Texas Senate Bill SB5

Texas 2019 - 86th Regular

Caption

Relating to an increase in the amount of the exemption of residence homesteads from ad valorem taxation by a school district, a reduction in the amount of the limitation on school district ad valorem taxes imposed on the residence homesteads of the elderly or disabled to reflect the increased exemption amount, and the protection of school districts against the resulting loss in local revenue.

Impact

One of the key impacts of SB5 is the mandate for additional state aid to school districts that face revenue losses due to the increased exemptions. The legislation acknowledges that lifting exemption limits will cause a decrease in local tax revenue, prompting state compensation to cover the shortfall in funding for educational services. This compensation is structured to ensure that school districts are not adversely affected by the reduction in local tax income, providing stability for educational funding levels that rely heavily on property tax revenues. The proposed changes emphasize a collaborative effort between state and local entities to sustain educational service provision despite adjustments in tax burdens.

Summary

SB5 proposes significant amendments to the Texas Tax Code regarding the exemptions on residence homesteads from ad valorem taxes as imposed by school districts. The bill increases the exemption amount for the appraised value of homesteads from $25,000 to $35,000, explicitly focusing on the residences of individuals aged 65 or older and those who are disabled. This increase not only lightens the tax burden for these vulnerable demographics but also provides a protective measure ensuring that the total annual amount of tax does not exceed previous limits when property remains eligible for the exemption. The intent is to alleviate financial pressure on these constituents while maintaining their community's access to essential services funded through local property taxes.

Contention

Despite its intended benefits, SB5 may face contention, especially from local governments and fiscal conservatives who argue that increasing tax exemptions could lead to decreased local funding capabilities. Critics may contend that while the exemptions offer immediate relief to select populations, they could potentially result in longer-term financial strains on school districts, especially as they navigate reduced revenue and increased state aid reliance. The potential over-reliance on state funding could ignite debates about the sustainability and equity of financial distributions, especially concerning local governance and taxation authority.