LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 81ST LEGISLATIVE REGULAR SESSION May 20, 2009 TO: Honorable Chris Harris, Chair, Senate Committee on Economic Development FROM: John S. O'Brien, Director, Legislative Budget Board IN RE:HB1770 by Miklos (Relating to the Tax Increment Financing Act. ), Committee Report 2nd House, Substituted To the extent that provisions of the bill would result in the inclusion of more property andlonger durations in tax increment financing agreements, the provisions would create a cost totaxing units and the state. Because information necessary to estimate the amount of newproperty or extensions of tax increment financing agreements is not available, there would bean indeterminable cost to the state. The bill would amend several provisions of Chapter 311 of the Tax Code, regarding the Tax Increment Financing Act. SECTION 1 of the bill would expand the authority of a municipality to designate non-contiguous areas within its corporate limits, in its extraterritorial jurisdiction, or in both as a reinvestment zone. SECTION 2 would add the amount of property taxes levied and assessed on the captured appraised value located in the reinvestment zone as an option for calculating the amount of the tax increment. SECTION 3 would clarify that notwithstanding any termination of the reinvestment zone under Section 311.017(a), the taxing unit would still be required to make payments to the fund that are specified under Section 311.013(b). This section would also clarify that notwithstanding Section 311.012(a), a unit would not be required to pay into the fund any tax increment attributable to uncollected taxes until those taxes are collected. SECTION 4 would allow the termination date for a reinvestment zone to be extended by the creating unit. A taxing unit other than the zone's creating unit would not be required to continue to participate during the extended period. SECTION 5 would specify that the Legislature validates and confirms all governmental acts and proceedings of a city or county that were taken before the effective date of the bill with certain exceptions. SECTION 6 would provide that the provisions of the bill would only apply to a tax increment for a period occurring on or after the effective date of the bill. Under a tax increment financing agreement, all or a portion of the incremental taxes collected in the zone are forwarded into a Tax Increment Fund (TIF). Under the hold harmless provisions of House Bill 1, Seventy-ninth Legislature, Third Called Session, 2006, school district taxes that are forwarded into a TIF are subtracted from school district collections, increasing state funding. According to the Comptroller of Public Accounts, to the extent that school districts agree to continue participating in reinvestment zones for which the originating city or county has extended the termination date, there would be a cost to the state. Costs would depend on the future actions of cities and counties regarding reinvestment zone extensions, and future decisions of school districts about whether to continue participating in extended reinvestment zones. Additionally, cities and counties could lose revenue to the extent that the bill results in the inclusion of more property in reinvestment zones, results in longer reinvestment zone terms, or validates actions that were invalid under current law if these actions caused higher tax increments. Because of a lack of data on these items the fiscal impact on cities and counties cannot be determined. Local Government Impact Based on analysis from the Comptroller of Public Accounts, for the reasons stated above, the fiscalimpact to units of local government cannot be estimated. Source Agencies:304 Comptroller of Public Accounts LBB Staff: JOB, JRO, SD, DB
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 81ST LEGISLATIVE REGULAR SESSION
May 20, 2009
TO: Honorable Chris Harris, Chair, Senate Committee on Economic Development FROM: John S. O'Brien, Director, Legislative Budget Board IN RE:HB1770 by Miklos (Relating to the Tax Increment Financing Act. ), Committee Report 2nd House, Substituted
TO: Honorable Chris Harris, Chair, Senate Committee on Economic Development
FROM: John S. O'Brien, Director, Legislative Budget Board
IN RE: HB1770 by Miklos (Relating to the Tax Increment Financing Act. ), Committee Report 2nd House, Substituted
Honorable Chris Harris, Chair, Senate Committee on Economic Development
Honorable Chris Harris, Chair, Senate Committee on Economic Development
John S. O'Brien, Director, Legislative Budget Board
John S. O'Brien, Director, Legislative Budget Board
HB1770 by Miklos (Relating to the Tax Increment Financing Act. ), Committee Report 2nd House, Substituted
HB1770 by Miklos (Relating to the Tax Increment Financing Act. ), Committee Report 2nd House, Substituted
To the extent that provisions of the bill would result in the inclusion of more property andlonger durations in tax increment financing agreements, the provisions would create a cost totaxing units and the state. Because information necessary to estimate the amount of newproperty or extensions of tax increment financing agreements is not available, there would bean indeterminable cost to the state.
To the extent that provisions of the bill would result in the inclusion of more property andlonger durations in tax increment financing agreements, the provisions would create a cost totaxing units and the state. Because information necessary to estimate the amount of newproperty or extensions of tax increment financing agreements is not available, there would bean indeterminable cost to the state.
The bill would amend several provisions of Chapter 311 of the Tax Code, regarding the Tax Increment Financing Act. SECTION 1 of the bill would expand the authority of a municipality to designate non-contiguous areas within its corporate limits, in its extraterritorial jurisdiction, or in both as a reinvestment zone. SECTION 2 would add the amount of property taxes levied and assessed on the captured appraised value located in the reinvestment zone as an option for calculating the amount of the tax increment. SECTION 3 would clarify that notwithstanding any termination of the reinvestment zone under Section 311.017(a), the taxing unit would still be required to make payments to the fund that are specified under Section 311.013(b). This section would also clarify that notwithstanding Section 311.012(a), a unit would not be required to pay into the fund any tax increment attributable to uncollected taxes until those taxes are collected. SECTION 4 would allow the termination date for a reinvestment zone to be extended by the creating unit. A taxing unit other than the zone's creating unit would not be required to continue to participate during the extended period. SECTION 5 would specify that the Legislature validates and confirms all governmental acts and proceedings of a city or county that were taken before the effective date of the bill with certain exceptions. SECTION 6 would provide that the provisions of the bill would only apply to a tax increment for a period occurring on or after the effective date of the bill. Under a tax increment financing agreement, all or a portion of the incremental taxes collected in the zone are forwarded into a Tax Increment Fund (TIF). Under the hold harmless provisions of House Bill 1, Seventy-ninth Legislature, Third Called Session, 2006, school district taxes that are forwarded into a TIF are subtracted from school district collections, increasing state funding. According to the Comptroller of Public Accounts, to the extent that school districts agree to continue participating in reinvestment zones for which the originating city or county has extended the termination date, there would be a cost to the state. Costs would depend on the future actions of cities and counties regarding reinvestment zone extensions, and future decisions of school districts about whether to continue participating in extended reinvestment zones. Additionally, cities and counties could lose revenue to the extent that the bill results in the inclusion of more property in reinvestment zones, results in longer reinvestment zone terms, or validates actions that were invalid under current law if these actions caused higher tax increments. Because of a lack of data on these items the fiscal impact on cities and counties cannot be determined.
The bill would amend several provisions of Chapter 311 of the Tax Code, regarding the Tax Increment Financing Act.
SECTION 1 of the bill would expand the authority of a municipality to designate non-contiguous areas within its corporate limits, in its extraterritorial jurisdiction, or in both as a reinvestment zone.
SECTION 2 would add the amount of property taxes levied and assessed on the captured appraised value located in the reinvestment zone as an option for calculating the amount of the tax increment.
SECTION 3 would clarify that notwithstanding any termination of the reinvestment zone under Section 311.017(a), the taxing unit would still be required to make payments to the fund that are specified under Section 311.013(b). This section would also clarify that notwithstanding Section 311.012(a), a unit would not be required to pay into the fund any tax increment attributable to uncollected taxes until those taxes are collected.
SECTION 4 would allow the termination date for a reinvestment zone to be extended by the creating unit. A taxing unit other than the zone's creating unit would not be required to continue to participate during the extended period.
SECTION 5 would specify that the Legislature validates and confirms all governmental acts and proceedings of a city or county that were taken before the effective date of the bill with certain exceptions.
SECTION 6 would provide that the provisions of the bill would only apply to a tax increment for a period occurring on or after the effective date of the bill.
Under a tax increment financing agreement, all or a portion of the incremental taxes collected in the zone are forwarded into a Tax Increment Fund (TIF). Under the hold harmless provisions of House Bill 1, Seventy-ninth Legislature, Third Called Session, 2006, school district taxes that are forwarded into a TIF are subtracted from school district collections, increasing state funding. According to the Comptroller of Public Accounts, to the extent that school districts agree to continue participating in reinvestment zones for which the originating city or county has extended the termination date, there would be a cost to the state. Costs would depend on the future actions of cities and counties regarding reinvestment zone extensions, and future decisions of school districts about whether to continue participating in extended reinvestment zones.
Additionally, cities and counties could lose revenue to the extent that the bill results in the inclusion of more property in reinvestment zones, results in longer reinvestment zone terms, or validates actions that were invalid under current law if these actions caused higher tax increments. Because of a lack of data on these items the fiscal impact on cities and counties cannot be determined.
Local Government Impact
Based on analysis from the Comptroller of Public Accounts, for the reasons stated above, the fiscalimpact to units of local government cannot be estimated.
Source Agencies: 304 Comptroller of Public Accounts
304 Comptroller of Public Accounts
LBB Staff: JOB, JRO, SD, DB
JOB, JRO, SD, DB