LEGISLATIVE BUDGET BOARD
Austin, Texas

FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION


May 4, 2025

TO:	Honorable Morgan Meyer, Chair, House Committee on Ways & Means

FROM:	Jerry McGinty, Director, Legislative Budget Board

IN RE:	HB1827 by Slawson (Relating to the repeal of the additional ad valorem taxes imposed as a result of a change of use of certain land.), As Introduced

Estimated Two-year Net Impact to General Revenue Related Funds for HB1827, As Introduced: a negative impact of ($130,234,000) through the biennium ending August 31, 2027.

However, there would a negative impact of ($244,310,000) in the biennium ending August 31, 2029.

General Revenue-Related Funds, Five- Year Impact:

All Funds, Five-Year Impact:

Fiscal Year	Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2026	$0
2027	($130,234,000)
2028	($120,108,000)
2029	($124,202,000)
2030	($107,870,000)

Fiscal Year	Probable Savings/(Cost) from Foundation School Fund 193	Probable Revenue Gain/(Loss) from Recapture Payments Atten Crdts 8905	Probable Revenue Gain/(Loss) from School Districts
2026	$0	$0	$0
2027	($130,234,000)	($175,510,000)	($522,020,000)
2028	($120,108,000)	($173,856,000)	($538,998,000)
2029	($124,202,000)	($199,021,000)	($564,864,000)
2030	($107,870,000)	($172,794,000)	($578,402,000)

The bill would repeal the additional property taxes imposed as a result of a change in the use of land appraised as open-space land, timberland, parkland, or public access airport property.

Under Chapter 23 of the Tax Code, qualified land is appraised at a value much lower than market value. Tax Code Sections 23.55, 23.76, 23.86, 23.96, and 23.9807, impose an additional property tax and interest in certain instances when the property owner changes the use of the land that receives a special appraisal; the additional tax is referred to as the rollback tax. The additional tax is computed based on the difference in each of the preceding three years between the market value of the land and the taxable value of the land as reduced by the special appraisal. The bill's proposed repeal of the rollback tax on land subject to special appraisal would create a cost to school districts and other units of local government because they would no longer receive the additional tax. The loss of the additional tax would also create a cost to the state through the operation of the school funding formula.

The bill does not repeal Section 23.46 of the Tax Code, regarding additional taxation on land subject to special appraisal as agricultural land under Subchapter C of the Tax Code, which is similar to the provisions the bill would repeal. For these reasons, and the lack of relevant information, no adjustment for the absence of a Section 23.46 repeal was made to the estimated costs in the table above and any such adjustment would be insignificant. Additionally, no timber, parkland or public access airport property rollback information is available; consequently, the effect of the proposed rollback changes on taxing units containing land in those categories is unknown.

The estimated rollback tax revenue loss is based on information from appraisal districts. There would be a collections loss, but no corresponding taxable property value loss. The rollback tax revenue loss would result in a decrease in Recapture Payments - Attendance Credits. Recapture is an estimated method of finance in the Foundation School Program (FSP). A reduction in recapture revenue would be partially offset by an increased cost to the Foundation School Fund. The estimated cost to the FSP is $130.2 million in fiscal year 2027, decreasing to $107.9 million in fiscal year 2030. The decrease in recapture is reflected as a revenue loss in the table above.

Local Government Impact

The bill would repeal the the additional property taxes imposed as a result in change in the use of land appraised as open-space land, timberland, parkland, or public access airport property which would reduce collections for units of local government. However, the no-new-revenue and voter-approval tax rates as provided by Section 26.04, Tax Code would be higher as a consequence of the reduced collections proposed by the bill. If cities, counties, and special districts did not adopt higher rates, local collections would be reduced by $361.0 million in fiscal year 2027. If those jurisdictions adopted higher tax rates, the initial revenue loss would be offset by increased tax levies from owners of non-exempt property and slightly reduced tax savings from owners of property that changed use as provided by the bill.