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

FROM:	Jerry McGinty, Director, Legislative Budget Board

IN RE:	HB4083 by Button (Relating to an exemption from ad valorem taxation of certain perishable inventory held for sale at retail.), As Introduced

Estimated Two-year Net Impact to General Revenue Related Funds for HB4083, As Introduced: a negative impact of ($55,031,000) through the biennium ending August 31, 2027. However, there would be a negative impact of ($136,471,000) in the biennium ending August 31, 2029.

Fiscal Year	Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2026	$0
2027	($55,031,000)
2028	($58,043,000)
2029	($78,428,000)
2030	($105,506,000)

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 Levy Loss
2026	$0	$0	$0
2027	($55,031,000)	($13,696,000)	($66,225,000)
2028	($58,043,000)	($14,306,000)	($66,554,000)
2029	($78,428,000)	($15,768,000)	($72,192,000)
2030	($105,506,000)	($16,237,000)	($83,220,000)

Contingent on the passage of HJR 174, the bill would exempt the total appraised value of perishable inventory held for sale at retail from the property tax. The bill would provide definitions and establish that a person is entitled to a property tax exemption of these certain products, if the person is not otherwise entitled to an exemption from taxation.

The bill provides that a person is not entitled to this exemption for a tax year in which the person owes a delinquent tax to the state or a taxing unit on January 1 of that tax year.

The bill would exempt certain perishable inventory held for sale at retail from property tax. The estimates are based on retail/wholesale inventory and sales information from the U.S. Census Bureau and consumer expenditure survey data from the Bureau of Labor Statistics. The analysis extracted values that correspond to the specific qualifying items and were limited to establishments that offer such merchandise in a retail environment.

Under provisions of the Education Code, the school district tax revenue loss is partially transferred to the state. The estimated cost to the Foundation School Program (FSP) is $55.0 million in fiscal year 2027, $58.0 million in fiscal year 2028, increasing to $105.5 million in fiscal year 2030. The cost to the FSP includes estimated decreases in Recapture Payments - Attendance Credits of $13.7 million in fiscal year 2027, $14.3 million in fiscal year 2028, increasing to $16.2 million in fiscal year 2030 as a result of school district tax revenue loss. The decrease in recapture is reflected as a revenue loss in the table above because recapture is appropriated as a method of finance for the FSP in the General Appropriations Act.

Contingent upon passage of a constitutional amendment authorizing the property tax exemption, the bill would exempt the total appraised value of perishable inventory held for sale retail which would reduce taxable value. 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 taxable property value proposed by the bill. If cities, counties, and special districts did not adopt higher rates, local levies would be reduced by $88.0 million in fiscal year 2027. If those jurisdictions adopted higher tax rates, the initial revenue loss from the exemption would be offset by increased tax levies from owners of non-exempt property and slightly reduced tax savings from owners of exempt property.

LEGISLATIVE BUDGET BOARD
Austin, Texas

FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION


April 27, 2025