to the provision of state aid to certain local governments disproportionately affected by the granting of ad valorem tax relief to disabled veterans.

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 140.011(a)(2), Local Government Code, to redefine "local government."

SECTION 2. Amends Section 140.011(b), Local Government Code, as follows:

(b) Provides that a local government is a qualified local government for a fiscal year if the amount of lost ad valorem tax revenue calculated under Subsection (c) (relating to providing that the amount of a local government's lost ad valorem tax revenue for a fiscal year is calculated by a certain formula) for that fiscal year is equal to or greater than:

(1) two percent of the local government's general fund revenue for that fiscal year if the local government is:

(A) a municipality adjacent to a United States military installation; or

(B) a county in which a United States military installation is wholly or partly located; and

(2) 10 percent of the local government's general fund revenue for that fiscal year if the local government is:

(A) a municipality other than a municipality described by Subdivision (1)(A); or

(B) a county adjacent to a county described by Subdivision (1)(B).

SECTION 3. Provides that Section 140.011(a)(2), Local Government Code, as amended by this Act, applies only to the eligibility of a local government to apply for a disabled veteran assistance payment beginning with the fiscal year of the local government that ends in the 2025 tax year.

SECTION 4. Effective date: September 1, 2025.